The initiative will apply to hackney carriages and private vehicles that use clean fuel, and will take effect from September 1.
The introduction of these subsidised fees aims to encourage the use of licensed vehicles which are less harmful to the environment, and means that licensing fees could be slashed by up to 50 per cent, depending on what type of fuel the vehicle uses.
As part of its ongoing work to tackle climate change, North Herts District Council is also currently considering several other environmentally-friendly options for hire vehicles, including supporting the purchase of electric or hybrid hire vehicles, installing home charging points for hire vehicles, providing electric charging points near taxi ranks and introducing 'no idling' conditions for taxi ranks.
These initiatives from the NHDC licensing team follow on from the declaration of a climate emergency by the council in May this year.
As a result of this declaration, a cabinet panel was set up to consider and investigate a range of climate and environmental issues within the community.
Councillor Gary Grindal, NHDC's executive member for environmental health, said: "As a council we are looking closely at ways that we can help to combat climate change.
"Making changes to the licensing for hire vehicles and encouraging cleaner transport on our streets is one small step that, in the long-term, will have a big impact on our local environment.
"We look forward to working with hackney carriage and private hire vehicle owners to make this happen."
To find out more about taxi licensing in North Herts go to north-herts.gov.uk/home/licensing/taxi-licensing.