Private firms and local authorities have been given the chance to bid for £10 million to buy low-carbon buses.
The offer is part of a Department for Transport strategy to improve air quality in UK cities and encourage a switch to less-polluting vehicles.
The Government is also offering a share of a £3.5-million pot to provide cash for firms involved in producing biogas, which is fuel produced from waste material that can be used to power homes and vehicles.
The fund, totalling £30 million, includes more cash for the Technology Strategy Board's UK low-carbon vehicle supply chains and money to pay for a test centre in Nuneaton.
Money is also earmarked to research transport technology that increases fuel efficiency, and for a project to demonstrate how a low-carbon truck would work.
The Alternative Fuels Infrastructure Grant programme will also get more funding, installing energy hubs for vehicles which can run on a range of alternative fuels.
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