Some HK$10 billion will be spent on phasing out old smoke-belching diesel commercial vehicles.
The costliest measure in the policy address seeks to phase out 80,000 pre- Euro and Euro I to III emission standard diesel commercial vehicles by 2019. This would help reduce overall emissions of harmful particulates and nitrogen oxides by 80 and 30 percent, respectively.
Newly registered diesel vehicles will have a working life of just 15 years.
Drivers of old vehicles are in line for subsidies of between 18 and 30 percent to buy new ones.
Drivers can also elect to receive a subsidy to retire the vehicles.
The new scheme is expected to be implemented at the beginning of next year. It is expected to result in the phasing out of pre-Euro and Euro I vehicles in 2016, their Euro II counterparts in 2017 and finally Euro III transport in 2019.
Lok Ma Chau China-Hong Kong Freight Association chairman Stanley Chiang Chi-wai said he doubts drivers are getting a good deal.
"The scheme means drivers will have to pay an extra HK$790,000 for a new vehicle even if their Euro III vehicle is less than 10 years old," he said.
Meanwhile, ocean-going vessels will be required to switch to diesel in which the sulfur content is less than 0.5 percent.
The cost would entail about HK$10,000 to HK$20,000 more each sailing.
Also, with the fish trawling ban imposed in Hong Kong, the government will set up a HK$500 million development fund to compensate fishermen.