CO2 is not the problem.
As others have pointed out, the main problem faced by Old World cities like London, Manchester, Rome and Naples isn't the CO2 as such: it's the *congestion*.
CO2 emissions and other pollutants can -- and, in general, are -- being solved (albeit slowly) by scientists. However, the problem of providing a door-to-door transportation system is still proving extremely difficult to solve. We've tried feet, but humans cannot carry much. The motive power of the automobile may eventually switch to electricity, hydrogen or unobtainium, but it doesn't solve the congestion problem.
Even horses fail the congestion test. The congestion the humble horse and cart of old managed to create in London during the mid-1800s proved great enough to trigger the construction of the first stretch of what is now London's Underground rail network.
Traditional light rail is a dead-end technology: adding yet another road-using device to the infrastructure isn't going to solve congestion issues on, say, the A205 South Circular or the A20 through New Cross and Lewisham. The key problems are ridiculously narrow roads given their traffic, and the chronic lack of investment in the infrastructure. Squeezing trams onto the same roads will only make the congestion worse: light rail isn't designed for commuting; it's too slow for that. It's intended for _local_ users. (Croydon Tramlink's own metrics are based around reducing car journeys to and from *Croydon*, not cutting through traffic on the A23 between Brighton and London.)
It isn't just the roads either: if the trains in the South-East of England were any bloody good, we might consider using them. Unfortunately -- and ASI members, please note -- the *private* companies that built the original rail network around here during the 1800s were such bitter rivals that they frequently duplicated routes out of sheer spite, while constructing their core network as cheaply as possible. The result of which is a dearth of grade-separated junctions and the ludicrous situation of a 20MPH speed limit for trains between London Bridge, Cannon Street, Blackfriars (Thameslink), Waterloo East and Charing Cross.
People would be happy to use alternatives, if viable alternatives existed. As it is, London's rail network is already so saturated that it deliberately tries to price people *off* it, to *reduce* demand during peak hours -- exactly the hours when most of the region's population is *contractually obliged* to come into work! (No, my tree-hugging friends, we don't commute out of spite. We do it because the people we work for *require* us to be in that office by 0900 hrs!)
Cycling into the City from Dartford or Gravesend in a howling gale isn't really an option: the advantage of trains is that we can actually get some work done while travelling (in theory; in practice you can barely find space to stand). You can't do that on a bike, so it's an hour or two wasted. In each direction. And you're utterly *knackered* by the time you reach your destination.
One of the lesser-known advantages of a service industry is that it doesn't need to be close to anything other than good communications links and decent transport. London -- especially south-east London -- is headed for a massive wake-up call soon. The BBC is already relocating a number of operations to Manchester. They're not the first to move away, and I doubt they'll be the last.