The project, jointly launched by Southsea Cycles, Sustrans and Nick Sebley of the Portsmouth Climate Action Board, is aimed at making cargo bikes 'commonplace' in the city.
'With road transport in Portsmouth accounting for 37 per cent of our emissions and the number of cars on our roads increasing year after year, there's a real need to provide alternatives to the motor vehicle,' Mr Sebley said.
'This electric cargo bike hire scheme is aimed at people who don't have a car and have to use taxis or buses for big weekly shops or to get their kids to the pool.'
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He added that they were 'a great substitute' for families considering buying a second car and that the aim was to have them available in every community centre in the city.
The money to purchase the bike, which will be stored at the Albert Road cycle store, is being raised through a crowdfunding campaign.
'The cargo bike is perfect for the family and small businesses but we need to make them the norm rather than the exception on the streets of Portsmouth,' Kevin Watkins, the shop's co-owner, said. 'We know they are expensive to purchase but hopefully by having a low cost hire option enables more people to experience them.
Hire charges will be £2 for two hours, £4 for half a day and £9 for a whole day, for members and for people with a leisure card.
Jenni Jones, liveable cities and towns officer for Sustrans, said cargo bikes were 'a fantastic alternative to a car'
'Not only is it often quicker to travel by bike, especially at rush hour, but it's also better for the planet,' she said. 'More and more businesses are using them for last-mile deliveries too - it's a really easy way for businesses and customers to do their bit to reduce congestion and air pollution in Portsmouth.'
To find out more call Southsea Cycles on 023 9229 7549.