Conventional wisdom for American automobiles is being turned on its head by the combination of high fuel prices, concern about greenhouse gas emissions, and a looming recession. The auto industry is responding by taking a page out of Europe’s playbook—where smaller cars and smaller engines rule, but driving fun has not been banished from the equation. Smaller yet powerful engines are possible due to advances in supercharging, turbocharging, and direct injection.

Supercharging and turbocharging are related technologies—both are concerned with compressing more air into the combustion chamber of the engine. This increases the power when air and fuel combine with a spark, but also increases efficiency of the combustion process. What’s the difference between the two? Supercharging uses a belt to compress the air while a turbocharger uses exhaust gases from the engine to power the compression.

Supercharging has been around for decades. A decade ago, Buick offered supercharged models to deliver V-8 like performance in its V-6-powered flagship models. Supercharging in the current Jaguar XF V-8 boosts the car’s performance to the level of a V-10 or V12 engines, while maintaining a modicum of fuel economy. European automakers are now looking at adding giving the supercharging treatment to small displacement engines in the 1.2 to 1.5-liter range.

Turbocharging is finding a much broader application as durability concerns have been addressed and new variable-vane turbochargers deliver smoother power for the driver—ending the complaints of the past about “turbo lag”. Volkswagen and Renault are leading the way, but Ford, General Motors and FIAT are not far behind.