* Limited number of 'supercredits' spur innovation
* Too many would mean conventional cars do not get cleaner
* EU source says Germany analysing Commission figures (Adds comment from Climate commissioner, EU source (last four paragraphs)
BRUSSELS, Feb 18 (Reuters) - German proposals to protect its output of big, luxury cars threaten EU plans to limit carbon emissions by 2020 and could jeopardise future ambitions, a document from the bloc's executive said.
Proposals from the German government and German Christian Democrat politician Thomas Ulmer undermine attempts to enforce a 95 grams of CO2 per km (g/km) emission ceiling on cars by 2020, according to the Commission document seen by Reuters.
EU politicians are divided between those keen for rigorous green standards and those seeking flexibility.
The German car industry and Ulmer, who is leading debate on the car law continuing in the European Parliament this week, have been at the forefront of demands for increased allocation of so-called supercredits.
These allow manufacturers to produce cars that exceed the EU target if they also make very low emission electric or hybrid vehicles.
The Commission says a certain number of supercredits (a maximum of 20,000 per manufacturer) could support innovation, but too many would be counterproductive because that could prevent conventional cars from becoming any less polluting.
The internal Commission document, seen by Reuters, looked at four scenarios based on the German proposals - which would set no limit on supercredits - and found they would mean emissions in a range of 99 g/km to 123 g/km - compared with the EU goal of 95 g/km on average across all new EU vehicles by 2020.
The result would be "substantial increases in CO2 emissions and oil use" as well as "significant increases in consumer fuel costs and resulting decreases in GDP".
And because the supercredits would delay achievement of the 95 gram target, the German proposals would "have implications for the ability to set further CO2 targets".
German manufacturers including Daimler, BMW and Audi dominates the premium car segment.
'LIMITED IMPACT' PROPOSALS
The Commission also analysed proposals by British Liberal Member of the European Parliament Fiona Hall and Spanish Socialist MEP Eider Gardiazabal, which give an incentive for very low emissions vehicles, but have only "a limited impact on the effective CO2 target".
As a result, "their impact on consumer fuel costs and GDP is also rather limited," the Commission paper said.
For the German proposals, the scenarios give a range of deviation from the Commission target, depending on how many supercredits are earned through the production of ultra-low emission vehicles.
Greg Archer, a programme manager at campaign group Transport & Environment, predicted 10-15 g/km in excess of the 95 gram goal, given ambitious German electric vehicle targets.
"The effect will be fewer jobs created, higher fuel bills for drivers and more CO2 released," he said. "Yes, we want to encourage electric vehicles, but we don't want to encourage electric vehicles if that means conventional cars don't get any cleaner."
An EU source, speaking on condition of anonymity, said Germany was analysing the Commission figures and did not intend to water down the CO2 goals, but "to enhance alternative engineering".
The Commission declined to comment on unpublished documents.
However, Climate Commissioner Connie Hedegaard in a telephone interview reiterated her view that the number of supercredits needed to be limited.
"We have a very different industry. Some are producing small cars and some are producing very big cars, so we must strike the right balance," she told Reuters. "The Commission proposal is a very, very delicate balance." (Editing by Anthony Barker and David Cowell)