Environmentalists and the automotive industry have clashed over plans by the European Commission to set new limits on car emissions, which carmakers called too costly and activists said were too lax.

The Commission, the European Union executive, is proposing that carmakers should be required to reduce carbon dioxide emissions from new cars sold in Europe to an average 130g/km by 2012. It would target an overall cut in car emissions to 120g/km by 2012 from current levels of roughly 161g/km.

The goal would be achieved through biofuel use and other technology, in addition to improved standards from carmakers themselves.

Reducing CO2 emissions from passenger cars is one of the EU's objectives under the Kyoto Protocol, an international treaty on climate change. CO2 is linked to increased global warming.

The car that emitted the lowest CO2 emissions during the Auckland-Wellington-Auckland Energywise rally last November was the smart fortwo coupe, with 169.23g/km.

Honda Civic Hybrids recorded around 177.

Fiat's Grande Punto was next with 184.47, followed by the Volkswagen Polo diesel with 185.13.

The Ford Territory Turbo SUV emitted the most, 400.72g/km. Holden's SUV Captiva pumped out 376.67.

Petrol engines emit more carbon dioxide emissions than diesels, but diesels pump out more polluting particle matter, or soot.

However, carmakers say that newer diesel exhaust technology, is reducing soot output by around 90 per cent and has the potential to comply with the toughest emission limits in the world.

EU environmentalists said the 120g/km should have been imposed on carmakers directly.

"Climate change is a long-term challenge and the car industry also needs a long term outlook,"said Jos Dings, director of environmental group T&E. "An 80g target by 2020 would ensure that we double fuel efficiency within a decade."

But the European Automobile Manufacturers Association (ACEA), a lobby group, said the 130g/km figure was still too high and not the most cost-effective way to curb climate change.

"We're very committed to fighting global warming together with every other participant," said ACEA spokeswoman Sigrid de Vries.

"But putting the burden mainly on the car industry is too costly and not cost-effective, and it will lead toward loss of jobs and manufacturing in Europe."

ACEA represents manufacturers including BMW, DaimlerChrysler, Porsche, Fiat and Renault.

The proposal is part of EU efforts to fight climate change.