The government has revealed plans for a major overhaul of the UK's transport policy designed to improve economic competitiveness, while slashing carbon emissions, including proposals for a clearer price on transport carbon emissions, greater investment on R&D and wider trialing of road pricing schemes.

The report from, the Department of Transport, entitled Towards a Sustainable Transport System, represents a response to both the recent Eddington Transport Study and the Stern Review of the Economics of Climate Change and sets out the government's strategy for delivering at least a 60 per cent cut in transport-related carbon emissions by 2050.

Transport secretary Ruth Kelly said that the report revealed how it was possible to "support people's desire for mobility" while delivering reduced carbon emissions.

"This framework document will help us deliver a transport system that… dispels the myth that as an economy we face the false choice of being 'poor and green' or 'rich and dirty'," she said.

The report, which lays the groundwork for a new Green Paper and formal consultation in the spring of 2008, broadly endorses the recommendations in the Stern Report for a price on carbon emissions, greater investment in green transport technologies and wider dissemination of information on low carbon transport options.

Specifically, the report signals support for an expansion of green taxes, such as the government's decision to band Vehicle Excise Duty based on carbon emissions; reasserts the government's plans for local road pricing schemes; pledges closer co-operation on R&D between government and private companies; and commits to increased spending on the Smarter Choices programme, which aims to promote green modes of transport such as cycling and walking.

It also outlines new plans to tackle aviation emissions that could see newly created take-off and landing slots assigned based on the environmental performance of the aircraft applying. While the Department for Transport said that it had to assess the compatibility of the plans with EU and international regulations, it is hoped that with airlines competing fiercely for slots, such a move could provide a major incentive for investment in cleaner aircraft.

The new proposals are likely to increase the long-term cost of carbon intensive travel – such as road and air transport – while creating significant incentives for investment in more carbon efficient means of transport.

The report said many of the proposals would be funded through a long-term increase in the Department for Transport's budget that will see spending on transport double in the 20 years to 2019. However, the report also reiterated the government's commitment to motorway and airport expansion and hinted that any new green schemes will take time to emerge, warning that "given the fact that transport spending takes time, investment plans up to 2013/14 are largely set and funding over the next six years will be focused on the most congested routes".

Friends of the Earth’s senior transport campaigner Tony Bosworth said that consequently many of the government's current transport policies would continue to contribute to an increase in carbon emissions.

"Some of today's proposals… are welcome, but continuing support for motorway widening and airport expansion will increase emissions," he warned. "If the government is serious about tackling transport and climate change, its policy must be coherent, not contradictory."

Rebecca Lush Bloom of the Campaign for Better Transport think tank was similarly unimpressed, arguing that the government was failing to shift its transport strategy quickly enough.

"It's billed as a discussion document, but this is a time for action, not more talking," she said. "Transport emissions are rising each year but instead of a clear sustainable action plan, we get yet another discussion document."

The report was released on the same day as the Department for Transport announced a £132m increase in funding for the UK's rail freight network, designed to remove 300,000 lorry journeys from the roads each year.

Under new plans, £80m will be invested in increasing freight capacity between Peterborough and Nuneaton while almost £43m will be spent to improve the Southampton-Nuneaton corridor, an important link between one of the UK's busiest ports and the Midlands and North West.

Transport minister Tom Harris said the investment would help limit road congestion and carbon emissions, and comes on top of the £65m the Department for Transport announced earlier this year for the rail freight network.