Can improved engineering and materials be employed in heat engines to reduce heat transfer into the environment? can they eliminate heat transfer into the environment entirely?
A heat engine creates mechanical energy as heat is transferred between regions; a warmer source and a cooler sink. Typically the source is a heated volume and the environment is the sink. The operation of the engine relies on the transfer of heat between the source and the sink. If one could super-insulate the heated side it would prevent some energy loss. But there is no way to operate a heat engine without transferring heat to the sink.
You may wish to review efficiency calculations of Carnot Engines. The theoretical maximum efficiency is a function of the temperature difference between the source and the sink.