The government's plan to expand the remit of the Australian Renewable Energy Agency to include carbon capture and use, carbon sequestration and hydrogen has been met with suspicion in some quarters, with the Greens promising to block the legislation in the Senate.
Prime Minister Scott Morrison and Energy Minister Angus Taylor made the announcement at Bluescope Steel in Port Kembla on Thursday, pledging $1.43 billion to the renewables agency over the next 10 years, and a range of measures aimed at incentivising emissions-intensive industries to become more energy-efficient.
But director of the Australia Institute's climate and energy program, Richie Merzian, says the funding actually represents a cut to the agency's budget and asks it to produce more with less.
Since it was established in 2012, ARENA has spent $1.6 billion, meaning the new funding is less over a longer period, and its priorities will be directed to technologies including green steel production and clean hydrogen energy.
"Whenever we talk about renewables the government wants to be technology-neutral, but whenever we talk about fossil fuels the government wants to play favourites," Mr Merzian said.
"The government champions 'clean hydrogen', which is just clean coal 2.0, using the same failed technology of carbon capture and storage to support the same high-polluting fuels of coal and gas."
Mr Morrison said again on Thursday that wind and solar no longer need government subsidies but need to be integrated into the grid.
Mr Merzian said the announcement also fails to give the industry the certainty it needs to make investments.
Labor leader Anthony Albanese said the Coalition had never liked ARENA or the Clean Energy Finance Commission, which were established under the Gillard government.
"They have tried to abolish it and now they are trying to emasculate it," he told reporters in Sydney.
"The fact is that this government don't support renewables."
Greens leader Adam Bandt compared the government's announcement to taking money from the health budget and giving it to tobacco companies.
"The only way coal and gas can survive is with government support, so they are desperately seeking a handout to build what will soon be stranded assets," he said.
"The Greens will move amendments to block public money going anywhere near coal and gas. We hope Labor and the Senate crossbenchers will support us."
Crossbencher Zali Steggall said the government was moving the goal posts to include coal and gas in the definition of clean and low emissions.
"The shift allows money previously destined to fund renewable energy sources to be spent on carbon capture and storage and prolong the life of the fossil fuel industry," she said.
"The government has already spent $1.36 billion on carbon capture storage without any effective outcome. Without a carbon pricing mechanism, it is just money wasted."
Carbon Market Institute chief executive John Connor said carbon capture and storage should not be used to prolong the scheduled closure of high-emissions power generation.
"The initiatives and funding announced today are important and can enhance Australia's ability to emerge from the COVID recession with a more resilient and cleaner economy," he said.
- with AAP