FEDERAL and state governments have put $90 million on the table for new brown coal technology projects in the Latrobe Valley, including potential export schemes.
The fund will receive $45 million from each government and pay for new projects, such as drying brown coal for export, converting to fuel and fertiliser, and cutting emissions from coal-fired electricity generation.
It comes just a week after the federal government dumped a $100 million grant for a new coal-fuelled power plant in the Latrobe Valley after the proponent failed to meet key conditions.
Yesterday's announcement was criticised by conservationists, who said both governments were throwing good money after bad in pursuing brown coal development.
Federal Energy Minister Martin Ferguson told The Age the grants would be given out on a competitive basis, sparking a ''technology race''.
He said Gippsland had more than 20 per cent of the world's low-rank coal reserves.
It was important to economically harness the resource in new, low-emissions ways.
''We are looking for the best technology, and out of that I think we will create a breakthrough that means a terrific opportunity to use this vast resource,'' he said.
Environment Victoria's Mark Wakeham said that just last week the federal government finally conceded that the HRL coal-fired power station had failed to meet all its targets, and withdrew the $100 million federal grant.
''And yet now both governments are proposing a new $90 million fund which will once again raise false hopes in the Latrobe Valley and waste taxpayers' money and valuable time in the fight to halt climate change,'' he said.