For the near term (up to 15 years), we should increase our efforts to improve light-duty vehicle engines and transmissions, but all improvements must go toward increasing fuel efficiency rather than making cars bigger and faster. Also critical is reducing vehicle weight and size.
For the mid- and long-term (15-30 years, and more than 30 years), we should ramp up work on radically different technologies such as plug-in hybrids and hydrogen fuel-cell vehicles.
We must also develop and market more environmentally benign fuels based on nonpetroleum sources. In general, the use of biofuels will grow but not as fast as expected just a few years ago.
The final key is policy action. A coordinated set of regulatory and fiscal measures will be needed to push and pull improved technologies and greener alternative fuels into the market place in high volume. Measures should require auto manufacturers to make smaller, more-efficient cars, encourage consumers to choose those vehicles, and discourage everyone from driving so much.
The full MIT transportation report is here
Over the next 25 years, the fuel consumption of new vehicles could be reduced by 30-50 percent and total U.S. fuel use for vehicles could be cut to year 2000 levels, with greenhouse gas emissions cut by almost as much