It is keen to work with motor manufacturers on introducing taxis with lower fuel consumption and CO2 emissions.
The funding, provided jointly by Transport for London (TfL) and Cenex, the UK's National Centre of Excellence for Low Carbon and Fuel Cell Technologies, will be used to introduce a low carbon taxi demonstration project in London.
The Public Carriages Office has issued a contract notice to the Official Journal of the European Union (OJEU) inviting motor manufacturers to register their interest in supplying low carbon taxis.
Suitable low carbon technologies might include stop-start or 'micro-hybrid' technology where the engine cuts out automatically when the vehicle stops, and starts up again when the accelerator is pressed.
This technology is already being used by many of the major car manufacturers as a means of reducing carbon dioxide emissions.
London's taxis spend about 40 per cent of their time waiting at taxi ranks, at traffic signals, or waiting to pick up or drop off passengers. Under these conditions, a micro-hybrid taxi is expected to reduce fuel consumption and carbon dioxide and other emissions by 10 to 15 per cent, as well as producing less noise and fewer harmful air pollutants.
Johnson said: "As well as significantly cutting carbon dioxide emissions, we're looking for taxis that are quieter and produce fewer air pollutants, which will be good news for anyone who spends time in London.
David Brown, managing director, surface transport, at TfL, said: "With over 21,000 taxis on London's roads, making our taxi fleet more fuel efficient will lead to substantial carbon dioxide savings and help tackle climate change."
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