Funding of up to £300 million has been announced to develop a range of new technologies, including flying taxis and freight-carrying drones.
The Government will provide £125m, which will be supported by industry co-investment of up to £175m.
Alongside this, five new transport research networks will receive a £5m cash injection for their work developing cleaner forms of fuel and other tech innovations to reduce emissions and improve air quality.
The new transport research networks will be led by: the University of Birmingham, the University of Leeds, the University of Durham, Cardiff University and University College London.
Prime Minister Boris Johnson said: “From our shopping choices to planning our holidays, we rightly want to make decisions that protect the planet.
“This £300m investment will help speed up the development of greener flights, and new ways of delivering the goods we order online.
“The UK is already recognised around the world as a centre for green tech. Now we will lengthen our lead, supporting our industry and our citizens to reduce their carbon footprint.”
News of financial support for drones in the UK comes after UPS applied for certification to begin drone deliveries in America. The company intends to use drones for commercial purposes, and await a response from the U.S. Federal Aviation Administration (FAA).
Business secretary Andrea Leadsom says that the possibilities for new ways to transport goods and services - or to get from A to B - are “endless”.
She continued: “This investment will help make the most of the exceptional talent and expertise we have in these industries, and ensure the UK leads the way internationally in designing and developing technology, from electric taxis to drones delivering parcels.”
The Future of Flight Challenge is delivered by UK Research and Innovation. Industry will initially focus on smaller aircraft and drones to ensure the suitability of the new technologies before developing them for larger passenger aircraft.
Transport secretary Grant Shapps said: “New technologies like electric and autonomous aircraft can help us tackle climate change, making journeys greener and working better for passengers.
“This funding will support the extraordinary talents of UK industry and academia, and demonstrate our country’s position as a world-leading transport innovator.”
The additional £5 million of funding has been awarded by the Engineering and Physical Sciences Research Council (EPSRC).
There will be a briefing about the competition by video conference on the morning of September 5; details of how to register for this will be released on the Innovate UK site soon.