Green cars: The last hurdle

Give the auto industry credit. Today's cars are better in almost every respect than cars made a generation ago. They're better made, safer, more durable and have more advanced technologically. They're also a lot cleaner. Through changes in the fuel, such as removing both lead and sulfur and technological innovations like the catalytic converter, cars are no longer the smoking hulks of the 1970s.

In fact, cars are better today in every respect but one: global warming pollution. The next hurdle to creating a "green" car will be to reduce emissions of carbon dioxide, the chief culprit in man-made climate change.

A staggering amount of carbon dioxide pollution comes from U.S. cars. In 2005, our carbon emissions from personal vehicles totaled 318 million metric tons. That's equal to the amount of carbon in a coal train 55,000 miles long, enough to circle the world twice. General Motors' (nyse: GM - news - people ) cars alone account for more carbon pollution than America's largest electric-generating company, American Electric Power (nyse: AEP - news - people ).

Global warming is the most serious and urgent environmental crisis of all. Scientists are in almost universal agreement that the planet is getting warmer, and that disaster lies down the road unless we take action. Scientists also say that we must reduce greenhouse gas emissions, including carbon dioxide, by 80% over the next 40 years to avoid the worst impacts of global warming, like coastal flooding, punishing heat waves, more intense hurricanes and mass extinctions of plants and animals.

No effort to reach the goal of 80% reduction can succeed without reducing emissions from cars and trucks. Lack of technology has never been a barrier to progress on cutting fuel consumption. Today's vehicles are loaded with all sorts of innovations like multivalve engines and fuel injection, but the auto companies for years have focused on improvements in power and performance, not fuel economy. And they fiercely resisted improvements in fuel efficiency standards, which were finally raised by Congress last December for the first time since 1975.

So how will the auto industry achieve the fuel efficiency gains needed to meet the new standards and create a truly green car, one that protects the planet from global warming? Actually, it won't be all that hard. Automaking is a technologically thriving industry, and much of the needed technology to cut carbon emissions will come right off the shelf.

The first changes will come soon and will be relatively cheap. One fix will be making cars more aerodynamic, by reducing wind resistance on roofs, grilles, and hoods. Another easy engineering task is "body lowering"--suspensions that lower the chassis at high speeds, reducing wind resistance. A number of luxury vehicles already have it.

Other easy changes will include six-speed automatic transmissions and dual-clutch manual transmissions, a best-of-both-worlds technology in between a manual and automatic transmission. Power steering pumps, now driven off the engine in most cars, will be replaced with electric motors. Tires with lower rolling resistance will bring still more mileage improvements.

Automakers will also turn to lightweight materials--more aluminum and lightweight steel, which will reduce weight. Ford has said that between 2012 and 2020 it will trim 250 to 750 pounds from every car in its lineup.

Some of the biggest changes will come under the hood. Direct fuel injection (a more efficient way of getting fuel into the cylinders), turbocharging, hybrid technology and clean diesel will yield major improvements. Ford is developing "ecoBoost" engines that will burn 10% to 20% less gasoline without any loss in performance, according to the company. It plans to put the engine into several models over the next five years, starting with the Lincoln MKS.

More exotic vehicles are in the works. Eventually, we may get plug-in electric cars, like the Chevy Volt, a concept GM promises to bring to market by 2010. Honda (nyse: HMC - news - people ) has already started leasing its FCX Clarity, a fuel-cell car whose only direct emission is water, to selected consumers in Southern California. Of course, both electricity and hydrogen are today produced from fossil fuels and are not CO2-free, but the greater efficiency of electric or hydrogen cars coupled with cleaner power generation could enable a big cut in emissions overall.

All of these advanced vehicle technologies will be needed in coming years, along with progressive reductions in the CO2 emissions from motor fuels. An essential step needed to push these improvements along is the passage of a cap-and-trade global warming bill by Congress. Under this approach, Congress will set firm limits on global warming pollution and ratchet down those limits over time. Revenues from the coming carbon market can be used to reward automakers that reduce their carbon footprint the most.

By using the power of cap-and-trade policy to reward the most cost-effective combinations of advanced vehicle technologies and low-carbon fuels, automakers can do for global warming what they have already done for conventional air pollution, so that a generation from now automobile CO emissions will be a fraction of what they are today. And then we'll have, for the first time, cars that are truly green.