A new blueprint for clean fuels claims hybrid technology, already available in the petrol/electric Toyota Prius and Honda Insight, provides the vital stepping stone to adopting fuel cell vehicles in the long term.
Pathways to Future Vehicles, produced by the Energy Saving Trust, also throws a question mark over long-term demand for liquefied petroleum gas (LPG).
The report suggests that clean petrol and diesel engine technology, particularly combined with hybrid systems, will achieve greater environmental benefits in the long term.
A spokesman for the Energy Saving Trust said the report should not discourage firms from investing in LPG today as the organisation still stood by its rallying call for fleets to adopt the fuel.
The report says: 'Even the latest technology LPG cars will only offer a limited margin in terms of NOx emissions compared with Euro IV petrol cars. The substantial air quality benefits offered by LPG cars 10 years ago appear increasingly marginal.'
In its place will come hybrid vehicles, the report suggests, offering potential emission and fuel savings of 50% compared to current technology.
Eoin Lees, chief executive of the EST, said: 'LPG is a good option available right now, but our report looks at the market signals needed to encourage a longer-term move to low - and ultimately zero - carbon transport economy in the future. In the long-term, to 2020, hydrogen fuel cell technology offers the best solution.'
Manufacturers have signed up to a voluntary agreement to cut average vehicle emissions to 140g/km by 2008.
But the report takes the programme a step further, focusing on a target of 10% of vehicle sales emitting less than 100g/km of CO2 by 2010.
To achieve this, the Government would have to invest an extra £300 million in development and grants programmes, on top of £35 million a year it already invests in the EST.