For company car drivers there are tax discounts to be had for running a car with a factory-fit conversion to LPG.
Drivers of petrol cars meanwhile pay tax at between 15% and 35% of P11D price depending on the level of CO2 emissions, but the system is weighted against drivers of diesels with a 3% penalty meaning the minimum level of tax starts at 18%. Diesels are supposedly responsible for much of the local pollution in towns and cities - especially nitrous oxides and particulates - despite the fact that carbon dioxide emissions (the gas linked to global warming) from diesel cars are much lower than for petrol cars.
Hybrid vehicles also offer low emissions - particularly low in the case of the Honda Insight at 80g/km and a combined fuel consumption figure of 83.1mpg, thanks to a 1.0-litre engine and electric motor.
The Toyota Prius needs a more powerful engine to be able to carry extra passengers, and its 1.5-litre engine with electric motor delivers fuel consumption of about 57mpg and CO2 emissions of 120g/km.
Both cars gain benefit-in-kind tax discounts with an annual tax band of 9% and 11% respectively for 2002/03.
But consider the Audi A2 1.2 TDI. It uses a 61bhp three-cylinder diesel engine and an array of technical modifications to achieve its target fuel consumption figure of three litres per 100km - or 94.3mpg.
There is little to distinguish the car between the A2 1.4 TDI, but the wheels are more aerodynamic and the TDI badge on the rear uses a green 'I'.
The other distinguishing feature is the steering wheel on the left - this car is only available in Audi's main diesel markets in Europe: Germany, France, Italy and Spain - and there are no plans to bring it to the UK.
Audi says development and tooling costs for the model, which features a unique engine/transmission combination, would be too high to justify right-hand drive production for Audi's only right-hand drive A2 TDI market, but the company would not rule out bringing the car to the UK if demand was sufficient. Audi says its TDI technology is the 'backbone' of the intelligent use of energy in the future.
A spokesman said: 'Only the diesel engine will allow us to further lower the average fuel consumption in the Audi range.
'The Volkswagen Group is evaluating the use of fuel cells in the longer term, and all its brands will benefit from the results of the research.'
My challenge was to validate Audi's ambitious claims for fuel consumption for the A2.
Apart from the steering wheel being on the wrong side the car is much like a standard A2. However, weight is pared down so that this 1.2-litre TDI is 135kg lighter than the UK-spec 1.4 TDI through extensive use of lighter materials for the components, while the drag co-efficient matches Honda's slippery Insight Hybrid at 0.25.
After setting off the A2 automatically defaults into 'Eco' mode and strange things start to happen. With the gearbox in automatic mode sitting at junctions or at traffic lights for more than four seconds with your foot on the brake results in the engine cutting out. Although this is all part of Audi's fuel-saving master plan it takes some faith to believe that normal service will be renewed when you release the brake.
Luckily, 'Eco' mode can be switched off to prevent the engine cutting out during parking manoeuvres, and automatically cancels when you shift gears yourself. Over five days I covered about 400 miles in the car, and if you add up the time it spent stationary without the engine running I am sure it would have a significant impact on fuel consumption - especially as it included Friday evening traffic on the A1 northbound.
Another piece of electronic wizardry - and one which necessitates the use of a sequential manual gearbox - is the trick clutch used in the A2.
If the throttle is released while on the move the electronics disengage the clutch and the car will freewheel with the engine idling at about 700-800rpm. When the throttle is opened again, the clutch is engaged once the engine has reached the required speed. The Audi A2 is unique in offering a practical premium-badge small car. Even for those drivers obsessed with image there is unlikely to be the embarrassment of 'what will the neighbours think' attitude with four-rings on the front.
Its 20-litre fuel tank might sound small - being less than half the size of those found in traditional 'superminis' - but it has a theoretical range of more than 400 miles based on average consumption of 94.3mpg. During my drive the car travelled from Peterborough to Lincolnshire before going down to Bedfordshire where it stayed overnight. The next day it headed back to Lincolnshire before going on to Yorkshire two days later.
The trip computer demanded a fuel stop at Doncaster - about 300 miles after it was brimmed - and the cost of the refill was just £12.55.
The car proved even more frugal on its trip to Hull and on the way home the remarkable figure of 2.8l/100km appeared on the fuel consumption display - we had broken the 100mpg barrier.
This provokes an important argument: Audi has produced a car that will keep up with cars such as the Toyota Prius in terms of economy, and is just as practical. It is as aerodynamic as the Honda Insight, but is even more economical and can match its impressively low CO2 emissions. In Germany the A2 1.2 TDI costs 500 Euros more than the A2 1.4 TDI, so a fair assumption would be that if the 1.2 TDI was on sale in the UK it would cost about £14,500 - £395 more than the 1.4TDI.
In simple cash terms, the A2 would be less expensive than the two hybrids - even with their generous £1,000 PowerShift grants. But, if the A2 1.2TDI were available in the UK as a company car, drivers would face benefit-in-kind tax this year at double the rate of the Insight because of the 3% diesel supplement - 18% compared to the Honda's wallet-friendly 9%.
Despite the huge progress made in diesel technology over the past five years, it is still being held back by Government policy and the British retail customers' diesel prejudice. As the A2 1.2 TDI proves, not only is this unfair, it is just plain wrong.