The European commission is set to propose looser emissions limits for new cars today in the face of fierce pressure from the EU auto industry and German ministers to water down its legislative plans.
The 27-strong commission is expected to vote on proposals to impose a mandatory CO2 emissions limit of 130g a kilometre on all new cars from 2012.
Its original plan to set the target at 120g was shelved last week after a furious dispute.
The fresh proposal from commission president Jose Manuel Barroso includes bowing to industry demands for a more integrated approach to fighting climate change by raising the mandatory use of biofuels in cars from 10 per cent to 12.5 per cent.
Mr Barroso intervened after crisis talks failed on Monday between Stavros Dimas, environment commissioner, and Gunter Verheugen, industry commissioner.
Yesterday Angela Merkel, the German chancellor and current EU president, urged the commission not to impose a general cap on CO2 emissions from all cars, but instead to set different limits for different types of car.
Michael Glos, her economy minister, has warned that tens of thousands of German jobs are at risk.
German industry ministers and Mr Verheugen had argued that the 120g target, imposed without other measures to reduce car emissions, would wipe out premium carmakers such as Audi, Mercedes (owned by DaimlerChrysler), BMW and Porsche.
Sergio Marchionne, Fiat chairman and president of ACEA, the European carmakers association, warned Mr Barroso this month that a 120g cap would shift thousands of jobs overseas.
He said the commission's own consultants had calculated the cap would add €3,650 to the average retail price of each new car.
Similar concerns were raised by Volkswagen, DaimlerChrysler and BMW as well as the European heads of Ford and General Motors.