European Commission officials are working towards formally proposing legislation that would impose a CO2 cap for motor vehicles manufactured and imported into the European Union.

As a result, negotiations are intensifying in the run-up to publication of the proposals, with some manufacturers pressing to secure derogations for certain models, while others are keen to ensure fines are not levied against those who do not meet the new targets.

Previous reports to the European Parliament had suggested that the proposals would be released in 2008, but information released in a Brussels weekly newspaper, the European Voice, says the draft law could be tabled as early as December 19.

It quotes officials as saying the main sticking point is whether manufacturers should be fined if they breach mandatory CO2 emission limits for new models.

An EU official has reported a “big row” over penalties between the Commission’s directorate generals for industry and the environment.