Staffing issues and a backlog of work has led to more than £13m worth of Clean Air Zone (CAZ) grants not being paid out, a council has said.
Newcastle City Council said it had given out fewer than 500 grants in the past year. The grants help drivers upgrade to less polluting vehicles.
The council said it has received nearly 2,500 applications from drivers facing daily charges of up to £50 per day.
Head of transport Pamela Holmes said it will work to "administer more" grants.
The Newcastle-Gateshead CAZ, which came into force at the end of January, enforces charges for older and more polluting vehicles travelling into restricted areas.
Those taxis and minibuses deemed to be more polluting are charged £12.50 per day and buses, coaches and HGVs are charged £50 per day. Private cars are exempt.
The grant scheme, to support drivers replacing older vehicles, was launched several weeks before the CAZ went live.
However, the Local Democracy Reporting Service reported only about 12% of applications had been processed and paid.
Ms Holmes said the figure was lower than the council had anticipated, but there had been problems with some drivers being unable to provide detailed evidence in conjunction with their application.
This council is requesting proof that drivers who use their vehicles to run a business have to enter, or pass through, the designated zone at least twice per week.
'Toing and froing'
Ms Holmes said: "We wanted to target those that needed it most because we only have a finite pot of money, and we don't want to encourage people to come through the zone when they don't need to.
"We are having a bit more toing and froing on that than we anticipated.
"We have been quite prescriptive in what people need to provide and some people just do not have the evidence..
Ms Holmes said grant funding worth about £15m had been allocated and stressed the council "would like to get it out".
It comes after the council said the zone was already improving air quality, although it has not yet published the relevant data.