Astonishingly, an unmodified Doble Model E runs clean enough to pass the strict emissions laws in California today.
Several automakers continued to experiment with steam until 1973, when the Arab oil embargo forced them to concentrate resources on the problem of fuel efficiency in existing engines. Since that time, not many manufacturers have put much research into a car powered primarily by steam. It is true that the technology poses some difficult problems, but one cannot help but be curious how efficient a steam car might be with the benefit of modern materials and computers. With today's pressure to improve automotive performance and reduce emissions, it is not unthinkable that the steam car may rise again.
Topic spotted on Interesting Thing of the Day.
Further reading: An article by Jay Leno about his Doble steamer
BMW that is working on the idea: http://www.treehugger.com/files/2005/12/bmw_developing.php