Of course they are, but increasing efficiency is only loosely related to that, due to Jevons Effects:

http://en.wikipedia.org/wiki/Jevons_paradox

Having more efficient (and probably phallic shaped) vehicles could reduce aggregate emissions ... or, more likely, the lower cost of driving could increase how often it's done.

Unless the newer efficiency is combined with laws that make emissions directly more costly, you're ultimately just bailing from one side of the pool to the other.

But then, if you're going to put those laws in place, then you don't need to reward any one specific technology's creation; you've already incentivized (sorry) any emission-reducing change in behavior, which is a far longer list than any bureaucrat or contest-creator can come up with. Unless, of course, you think that we're going to have separate contests for "make the average distance of worker from workplace less than one mile" or "make average driving distance less than 11k miles/person-year", etc etc etc.

Projects like the "car with ultra-high gas mileage" are instances of a very unproductive mentality when it comes to responsible environmental stewardship: it's a mentality that, stripped of misdirection, says "it's okay to be wasteful, as long as you're wasteful with efficient technology".