New cars and vans powered wholly by petrol and diesel will not be sold in the UK from 2030, Prime Minister Boris Johnson has said.
But some hybrids would still be allowed, he confirmed.
It is part of what Mr Johnson calls a "green industrial revolution" to tackle climate change and create jobs in industries such as nuclear energy.
Critics say the £4bn allocated to implement the 10-point plan is far too small for the scale of the challenge.
The total amount of new money announced in the package is a 25th of the projected £100bn cost of high-speed rail, HS2.
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Business Secretary Alok Sharma told BBC Breakfast the £4bn was part of a broader £12bn package of public investment, which "will help to bring in three times as much in terms of private sector money".
Mr Sharma, who is president of the COP26 international climate summit that the UK will host next year, said the money would also support the creation of 250,000 jobs in parts of the UK "where we want to see levelling up".
The government hopes that many of those jobs will be in northern England and in Wales, and that 60,000 will be in offshore wind.
PM's 10-point plan for 'green industrial revolution'
- Offshore wind: Produce enough offshore wind to power every home in the UK, quadrupling how much it produces to 40 gigawatts by 2030, and supporting up to 60,000 jobs.
- Hydrogen: Have five gigawatts of "low carbon" hydrogen production capacity by 2030 - for industry, transport, power and homes - and develop the first town heated by the gas by the end of the decade.
- Nuclear: Pushing nuclear power as a clean energy source and including provision for a large nuclear plant, as well as for advanced small nuclear reactors, which could support 10,000 jobs.
- Electric vehicles: Phasing out sales of new petrol and diesel cars and vans by 2030 to accelerate the transition to electric vehicles and investing in grants to help buy cars and charge point infrastructure.
- Public transport, cycling and walking: Making cycling and walking more attractive ways to travel and investing in zero-emission public transport for the future.
- Jet zero and greener maritime: Supporting research projects for zero-emission planes and ships.
- Homes and public buildings: Making homes, schools and hospitals greener, warmer and more energy efficient, including a target to install 600,000 heat pumps every year by 2028.
- Carbon capture: Developing world-leading technology to capture and store harmful emissions away from the atmosphere, with a target to remove 10 million tonnes of carbon dioxide by 2030 - equivalent to all emissions of the industrial Humber.
- Nature: Protecting and restoring the natural environment, with plans to include planting 30,000 hectares of trees a year.
- Innovation and finance: Developing cutting-edge technologies and making the City of London the global centre of green finance.