Germany's conservatives will discuss the draft of the carbon capture and storage (CCS) law at a meeting, while parliament is due to vote on it June 19.
"The (Christian Democrat) parliamentary floor leader Volker Kauder will advise the party to reject the law," said a source from the CDU, which rules in an uneasy coalition with the center-left Social Democrats (SPD).
"The CCS technology is still not widely accepted," the source added.
The CCS law would pave the way for further developing the technology aimed at cutting pollution from coal-burning power plants, by holding CO2 indefinitely in underground storage facilities.
Parties in the coalition had spent months wrangling on rules to regulate the efforts of utilities such as E.ON, RWE and Vattenfall Europe to test and install the technology early enough for large-scale commercial use after 2020.
Speedy progress of the law is required to allow these companies to meet timetables for pilot plants ahead of full commercial production planned for 2020, and to ensure that CO2 taken from the plants can actually be piped into suitable stores by that date.
Germany derives 50 percent of its power from coal but without CCS will not be able to keep this up in coming years, as stringent EU laws aimed at discouraging CO2 emissions set rising financial penalties on conventional coal burning.