Coal-fired power stations could be eligible for funding from Australia's $10 billion green bank under changes being considered by the Turnbull government.
In what would represent a significant weakening of the country's environmental financing rules, Energy Minister Josh Frydenberg confirmed the government is considering issuing a new ministerial directive to the Clean Energy Finance Corporation to put investment in so-called "clean coal" on the table.
"That is certainly one of the options we are looking at because we have recognised that we have an obligation after what we've seen in South Australia to ensure this does not happen across the country," he told the ABC.
"It's called the Clean Energy Finance Corporation not the renewable energy corporation."
Mr Frydenberg's comments drew immediate criticism from South Australian Premier Jay Weatherill, who says recent blackouts in his state are due to market failures rather than problems with renewables.
"When 'clean' has its meaning expanded to include 'coal' you realise how busted national electricity policy truly is," he said.
The government can ask the CEFC to broaden its investment mandate provided the project is still considered a low-emissions technology – defined as having 50 per cent less emissions than existing benchmark generation.
But under the government's plans the 50 per cent figure could be relaxed to allow high-efficiency, low-emissions – also known as "super-critical – coal-powered plants. By law, the only technologies the CEFC is precluded from investing in are nuclear power and carbon capture and storage.
"If you can lower emissions and stabilise the system with baseload power, that's a pretty good outcome for Australian households," Mr Frydenberg said. "The key here is about stabilising the system. We don't have the storage technology today to ensure that intermittent wind and solar can be up to 50 per cent of the market. So we actually need that coal and that gas."
The federal opposition has categorically ruled out supporting any legislative changes to relax the CEFC rules.
If the government were to change the CEFC's mandate it would still be unlikely to fund any new coal-powered stations, not least of all because high-efficiency, low-emissions plants would be extremely expensive.
Outgoing CEFC chief Oliver Yates said this month even if a coal proposal met the corporation's rules it may not be viable.
"To be honest in a market of such volatility it would be very difficult to find a private operator or commercial investor investing in coal-fired power stations in the Australian market today," he told a parliamentary committee.
"We, like a commercial investor, are very unlikely to find circumstances in which that would be an appropriate investment to expose taxpayers to."
Chief scientist Alan Finkel has also declined to back taxpayer subsidies for high-efficiency, low-emissions coal-fired power stations but has said some carbon capture and storage projects could be viable. Mr Finkel is currently conducting a review of Australia's energy market, due to report in June.
Mr Frydenberg on Sunday maintained his attack on Labor's 50 per cent renewable energy target, saying Opposition Leader Bill Shorten has fallen "under the spell of the deep Green left-wing of his party".
However the Australian Greens are concerned Labor is wavering in its commitment to renewables, under pressure from the government. Environment spokesman Adam Bandt says his party will force Labor to declare whether it will legislate its target if it wins government, by moving a Senate motion.
"The Liberals have declared war on renewables and it is time for Labor to decide which side it is on," Mr Bandt said. "The Liberals are backing coal, the Greens are backing renewables and we desperately hope Labor joins us so that the clean energy industry has confidence to invest in Australia."
Senate crossbencher Nick Xenophon said he wants the Coalition to consider an emissions intensity scheme to reduce power prices and ensure security – but that is something already ruled out by Mr Frydenberg.
He was forced to dump the option after his own backbench criticised its similarity to Labor's carbon price.
The Coalition under Tony Abbott tried to scrap the CEFC – even though it is profitable – but was blocked by a hostile Senate.
The Turnbull government subsequently announced it would keep the CEFC, which primarily invests in wind, solar and energy efficiency projects.
