A method and apparatus for the oxy-combustion of fuel in an internal combustion engine (ICE) used to power a vehicle includes one or more air separation devices that separate oxygen from the atmospheric air to mix with the fuel and return the nitrogen to the atmosphere and converts the free energy available in the form of waste heat from the engine exhaust gas stream and coolant system on board the vehicle into electrical and/or mechanical energy, which energy is used to separate oxygen from air to eliminate or significantly reduce the volume of nitrogen entering the ICE's combustion chamber, and thereby reduce NOx pollutants released into the atmosphere and increase the concentration of CO2 in the engine exhaust stream for capture using an integrated system to compress and increase the density of the captured CO2 for temporary on-board storage until it is discharged at a recovery station, e.g., during vehicle refueling.