Roads Minister Jesse Norman has called on UK businesses to lead research into low emission technology for lorries, as well as cars and vans.
The projects could see materials which make vehicles lighter, or improve the efficiency of engines or batteries.
Roads Minister Jesse Norman said: "We have made important progress in lowering emissions and are always looking at further ways of improving air quality.
"Lorries cause a third of the UK’s transport CO₂ emissions and simple new technologies can have the greatest impact in reducing the harmful pollutants of freight.
"This funding will give UK companies the chance to lead the world in developing important innovations to improve air quality across the country."
The governmenti s continuing to find innovative ways of improving air quality across the country and the funding comes just a month after the Air quality plan.
he competition has been developed with Innovate UK and will help the government achieve its ambition to be a global leader in electric vehicle technology and to see all new vehicles emission free by 2040.
Simon Edmonds, Director Manufacturing and Materials at Innovate UK, said: "We welcome this significant further investment in zero emission research and development funding, in particular its focus on freight and commercial vehicles as this is a major opportunity for UK companies to drive forward innovations."
The first of the projects in the government’s low emission freight and logistics trial, announced earlier this year, are now using new electric and hydrogen dual-fuel vehicles on our roads. By mid-2018, more than 300 of these low emission vehicles will be on UK roads.
Since 2010, the Office for Low Emission Vehicles and Innovate UK have invested more than £300 million in research and development, targeted at improving technologies for ultra low emission vehicles (ULEVs), which has unlocked a further £200 million of private sector investment. The number of ultra low emission vehicles on our roads is at record levels with more than 118,000 registered to date and more than 11,000 registered between April and June this year.