Since China promised to “reach the carbon peak in 2030 and carbon neutrality in 2060” at the 75th United Nations General Assembly in September 2020, the Paris Agreement signed by major countries and regions in 2016 has controlled the rise of global temperature and accelerated carbon neutrality policies and actions. As the leading power of a large number of road and non-road mobile machinery and national defense equipment, internal combustion engine (ICE) not only undertakes the important mission of energy saving and emission reduction in the near and medium term, but also faces great challenges and important opportunities on how to achieve carbon neutrality in the future. Based on the analysis of carbon neutrality policies and actions in major European countries, America, Japan and China, this paper puts forward two technical paths and their feasibility of low-carbon and zero carbon of ICE in the near and medium term, as well as the key technologies to be solved for zero carbon ICE fueled by biomass fuel, green hydrogen, green ammonia and green electricity synthesized fuel (e-fuel). It aims to explore the road of sustainable development for the future of ICE. Existing research shows that ICE, as an efficient and high power density thermal engine for converting chemical energy into mechanical energy, still has a large room for energy saving through the combination of electrification and intelligent technologies. Compared with fuel cell power, ICE has a more complete industrial chain, higher technical maturity and lower cost. By utilizing zero carbon fuels, ICE can still be widely used in large-scale power equipment such as heavy trucks, construction machinery, ships and aviation, so as to promote the early realization of carbon peak and carbon neutrality in China’s energy and transportation field.