achates.JPGInvestments in clean-burning combustion engines are picking up, as VCs bet that batteries and exotic fuels like hydrogen won’t be the end of the story for powering automobiles.

The latest is Achates Power, a San Diego, Calif. startup working on a clean diesel. Although details are thin, the company’s website promises to create “new benchmarks in fuel economy and power density.”

Constructing a new type of engine is a risky bet, relying not only on the ability of a small team of engineers to quickly work out all the kinks, but also on a market that has changed little in decades to adopt a totally new type of equipment.

However, diesel engines have a number of advantages over spark-ignition engines, the kind typically used in American passenger vehicles. Those include a greater efficiency, more torque and lower emissions of some gases, including CO2.

A design that tackled the remaining problems — including higher weight and the toxic soot diesel engines tend to produce — would have a shot at capturing a vast market. Khosla Ventures also recently bet on a diesel motor maker called EcoMotors, which has many of the same aims as Achates.

The investment in Achates was reported by VentureWire (subscription required). Besides Sequoia Capital, investing firms included Rockport Capital Partners, Interwest Partners and Madrone Capital Partners.