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From Road and Track review of gas vs. hybrid models of cars (Camry, Civic, Escape)

Environmentalists: AT-PZEVS Scrub the Air
Our three hybrids qualify in California as AT-PZEVs, Advanced-Technology Partial Zero Emissions Vehicles. Their Honda and Toyota siblings are ULEV-2s, meeting the second phase of Ultra Low Emissions Vehicle standards. The gasoline Escape is a Low Emissions Vehicle, Phase 2.
To put these in perspective, a LEV is roughly 90 percent cleaner than a pre-emissions-controlled car. A ULEV raises this to about 96 percent. It has been noted that a ULEV literally scrubs the air of a typical urban environment. An AT-PZEV is more than 25 percent cleaner still, bringing its reduction well into the 99-percent range. By almost any measure, hybrids offer significant environmental payoff.
What about hybrid batteries? Aren't they an environmental tradeoff? At first, this was something of an unknown. But our earliest Honda Insights and Toyota Priuses are now into their sixth year (eighth, in their home market). Indications are that battery packs are lasting the life of the car; that is, they're every bit as durable as gasoline engines. What's more, the recycled value of their nickel is high, and a secondary market of reconditioned batteries is evolving.