Italy is refusing to join France, Germany and Britain in a proposed European Union regulation that would subject automakers to fines if they can't cut carbon dioxide emissions from cars by 18 percent in the coming years.

E.U. member nation representatives on Friday had already agreed to phase in of those fines between 2012 and 2015, as they struggle with balancing environmental concerns with protecting their car manufacturers from the global economic crisis, Reuters reported.

But an unnamed Italian government source said that the compromise offer from its fellow E.U. members still doesn't offer enough protections for its smaller automakers, such as Fiat.

Italy's objections were over how to set fines for automakers that can't meet the proposed emission limits. Under the proposal, new vehicles sold in the E.U. couldn't emit more than 130 grams of carbon dioxide per kilometer. The current average for emissions for all vehicles is 158 grams.

Italy also has objected to a proposal that would set steeper reduction targets for Fiat than for Renault in France and Volkswagen in Germany, Reuters reported.

Still, a European diplomat told Reuters that enough of the 27 nations that make up the EU had agreed to the compromise to allow it to be put before the European Parliament, which has called for steeper cuts than E.U. member nations have supported.

The dispute is one of many facing the European Union as it works out the steps to reach its goal of cutting greenhouse gas emissions to 20 percent below their 1990 levels by 2020, while at the same time grappling with the effects of a global economic slowdown.

French President Nicolas Sarkozy, whose country holds the revolving presidency of the E.U., is pushing to have laws in place by January 2009 to meet those emission reduction goals.

But with the global economy suffering, countries and industries have been demanding compromises to lessen the potential economic burden that the new laws could impose.

In October, E.U. nations agreed to a proposal that would force all airlines operating within their borders to cut greenhouse gas emission to 3 percent below their 2005 levels by 2012 and to 5 percent by 2013. Airlines objected, saying the proposal could cost European air carriers as much as €5.3 billion ($6.7 billion) per year.

Airlines could meet those goals by reducing emissions or buying carbon dioxide credits through a carbon cap-and-trade program.

The European Parliament's industry committee in September voted to include the shipping industry in that carbon cap-and-trade program.

The European Union has grappled with questions of how to balance emission reduction goals with other environmental concerns.

In September, the industry committee approved a plan to require 10 percent of all vehicle fuels to come from renewable sources by 2020, but added requirements that much of that fuel be made from non-food sources such as wood chips, grasses and waste (see EU Supports 10% Biofuel Target, Limits Food-Based Biofuels).

Almost all the biofuels made today are made from grains, sugarcane or other food crops, and critics of the industry say that's led to increasing food costs as land has been diverted to growing crops for fuel instead of food.

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