Record diesel and petrol prices of more than 120p per litre in the middle of a global recession are a stark reminder that the days of cheap fill-ups are probably gone for good. While American and European consumers may be less keen to brim their tanks than they were before, millions of new motorists in China, India and other emerging nations are eager to take up the slack. And if that alone didn't provide a big enough spur to use mainstream fuels more efficiently and develop practical alternatives, there are other pressures too. The role of CO2 emissions in climate change is only the most recent of a series of environmental objections to burning our finite supply of fossil fuels in order to satisfy motorists. Tax changes and legislation are also forcing the motor industry to do something about it.

Britain has long linked motoring taxes to emissions, but other countries are more directly legislating for clean air and reduced fuel consumption. In Germany, some diesel models are already barred from parts of Berlin and Hanover, while Barack Obama's administration in the US has mandated that, by 2016, car manufacturers must achieve an across-the-range average fuel consumption of at least 35.5 miles to the (smaller) US gallon.

The easiest way of responding to these pressures is to find cheaper, cleaner fuels that can be used in today's cars with little modification. Biodiesel and bioethanol, which can be used in modified petrol engines, have become popular in countries with suitable agricultural industries, but their wider adoption slowed as doubts emerged about how efficiently such fuel can be produced and the extent to which they might be crowding out cultivation for food purposes. The use of bioethanol-based E85 has been promoted in the UK by Saab, Volvo, Ford and Bentley but remains limited, because the fiscal incentives have never been as big as those offered in some other countries, such as Sweden.

Hybrids build upon experience with existing petrol and diesel technology. These cars pair a combustion engine with a conventional transmission and an advanced drive-train that incorporates a system of batteries, electric motors and a lot of software. Designs vary, but commonly tap the power of the combustion engine or use regenerative braking in order to charge the batteries. They run on either the combustion engine or the electric motors alone, or a combination of both, depending on conditions. Toyota is the world leader in hybrids, but Peugeot Citroë*is expected to be the first company to market a diesel-based hybrid later this year.

A refinement of this design has greater battery capacity than a normal hybrid and it can be charged from the mains before a journey starts. Such "plug-in" hybrids are expected to become increasingly important in future, as they can run as a pure electric vehicle for longer than a typical hybrid. They also use mains electricity, which, depending on its source, may be much more environmentally friendly than a combustion engine. Toyota has developed a plug-in version of the Prius, which is now undergoing trials.

Motor manufacturers have experimented with electric cars for decades, but none has committed to sustained long-term mass production. Instead, electric cars have tended to be made by smaller specialised companies, such as the Norwegian Think. But now, several major groups have prototypes or trial vehicles that look like they will be offered to the public and produced in large numbers. BMW's Mini E, for example, is being tested in the US, UK and Germany, while Mitsubishi's tiny i-MiEV is already on sale in Japan. By contrast with the Mini E, the i-MiEV is one of the most convincing electric cars yet. Its compact drive-train hardly impinges on passenger or luggage space at all, and its electric motors provide very strong initial acceleration. The i-MiEV's lively behaviour completely dispels any notion that electric cars of the future will be dull. In fact, Tesla and Fisker are already offering high-end electric sportscars with exceptional performance – and a price tag to match, over £80,000. Even cars with more conventional performance have a significantly higher price tag than their combustion-engined counterparts. Although a £5,000 subsidy to be introduced in the UK next year may ease this somewhat.

The main drawback of electric cars, though, is their limited range, a problem exacerbated by the lack of suitable recharging infrastructure. Battery improvements, including the adoption of lithium-ion technology, will help, but until fast-charging technology is widely installed at workplaces, supermarkets and public car parks, the take-up of electric cars is likely to be slow.

One response is found in so-called range extenders, such as the Chevrolet Volt, eventually expected to come to the UK as the Vauxhall Ampera. This has both a small petrol engine and electric motors, but differs from a true hybrid in that the petrol engine is never used to drive the car's wheels directly; rather the Volt's batteries are charged from the mains, and when they run low on a long journey, the petrol engine kicks in to charge them up.

Another option, the use of hydrogen fuel cell vehicles with electric motors, lies further into the future, mainly because of the challenges involved in establishing a hydrogen refuelling infrastructure, although Mercedes, for example, has already demonstrated a very convincing fuel cell vehicle based on its B-Class model.

But as the car manufacturers try find new fuels and methods of propulsion to beat the efficiency and operating economics of mainstream cars, they're chasing a moving target. Modern petrol and diesel engines are much more powerful for their size than those of even a decade ago, and squeeze many more miles from a litre of fuel too. Mercedes' roomy E250 CDI saloon, for example, is a big car with a top speed of 149mph and capable of accelerating to 62mph in 7.7 seconds, but is powered by a comparatively small 2.15 litre turbodiesel engine that delivers 53.3mpg in official combined cycle fuel consumption tests. Mercedes isn't the only follower the "big car, small engine" school of thought, Volvo sells a perfectly drivable eco version of its similarly sized S80 saloon with a 1.6 litre turbodiesel engine. And improvements to diesel and petrol engines continue apace. Fiat has just started fitting MultiAir variable valve gear to some of its petrol engines which, as well as providing improved power and driving characteristics, claims to reduce fuel economy and CO2 emissions by up to 10 per cent as well.

Transmissions, too, provide plenty of scope for improvements in emissions and fuel consumption; Mercedes offers seven-speed automatic gearboxes, while BMW has gone one better with an eight-speeder from its supplier ZF. A wider choice of gears and better electronics means that a car is likely to spend more time in the optimum gear for prevailing conditions, and ZF claims its latest gearbox provides fuel savings of up to 11 per cent. Another influential innovation is Volkswagen's DSG transmission, which uses an automated mechanical gearbox fitted with a dual clutch system, broadly combining the convenience of an automatic with the economy and performance of a manual.

Providing drivers with information to promote economical habits is also useful. In common with a number of other models, new Hyundai vehicles, such as the ix35, have an indicator that helps drivers optimise gear changes.

But some other areas of car design – weight for example – have received less emphasis in the quest to save fuel and reduce emissions. Less weight requires less power, and less fuel, to move. The first Volkswagen Golf, introduced in 1974, weighed about 800kg; today's sixth-generation model is some 40 per cent heavier. Modern cars are bigger, which accounts for some of the difference, while safety equipment and creature comforts, such as air conditioning, make up the rest. Some manufacturers, such as Audi and Jaguar, have used aluminium extensively in their cars, and have benefited as a result. Jaguar's large XJ saloon is several hundred kilogrammes lighter than its BMW and Mercedes rivals. Other, more exotic weight-saving materials have only been used sparingly in cars. Lotus uses glass-reinforced plastics, but these have had relatively little mainstream appeal. Carbon fibre, increasingly used in aerostructures, has only made small inroads into the automotive market, although that may be about to change. BMW's long-standing core investors, the Quandt family, have built up interests in a number of companies connected with carbon technology, including SGL Carbon, a development that may presage the increased use of carbon fibre by BMW.

A single alternative fuel or new engine type may eventually emerge as the answer to all our mobility needs at a reasonable cost and without damaging the planet too much – but that's not the way it's looking at the moment. Work under way in a bewildering array of technologies and it seems that, if tomorrow's cars are going to be much more fuel-efficient and environmentally friendly than today's, this will be the cumulative result of a large number of separate small improvements, rather than a single remarkable breakthrough.

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