By Stephen Mulvey EU reporter, BBC News

The unveiling of the European Commission's plan to cut CO2 emissions from cars opens a new phase of a lobbying war between the motor industry and environmentalists.

The announcement was due to have been made two weeks ago, but was postponed at the last minute after German manufacturers wrote to the European Commission warning of factory closures and job losses.

But Brussels' influential green lobby will emphasise the European Union cannot meet its ambitious climate change targets unless it brings emissions from transport under control.

Transport is the one sector of the European economy where CO2 emissions have been rising rapidly in recent years, growing from 21% to 28% of the total between 1990 and 2004.

Strong views

The next step in the legislative procedure will be an impact assessment of the proposal tabled by the European Commission.

Draft legislation should follow later this year, or early next year - at which point the lobbyists will shift their focus to the European Parliament and the governments of the 27 member states, which have the power to approve, amend or reject the bill.

Fiat, Citroen and Renault have reduced CO2 emissions far more than VW, BMW and Volvo Their success is partly due to selling more efficient diesel cars Manufacturers say there has been "no clear demand" from consumers for fuel-efficiency Some SUVs emit more than 360g of CO2 per kilometre Most brands failing on CO2

The end result could be quite different from the proposal that the European Commission has put together with so much difficulty and internal friction.

Germany has already signalled that it has strong views on the subject.

Chancellor Angela Merkel said she would "never agree" to any proposal that penalised makers of big cars - such as the original suggestion from Environment Commissioner Stavros Dimas.

He told the BBC last month he wanted each manufacturer to get its average car's emissions below 120g of CO2 per kilometre.

But in the light of Ms Merkel's uncompromising stance, an approach which sets a target for the industry as a whole - and spreads the burden across all Europe's manufacturers - will probably be needed.

On Wednesday Industry Commissioner Guenter Verheugen said forcing manufacturers to reach a uniform reduction objective "was never our intention".

Mr Dimas has already been forced to scale down the reduction in emissions that carmakers will have to achieve from fuel-efficiency technology alone.

They are now only being asked to reach emissions of 130g/km - which compares to an average of 162g/km for new European cares sold in 2005.

French successes

In fact, some European carmakers are already making rapid progress towards such a goal.

Fiat has already met a target voluntarily adopted by the industry, to bring emissions down to 140g/km by 2008.

Citroen and Europe's second largest carmaker, Renault, are on track to meet this voluntary target too and Ford and Peugeot are not far off.

By contrast, the biggest carmaker in terms of sales, Volkswagen, is among the companies that has made least progress.

Among the major European manufacturers only Audi, Volvo and BMW are doing worse, according to a study published last year by the pressure group Transport and Environment.

Given these differences in performance, it is possible that the industry will not present a united front in the months to come.

France could also take a different position from Germany in discussions between the member states.

Cost factor

One of the big arguments in the coming months is likely to focus on the possible cost of exploiting technology to bring down emissions.

Industry figures have already called for the impact assessment to focus on the effect on jobs and costs, while environmentalists will favour a broader remit.

We have to do these things for future generations Chris Davies MEP

The European Automobile Manufacturers Association (ACEA) points to studies, including the Stern report, which suggest that vehicle technology is one of the least cost-effective ways of bringing down CO2 emissions from transport.

One of these studies says that the cost of a car could go up by between 2,400 and 4,000 euros (�1,650 and �2,600).

"That would make the cost of a small car prohibitively expensive," said Sigrid de Vries of ACEA.

"It would have an effect on where production in Europe could remain."

However, environmentalists point to other studies which say the increased cost could be a mere 600 euros (�400) and that any extra cost would be quickly recouped as a result of lower fuel consumption.

They point out that manufacturers also have the option of putting up the price of larger cars to compensate for reduced profit margins on smaller cars.

At a seminar in the European Parliament last week, a number of innovations that would help to bring down emissions were discussed.

Among them were:

• Better streamlining - including dashboard displays to take the place of wing mirrors
• lights on the dashboard to indicate the best moment to change gear
• making cars lighter, for example by modifying the seat structures

Changes to engines could include:

• A device to stop the engine when the car comes to halt and start it again with a press on the accelerator
• More hybrid cars, which run partly on electricity
• Further moves towards efficient diesel engines
• reducing the top speed of cars, to bring it nearer to the maximum speed they are likely to be driven at on European roads

British Liberal Democrat MEP Chris Davies, who organised the seminar, points out that the price of cars has come down significantly in the last decade, so a price increase over the next few years ought not to spell ruin for the industry.

"We have to do these things for future generations," he says. "We are not going to destroy the car industry in the process, and may give them a competitive advantage."