But help may be on the way from an unexpected source: the EPA.

In January the EPA announced it had developed a prototype diesel engine that would meet its own stringent emission levels. Ford Motor will license the engine, developed by 20-orso EPA employees in Ann Arbor, Mich. Interestingly, the EPA has an annual advanced technology budget of $12 million versus Ford's yearly budget of $7.5 billion for research, design, and engineering. "We're very proud of our merry band of geniuses," says Christopher Grundler, who is in charge of the Ann Arbor testing lab.

Should any of the EPA's inventions be commercialized, the agency will receive a fee sufficient to recoup its investments. The agency also developed a hybrid system that stores energy in hydraulic fluid and is being tested by trucktransmission maker Eaton Corp.

Ford, which controls half the diesel pickup-truck market in the U.S., could benefit greatly from the prototype engine. Its dominance is threatened by tightening emissions regulations for diesels. Ford and other automakers are looking for ways to expand diesel passenger vehicle sales in the U.S. because the engines are 30% more fuel-efficient than gasoline engines.

The EPA-designed engine increases the amount of oxygen-poor exhaust that re-circulates into the combustion chamber, and increases the pressure of the fuel forced into the cylinder. The fuel burns at such a low temperature (below 2,000° F) that negligible amounts of noxious nitrogen oxides are produced.