Fears mount that EU car emission rules will be watered down

European member states are reportedly close to agreeing a deal on the EU's proposed vehicle emission standards that could yet see the controversial legislation watered down.

The European Parliament had rejected lobbying from the car industry and voted in favour of legislation that would cut carbon dioxide output from cars by 18 per cent to 130 grams per km by 2012 as part of its ambitious climate change package. Those manufacturers that failed to meet the standards would face hefty fines.

However, according to Reuter's reports, representatives of the UK, France, Germany and Italy have agreed to support a industry proposals for the standards to be phased in by 2015, rather than adhering to the 2012 deadline.

They are also still debating cutting the level of fines, with Italian diplomats reportedly holding out for lower fines for auto manufacturers who fail to comply with emissions curbs.

The executive originally proposed penalties of €95 (£77) for every gram per kilometre that a car exceeds the cap, but Italy wants to lower this level to protect small car manufacturers.

"We don't think we're very far away from an agreement, but we're not yet at a point that we can accept their offer – it doesn't yet close the gap," an Italian source told the newswire.

Italy is unhappy that smaller cars, such as those produced by its domestic manufacturer fiat, have been set more ambitious targets than bigger cars.

In September, MEPs in the EU's environment committee voted to cap CO2 emissions from all new cars from 2012 in a surprise last minute backlash against strong pressure the industrial lobby.

Once the member states have finalised their proposals they are expected to enter into negotiations with the European Parliament and Commission in an attempt to finalise the rules before the end of the year.