Councils are set to receive £560m to help them fund green transport schemes under new government plans designed to cut transport emissions without hampering economic growth.

A new white paper released earlier today outlines how councils could bid for a share of a Local Sustainable Transport Fund to help them set up car clubs, bike schemes and other projects that increase public transport use and create jobs.

“Smaller-scale transport schemes, when carefully thought out and properly implemented, can be very high value for money, encouraging growth and reducing local carbon emissions, while also addressing public health and well-being and reducing road accidents,” the paper, entitled ‘Creating growth, cutting carbon’, said.

The government also pledged to work with the transport industry to increase the use of smart ticketing, like Oyster cards in London, so that most local public transport journeys can be made using the same technology by December 2014.

Regional and local transport minister Norman Baker said a good transport system was a cornerstone of the government’s efforts to grow the economy and reduce carbon emissions.

“Investment in local sustainable transport can deliver quick gains with both objectives, which is why, even in these difficult financial times, we are providing an unprecedented £560m to take this agenda forward,” he said. “We are clear you can have your green cake and eat it. Money invested wisely in local transport initiatives can both help the economy and cut carbon. It’s a win-win for local people and for the country as a whole.”

However, the proposals received a mixed reception from transport and environmental commentators.

Friends of the Earth welcomed the scheme, but said it would only be effective if carbon budgets were introduced, forcing all councils to take action.

Meanwhile, Tom Foulkes, director general of the Institution of Civil Engineers (ICE), warned that £560m would not be enough to patch up the hole in the transport budgets of the UK’s 300 local authorities that has resulted from the government’s cuts programme.