The role of the government has historically been important in technology development in market economies. Planned activities have taken many forms and complemented market based development:
Project management: As in the case of NASA for the space program and the War Production Board for the transformation of US industry during the Second World War. Adds precision and cost efficiency, some would argue. Certainly adds focus, which is a pre-requisite for precision.
Direct investment into R&D: Basic research at universities and applied R&D for particular applications needed in space or by the military.
Investment support: Loans on advantageous terms have sometimes been provided to facilitate large scale implementation of new technologies.
Early customer of new technologies and applications: In Europe publicly owned companies in telecom and utilities have been early customers willing to take some risk on new promising technologies.
Taxes: Polluting technologies have, for example, been taxed in order to speed up replacement by sustainable alternatives.
Subsidies: Clean technologies have sometimes been subsidized for the same purpose.
Laws: Old technologies and polluting technologies have been banned, as in the case of mercury, which by the 1st of June is banned in dentistry in Sweden.
In order to speed up the transformation of the transportation sector and facilitate the large scale use of sustainable technologies, governments need to apply several of the above. Certain amounts of project management will be necessary in order to make large scale investments by companies possible. Decisions about which fuels and technologies to use will be necessary, the setting of goals and the monitoring of progress is also likely to be unavoidable.
Direct investment in basic R&D at universities is done all the time. These investments will have to become more focused on fewer alternatives. In order to rapidly scale up production of new fuels (we use 83 million barrels of oil per day, globally/1000 barrels per second) we will need to make huge investments in the large scale production units for renewable fuels, or photovoltaic units, or electricity production, which is likely to require loans on advantageous terms.
Public sector organizations and the military may function as large early customers for the new technologies.
Taxes on petroleum based fuels may have to increase and subsidies of new technologies, such as bio fuel cars and trucks and hybrids may have to be put in place.
Laws, at some point I guess it will become possible or necessary to make some technologies or practices illegal.
The transformation of the transportation sector on a large scale is a too large and complex endeavor to be handled by the market on its own. The opportunities for new business growth in this sector are large and we will harvest the fruits of the present efforts if we speed up development.