Australia could allow its green bank to fund carbon capture and storage (CCS) projects under a proposal announced this week.

Under previous rules, the country’s AUD10bn ($7.45bn) Clean Energy Finance Corporation (CEFC) was barred from funding both CCS and nuclear power projects.

But today the government announced that it intends to float legislation to remove the “unfair” ban on CCS.

Environment and energy minister Josh Frydenberg reportedly said that while the planned amendment “only applies to carbon capture and storage”, high-efficiency, low-emissions coal-fired and gas-fired power plants with CCS technology would be eligible for funding from CEFC.

The government has framed the move as promoting a technology-neutral and “non-ideological” approach to energy security as well as reducing carbon emissions, while the country’s Business Council has said CCS will be essential to meet emissions targets post-2030.

However, critics including the Green and Labor parties said the move amounted to taking funds from renewable power projects to support fossil fuel power, which would not reduce emissions.

In a report issued last week, public policy thinktank the Australia Institute found that the government has spent AUD1.3bn to date on CCS initiatives, such as the Carbon Capture and Storage Flagships programme established in 2009, but has produced no large-scale projects.

Australia currently hosts several CCS demonstration projects, including the CO2CRC Otway project in Western Victoria (pictured) and the International Power Carbon Capture plant in Victoria.