Here is my real-world, short-term response that would be enacted tomorrow if I were king for a day:
What if, beginning Jan 1, 2008, the federal governement imposed a $4000 surcharge on all new vehicles sold in the U.S. that did not have an alternative fuel source engine like hybrid or fuel cell technology? Companies that have not been focusing on alternative fuels would ramp up their efforts to do so. Companies that already have projects in house would be encouraged to invest more in those technologies to move forward things like hybrid technology, fuel cell technologies, solar technologies, etc.
This would level the playing field for all manufacturers, give incentive to those manufacturers to begin working on alternative fuel or hybrid engines for all vehicles NOW rather than at some arbitrary point in the future, would help satisfy environmentalists, would create a market-based demand for the products since nobody would want to pay an extra $4k for a car without alternative fuel engine, would put money back in the pockets of consumers in two ways: Lower or at least help stabilize the oil price and significantly reduce the amount of gas needed to go the same distance as before; it may also encourage oil and auto companies to jointly invest in alternative fuel technologies from which both could profit; finally, it would reduce the amount of $$$ put into the pockets of anti-U.S. nations which now control the oil supply and thus relegate them to the sidelines reducing the potential for future "oil supply" wars.
Rather than continuing to focus on a MPG standard, companies would be encouraged to come up with alternatives that make MPG irrelavant.
THOUGHTS?