Details of the legislation are still under discussion, but European Commissioner for the Environment Stavros Dimas told the weekly European Voice newspaper that it would be closely based on the voluntary agreement.

Efforts to cut CO2 emissions have until now relied on the voluntary agreement with the car industry to bring emissions from new cars down to 140 milligrams per kilometre (mg/km) by 2008 and 120mg/km by 2012.

However the targets are presented as an average for the car industry as a whole, leaving room for individual car manufacturers to emit more or less than the average.

Dimas said the idea of individual targets was being discussed but "it appears there will be just one target for the whole industry".

He did not explain how this could be enforced under a new law.

Last month a study by the European Federation for Transport and Environment (T and E) showed that three-quarters of the 20 major car brands sold in Europe had failed to improve fuel efficiency at the rate needed to meet a key EU climate target.

The study was produced to track the progress of individual car brands in reducing carbon dioxide (CO2) emissions under the terms of a commitment made by the car industry to the EU in 1998-1999.

The target is reduced to 120 grams per kilometre by 2012.

While the deal included an agreement not to disclose the performance of individual companies in cutting emissions, the T and E report named and shamed.

Volkswagen, Europe's biggest car brand in terms of sales, has improved fuel efficiency at less than half the rate needed, according to the study.

"In contrast, Renault, Europe's second biggest brand and a direct competitor of VW, is on track to meet the target for the average new car sold to emit 140 grams of carbon dioxide (CO2) per kilometre by 2008," the Brussels-based lobby group said.

"Following the review of the carbon dioxide emissions by cars, Commissioner Dimas is proposing that legislation is proposed because the reports seem to indicate that the voluntary commitments may not be delivering what was expected," a European Commission spokeswoman told reporters Friday.

"Obviously this has still to be discussed and consultations are ongoing."

She added that there would be an announcement on the proposed legislation next month.

According to Dimas, cutting CO2 emissions and developing biofuels are two separate issues and biofuels will not be part of the new proposal.

Any CO2 law would require approval of member states and the European Parliament under the EU's co-decision procedure.

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