The plans form part of the Department for Transport’s wider strategy to encourage a radical shift to low carbon transport and improve air quality in our cities.

As part of the funding, local authorities and bus operators will have the opportunity to bid for an additional £10 million to buy new low carbon buses.  This is an extension to the existing scheme which is delivering around 350 low carbon buses in England. 

There will also be a £3.5 million pot to support the increased use of biogas - a sustainable renewable fuel produced from waste material.  Biogas can be used in the same way as conventional fossil fuels, powering vehicles and homes. 

The Government believes that generating fuel from waste has the potential to provide significant environmental benefits and will be crucial in helping the UK meet its tough carbon reduction targets.

Transport Secretary Andrew Adonis said:

“I want Britain to be at the forefront of ultra-low carbon technology, blazing a trail for environmentally-friendly transportation.

“These measures will not only help us to reduce emissions but also provide a sustainable and economically viable alternative to traditional carbon-based transport. 

“I am confident that we are on the right track to deliver a greener and cleaner industry that meets the needs of society as a whole whilst addressing the environmental challenges we face.”

Pat McFadden said:

“Increasing the funds for developing the UK’s supply chains for low and ultra low carbon vehicles is further proof of the commitment we have across Government to address the lowcarbon challenge.

“Car manufacturers such as Toyota and Nissan have already announced that they will be producing low carbon vehicles in the UK and we hope Vauxhall will follow.  This funding will also help consumers and operators recognise low carbon vehicles as a viable, affordable alternative when buying a vehicle and drive Britain closer to our goal of being the number one destination in the world to manufacture low carbon technologies.”

Also included in the fund is:

• an increase in funding for the Technology Strategy Board’s low-carbon vehicle supply networks competition. This aims to develop UK supply chains for low and ultra-low carbon vehicles;
• a new test centre in Nuneaton, to develop and test future intelligent transport technologies. It is hoped that these technologies could increase fuel efficiency and improve congestion;
• a low carbon truck demonstration project, aiming to demonstrate the benefits of lower carbon heavy goods vehicles over a full range of operations; and 
• further funding for the Alternative Fuels Infrastructure Grant programme, which supports the installation of refuelling and recharging stations for a range of alternative fuels.

Notes to editors

• Last year's Pre-Budget Report included a commitment to provide - through the Strategic Investment Fund (SIF) - £30m funding for low carbon vehicle transport projects.

Projects include:

• £5m for the extension of the Technology Strategy Board's (TSB) Low Carbon Vehicle Innovation Platform competition announced in December 2009, focused on developing UK supply chains for low and ultra low carbon vehicles.   The new funding will increase the project budget from £19m to £24m.    
• £3.7m to develop a telematics facility at MIRA - to test, develop and demonstrate new intelligent transport technologies and become a self-sustaining test centre.  These technologies have the potential to reduce carbon emissions in real-world applications at low cost. 
• £3.5m for a biogas demonstration project, subject to a feasibility study.  The project will fund a ‘mobile clean up facility’ (to upgrade raw biogas into biomethane of a quality that can be used as a transport fuel or injected into the gas grid) and fund the additional costs of vehicles using biogas.
• £3.5m for a low carbon truck demonstration project, also subject to a feasibility study.  The project will fund the demonstration of low carbon heavy good vehicles (HGVs), for example hybrids that have the potential for significant carbon savings and significant fuel savings for freight operators, yet have currently limited uptake because these benefits over a range of freight operations are not widely known or demonstrated.
• £1m of funding for the Alternative Fuel Investment Grant Programme (AFIGP).  This will allow two additional rounds of project funding in 2010/11.  The programme supports the installation of refuelling or recharging stations for a range of alternative fuels – natural gas / biogas, hydrogen and electricity.  The scheme is aimed at a wide range of technologies and is available for small projects nationwide.  It is additional to the Government's Plugged in Places programme.
• £10m for the Green Bus Fund Competition 2.  This would be run along very similar lines to the successful 2009 Green Bus Fund, which is delivering around 350 low carbon buses in England. This will require State aid clearance.
• an additional £3m support reserved for the Office for Low Emission Vehicles Plug-In Car grant programme.
• Advice on how anaerobic digestion, used to produce biogas, can help tackle climate change and produce renewable energy has been published today by Defra. ‘Accelerating the Uptake of Anaerobic Digestion in England: an Implementation Plan’ sets out actions to help businesses, local authorities, farmers and food producers to adopt the technology, which transforms organic material like manure and waste food into fuel.