The European Commission will propose carmakers should be required to reduce carbon dioxide emissions from new cars to an average of 130 grams per kilometre by 2012, a European Union source said on Monday.

The Commission would target an overall cut in car emissions to 120 grams per km by 2012 from current levels of roughly 161 grams per km, but that goal would be achieved through biofuel use and other technology in addition to improved standards from carmakers themselves, the source said.

The Commission, the EU's executive body, would suggest its strategy be implemented through binding legislation.

The proposal is part of EU efforts to fight climate change.

Political momentum for binding targets has grown as it becomes clear European carmakers will miss a voluntary goal to reduce the average carbon dioxide (CO2) output from new cars to 140 grams per km by 2008.

The compromise comes after weeks of debate within the EU's executive about how much of a burden to place on car companies, a key industrial sector in Europe.

Environment Commissioner Stavros Dimas had favoured binding legislation putting the full burden on auto makers to produce new vehicles that emitted on average 120 grams of CO2 per km in 2012.

But he met resistance from the car industry and auto powerhouse Germany. Industry Commissioner Guenter Verheugen supported an approach that targets fuel standards and driver behaviour in addition to vehicle technology.

COMPROMISE STRATEGY

Commission members are expected to endorse the compromise strategy at their regular meeting on Wednesday.

"It's balancing the three things: climate change, innovation and a competitive industry," the source said. "I would expect to see the target of 120 grams per km is agreed, of which the car manufacturers will contribute 130."

Biofuel use would contribute 5 grams per km while other factors such as improved tyres and gearboxes or shifting systems would make up the other 5 grams per km of the total goal, the source said.

The European Automobile Manufacturers Association (ACEA), a lobby group that represents car companies including BMW, DaimlerChrysler, Porsche, Fiat and Renault, has defended the sector's emissions performance.

Its members reduced CO2 emissions by 13 percent to 161 grams per km in 2004 compared to 1995 levels. ACEA says developing new technology to make further cuts is less cost-effective than other measures to reduce emissions and says consumers are not buying smaller, more fuel-efficient cars.

Car prices would increase by 2,450 euros ($3,167) per vehicle if the 120 grams per km goal focused strictly on manufacturers' technology, ACEA says.

Environmentalists say carmakers should take more responsibility for the emissions big fuel guzzlers give off.

The transport sector, including automobiles, is expected to contribute a 10 percent cut in CO2 emissions by 2012 to meet the EU's commitments agreed under the Kyoto Protocol to reduce greenhouse gas emissions blamed for global warming.

The automotive sector accounts for some 12 million jobs in Europe, according to ACEA