First off, let's remember that engines are really just self-propelled air pumps.
Secondly: The ideal air-fuel ratio is 14.7:1, which means that even with the steady increase in efficiency with engines, in general you're still going to be using roughly the same amount of fuel in relation to how much air is going into the engine. More air means more fuel can be burned, giving you more power.
Sure, you can design an engine to safely run quite a lean mix under certain driving conditions (20:1 isn't unheard of), but that increases combustion temperature a significant amount, causing excess NOx emissions to be generated, which is bad.
Direct injection petrol engines get around this by using stratified charge injection to reduce the amount of fuel injected in low/partial throttle without causing an excess of NOx, but they can struggle to properly mix the air and fuel when you're going full throttle, thus limiting power.
You can also make engines more efficient and/or powerful by raising compression ratio, improving head flow, VVT/lift, slapping on a turbocharger, etc, but you're still going to want that magical 14.7:1 AFR, because that's when you get very little CO, NOx, and hydrocarbon emissions, all of which is important in reducing smog and preventing divorced husbands from killing themselves in the garage.
On the other hand, clean combustion means you're getting the most possible CO2 from the engine; this kills hippies and makes polar bears cry.
Because CO2 is a product of clean combustion, you can only reduce the CO2 output of a car by limiting the amount of air it can pump. I don't know much about the actual regulated emission testing side of things, but I'd hazard a guess that they mostly test engines under 'normal' driving conditions, not full load at full throttle, so a 2.0L engine at 'normal' load/RPM should put out less CO2 than a 5.7L V8 does under similar conditions.
This is why small engines make environmentalists happy.