A row between France and Germany is threatening to delay new EU rules governing car's carbon emissions, according to reports today.

The Guardian newspaper claims that plans to impose a mandatory of 120g of CO2 per kilometre from 2012 due to be formally announced on Wednesday are in disarray and could be delayed until the New Year.

Under the rules, carmakers would be required to achieve 130g per kilometre through improvements to engine technology, while biofuels and other measures would help achieve the overall 120 grams per kilometre target.

But French and German carmakers are at loggerheads over the European Commission's proposals. French firms which manufacture lighter, more fuel efficient vehicles are largely in favour of the tough targets, but German manufacturers remain a long way from meeting the new standards and are concerned about the scale of proposed fines.

The row is threatening to lead to a watering down of the draft regulation, and commission president José Manuel Barroso has reportedly seized the dossier in an attempt to break the impasse.

Reuters reported that the latest version of the draft rules, seen by the news agency, attempt to satisfy both sides of the argument by allowing carmakers to team up to meet their emission obligations.

The draft suggests that some form of emissions trading mechanism could be introduced, allowing manufacturers of lighter vehicles to join with less fuel efficient competitors to ensure that together they meet the EU targets.

"In order to provide flexibility for manufacturers, manufacturers may agree to form a pool on an open, transparent and non-discriminatory basis for the purposes of meeting their targets under this proposal," the draft said. "Where manufacturers form a pool, (they) should be deemed to have met their targets under this regulation provided that the average emissions of the pool as a whole do not exceed the target emissions for the pool."

The document also fails to include details on the scale of penalties firms would face for non compliance, but commits the Commission to increasing fines over time.

Meanwhile, in the US similar legislation in California and 16 other states moved a step closer last week after a federal judge rejected an auto industry lawsuit challenging California's clean car rules.

Under the proposals, California's clean cars standards will take effect from 2009 and ramp up to deliver a 30 per cent reduction in overall global warming emissions by 2016.

Automakers had challenged whether California had the jurisdiction to impose such rules, but in his 57-page decision Judge Anthony W Ishii of the US District Court for the Eastern District of California wrote that "both EPA [the Environmental Protection Agenccy] and California... are equally empowered to promulgate regulations that limit the emissions of greenhouse gases, principally carbon dioxide, from motor vehicles".

The ruling means that California only requires permission from the EPA to begin enforcing the new rules, which a further 16 states including New York, Florida, Arizona and Massachusetts have also pledged to adopt. The EPA has failed to grant this approval for the past two years, prompting California to sue the federal body in a separate lawsuit.

"Today's ruling affirms California's legal right to clean its air and protect the health of its citizens," said Fran Pavley, a senior climate advisor with the Natural Resources Defense Council (NRDC). "The EPA should stop dragging its feet and give California the routine permission it needs to start enforcing the law."