VW's already developing diesel hybrids. They see it as less important because their regular TDi's already get similar gas mileage to hybrids anyway, and their super mileage TDi's (the Polo and Lupo) get Insight-type gas mileage from a 4-seater, again with no need for hybrid tech.

CO2 is produced in accordance with how much fuel you consume. If you're getting 50mpg with a diesel, you're still only putting out 50% as much CO2 as a gasoline car getting 25mpg, and the same as a hybrid getting 50mpg on gas.

Diesels actually have a big advantage on the CO2 front because a lot of places already sell B20 (20% biodiesel) which means you'll only be putting out 80% as much net CO2. On B100 biodiesel, you're putting out zero net CO2 because it was produced as a lifecycle from plants and organisms that removed CO2 from the air. As the cost of petrolium continues to increase, you'll see more and more biodiesel and in higher concentrations, thus reducing CO2. There's no equivilent fuel substitute for gasoline cars since they can't run more than 10% ethanol without being specifically tuned to run higher concentrations.