Community leaders are also set to contribute to the Low Carbon Cities Programme, while funding will be made available for smaller schemes in areas including Birmingham, Liverpool and Newcastle.
Announcing the new initiative, climate change minister Joan Ruddock said: "Our cities were once at the forefront of the industrial revolution. Now they have the opportunity to lead the way again and be the driving force behind our push to a low carbon economy.
"The Low Carbon Cities Programme will illustrate that meeting the challenge of climate change and building prosperity in our cities can and should go hand in hand."
Ms Ruddock's announcement of the new scheme has come after BT recently released a new guide for small businesses that are thinking about reducing their carbon footprint.
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