The UK will ban sales of new petrol and diesel cars from 2030, Prime Minister Boris Johnson said.
Under a 10-point plan for a “green industrial revolution”, Mr Johnson unveiled a £12 billion ($15.9bn) budget for the environment as he tries to reset his premiership after the turmoil in Downing Street last week.
The plan included further investment in nuclear power, wind energy, hydrogen and carbon capture and storage.
Critics said the plan did not go far enough, while a motoring industry executive said the ban on sales of new petrol and diesel cars “risks turning driving into a privilege afforded only to the wealthy”.
The ban on new petrol and diesel cars is being brought forward from 2040.
Mr Johnson said the green plan will create 250,000 jobs and help the country meet its legally binding pledge to become carbon neutral by 2050.
He said: “Although this year has taken a very different path to the one we expected, I haven't lost sight of our ambitious plans to level up across the country.
“My 10-point plan will create, support and protect hundreds of thousands of green jobs, while making strides towards net zero by 2050.
“Our green industrial revolution will be powered by the wind turbines of Scotland and the north-east, propelled by the electric vehicles made in the Midlands and advanced by the latest technologies developed in Wales, so we can look ahead to a more prosperous, greener future.”
The plans contain broader aims to make Britain a world leader in carbon-capture technology and the City of London a "global centre of green finance".
The government will also spend £525 million on developing large and smaller-scale nuclear plants, and new advanced modular reactors, in a move likely to anger environmentalists.
Mr Johnson is hoping the ambitious proposals can help deliver on pledges to reduce Britain's stark regional inequality and repair some of the economic damage done by the Covid-19 pandemic.
They are also seen as an opportunity for the government to align with the priorities of US president-elect Joe Biden ahead of a crucial climate summit to be held in Glasgow next year.
The 2030 ban on petrol and diesel cars and vans follows what Downing Street called "extensive consultation with car manufacturers and sellers".
Mr Johnson said in February that his government would aim to end such sales by 2035, but will now only allow the sale of hybrid vehicles until that year.
Under the new plans, it will invest £1.3bn on expanding electric vehicle charging points in homes and streets across England, and make £582m available in grants for people to buy zero or ultra-low emission vehicles.
Some in the motoring industry expressed alarm over the ban.
Ian Howells, senior vice-president of Honda Europe, said: “An approach that relies on expensive electric cars risks turning driving into a privilege afforded only to the wealthy”.
AA president Edmund King said the 2030 date was “incredibly ambitious”.
He said: “One of the biggest challenges will be for car makers to change more than 100 years of combustion engine production to cater for an electric future within a decade.”
However, Scottish Power chief executive Keith Anderson said the proposal was a “brilliant start”.
Mr Anderson said introducing more charging points would “give people the confidence” to buy an electric vehicle.
He said there would be minimal increases in power bills under the plan.
He told BBC's Radio 4 Today programme: "The numbers sound huge, they always sound massive, but the cost gets spread over 30, 40 or 50 years, so the impact on the bill is absolutely minimised."
Greenpeace welcomed the package and the "landmark announcement" on vehicles.
The environmental group called the move "a historic turning point on climate action" that could "put the government back on track to meeting its climate commitments".
But, Greenpeace said: "It's a shame the prime minister remains fixated on other speculative solutions, such as nuclear and hydrogen from fossil fuels, that will not be taking us to zero emissions anytime soon, if ever.”
Nearly £500m will be spent in the next four years on the development and production of electric vehicle batteries.
Under proposals to reduce carbon-emitting gas use, another £500m is earmarked to trial the use of hydrogen in homes for heating and cooking.
The government is aiming to build a so-called "hydrogen neighbourhood" within three years, a "hydrogen village" by 2025, and a town of tens of thousands of homes using the gas by the end of the decade.
It is also about to invest £1bn in a grant scheme launched in September, and now to be extended for a year, to make homes and public buildings more energy efficient.
Jonathon Porritt, co-founder of Forum for the Future, said some parts of the plan lacked sufficient detail.
He said: “There’s a lot of stuff in there I’d consider a wish list rather than a real commitment.”
The government, Mr Porritt said, had reversed a previous pledge to invest £9bn in green housing stock, with only £2bn outlined in the proposal.
However, Business Secretary Alok Sharma told Sky News: “What you’re seeing here is a down payment. There will be further announcements in the coming months.”
The PM’s 10-point plan
Offshore wind Harness enough offshore wind to power every home in the UK, quadrupling production to 40 gigawatts by 2030, and supporting up to 60,000 jobs
Hydrogen Generate five gigawatts of "low carbon" hydrogen production capacity by 2030 and develop the first town heated by the gas by the end of the decade
- Nuclear Push nuclear power as a clean energy source, supporting 10,000 jobs, and develop the next generation of advanced small reactors
- Electric cars Speed up the transition to electric vehicles, and transform infrastructure to support electric vehicles
- Public transport, cycling and walking Make cycling and walking more attractive and invest in zero-emission public transport
- Jet zero and greener maritime Support research projects for zero-emission aircraft and ships
- Homes and public buildings Make buildings greener, warmer and more energy efficient, and install 60,000 heat pumps every year by 2028
- Carbon capture Support technology to capture and store harmful emissions away from the atmosphere, with a target to remove 10 million tonnes of carbon dioxide by 2030
- Nature Protect and restore the natural environment, with plans to plant 30,000 hectares of trees every year
- Innovation and finance Develop technology needed for the plan, while making the City of London the "global centre of green finance"