Fortune Article

While new drilling technologies and oil reserves are taking the pressure off gasoline prices and peak production issues, demand for alternative fuel vehicles continues to grow. Environmental concerns and government regulations have made finding substitutes for the conventional gasoline-powered internal combustion engine a priority for both manufacturers and consumers. The federal government is demanding an average of 54.5 miles per gallon by 2025 -- a challenging target for traditional technologies. California is requiring increasing numbers of zero-emission or plug-in hybrid cars. But what direction to go? Depending on considerations like usage patterns, efficiency, and cost, there are at least a dozen substitutes for gasoline as motor fuel, including electricity, natural gas, vegetable oil, and even sunlight. Even the most promising ones like natural gas, as John O'Dell of Edmunds.com points out, are handicapped by the same thing: a lack of infrastructure for refueling or recharging. With that in mind, here's a look at the alternatives that are available today, along with some tentative predictions about their prospects for the future.

1. Gas-electric hybrids

The first hybrid models, the Honda Insight and Toyota Prius (above) both reached the U.S. in 1999, and today some 40 gas-electric models are for sale. Using electricity to partially power vehicles has significant fuel economy and emissions benefits. Gas-electric hybrids use a battery to provide power at low speeds, or to handle stop/start. The battery is charged through regenerative braking and by the internal combustion engine, and it need not be plugged in. While Toyota's (TM) popular Prius remains the best-selling hybrid -- more than 200,000 will be sold in 2013 -- their numbers now include supercars made by Ferrari and Porsche. The Porsche Panamera S hybrid has a 3.0 liter V6 engine and still gets 22 mpg city/30 mpg highway.

2. Plug-in hybrids

Plug-in hybrids or PHEVS are similar to gas-electric hybrids but have larger batteries that can propel the car limited distances on electricity alone, thus generating zero emissions. The batteries can then be recharged by being plugged into an electric power source. The cost of the larger batteries carries a hefty price premium -- an additional $7,000 for the plug-in version of the Prius before a recent price cut -- and only four PHEV models are currently available in the U.S. Sales of the best-known model, General Motors' (GM) range-assisted Chevrolet Volt (above), have been running at less than 2,000 a month.

3. Electrics

Electric vehicles (EVs) run gasoline-free; they use a battery to store the electric energy that powers the motor. Acceptance of pure EVs has been slowly growing since they were introduced to the mass market three years ago, with increased demand both at the low end of the market, following price cuts on the $30,000 Nissan Leaf (above), and at the top with the surprising success of the $80,000 Tesla Model S. Range anxiety continues to be a deterrent to greater buyer interest, as does the limited number of charging stations outside major cities. Eleven different EV models from mainstream manufacturers were on sale in 2013, among them Mercedes's Smart ForTwo Electric, which claims a range of 68 miles per charge and sells for $20,740 before incentives and discounts.

4. Ethanol and flex fuel

Thanks to the government's 2007 Renewable Fuels mandate requiring a certain amount of liquids made from renewable sources to be added to gasoline, ethanol made from corn has found its way into the nation's fuel supply. Some 84 car and truck models carry the designation "flex fuel," meaning they can run on mixtures that contain up to 85% ethanol. Lately, a backlash against ethanol use has developed as realization grows that ethanol contains less energy than gasoline, resulting in fewer miles per gallon, and takes a lot of energy to produce, which can lead to increased emissions of carbon dioxide. Opponents also argue that ethanol is unethical, because it diverts 40% of the corn grown from food supplies and drives up its cost.

5. Biodiesel

Manufactured from vegetable oil, animal fats, or recycled restaurant grease, biodiesel raises the octane rating of conventional diesel fuel and burns more cleanly, in addition to being non-toxic and biodegradable. Biodiesel can be used in its pure form but is most often found in a blend with 80% conventional diesel fuel. Government regulations required 1.3 billion gallons of biodiesel to be produced in 2013. Biodiesel can be used in most vehicles that have conventional diesel engines without modification, among them Ford's (F) F-250 Super Duty pickup.

6. Propane

Ease of maintenance and reduced emissions have spurred the use of propane in light-vehicle fleets (police cars and school buses) as well as in heavy-duty trucks with such familiar nameplates as Kenworth and Peterbilt. More than 270,000 propane vehicles are now on the road. Also known as liquefied petroleum gas (LPG), propane is produced as a by-product of natural gas processing and crude oil refining. Despite a high octane rating and clean burning properties, propane costs about one-third less than gasoline. But it must be stored in a pressurized tank, and the propane refueling infrastructure is limited.

7. Liquefied and compressed natural gas

Natural gas vehicles, operating on either liquefied or compressed gas, produce mileage similar to gasoline but burn more cleanly. The Energy Department estimates that some 112,000 vehicles powered by natural gas are currently in operation. Most are medium and heavy-duty trucks, but Honda (HMC) has offered a natural gas Civic (above) since 1998. It is slower than a gasoline one, has a limited range and refueling network, and costs thousands of dollars more. In its favor are cheaper prices for a fuel that is produced domestically and lower emissions.

8. Fuel cells

Like a fictional El Dorado glimmering in the distance, affordable hydrogen-powered fuel cells have been an elusive goal for a generation of researchers. Hydrogen is appealing because it can be produced domestically and burns cleanly, and fuel cell vehicles are two or three times more efficient than gasoline-powered ones. What's held them back has been the cost of building the cells themselves and a network of fueling stations to distribute the hydrogen. As a result, small fleets of FCVs are being tested by manufacturers, but no fuel cell vehicles have reached the consumer market. Two notable models in limited tests: the Honda FCX Clarity, and the 2012 Mercedes-Benz F-cell (above), which gets 52 miles per kg of hydrogen (roughly equivalent to a gallon of gasoline).

9. Solar

In October, a car powered by the sun drove almost 2,000 miles across the Australian outback at an average speed of 56 miles per hour. Sounds perfect -- solar power is free and clean -- but there are a few caveats: The Dutch-engineered car (above) just carried a driver, travelled only during daylight hours, and used a small battery to get rolling. Is this the future? Probably not. The photovoltaic cells that capture the sunlight and convert it to electricity are expensive to produce, and the car is made from pricey lightweight materials like titanium composites. However, solar-powered vehicles might find limited use as commuter cars where they had an opportunity to recharge during the day, and some are used today as golf carts.

10. Steam

Between 1899 and 1905, the Stanley Steamer (above) outsold all gasoline-powered cars in the U.S. Steam engines had been in development since the early 18th century; gasoline was a baby by comparison. But internal combustion engines caught up quickly after they got self-starters, and steamers were doomed by having to carry around heavy boilers. Steam-powered vehicles still get attention because they can burn fuel like garbage, wood, and crude oil -- General Motors introduced two experimental ones in 1969 -- but they are relatively inefficient and very weighty. In 2009, a modern steam car broke the speed record set by a Stanley Steamer in 1906 when it exceeded 130 miles per hour, but it weighed more than three tons and contained more than two miles of steam tubing.