A draft Commission proposal obtained by Reuters says oil companies will be required to monitor greenhouse gas emissions that result from harvesting, refining and transporting oil, which the proposal calls oil's "life cycle."

Those emissions must be reduced by 1 percent annually starting in 2011 through 2020, the proposal said.

"The level of life-cycle greenhouse gas emissions per unit of energy reported in 2020 shall be no greater than 90 percent of the level reported in 2010," it said.

The proposal also sets stricter environmental standards on fuel sold in the 27-nation European Union in an effort to reduce air pollution and cut back on greenhouse gas emissions.