The government has announced that it will put £20 million into the development of new low carbon vehicles.
Road transport is responsible for 20 per cent of domestic carbon emissions in the UK.
According to transport minister Jim Fitzpatrick, getting such technology on the road is "vital".
Within five to seven years it is hoped that the cars will be owned by consumers as an alternative to vehicles emitting a high amount of CO2.
Mr Fitzpatrick stated that the environmental impact of traditional vehicles needs to be reduced.
"This fund represents an excellent opportunity for UK expertise to help shape a low carbon future for transport and I would urge companies to grasp it with both hands," he said.
Earlier this year, former US vice president Al Gore staged a series of concerts named Live Earth in order to raise awareness of the dangers of carbon emissions around the world.