Industry Minister Ian Macfarlane awarded the grant to HRL Limited on Monday, which he says will slash greenhouse gas emissions generated by coal-fired power stations.

The demonstration project involves building a 400-megawatt integrated drying gasification combined-cycle (IDGCC) power generation plant at the Loy Yang coal mine in Victoria's Latrobe Valley.

“HRL's clean coal technology will produce power more efficiently, at lower cost, with 30 percent lower CO2 emissions and half the water consumption of conventional brown coal power plants,” Macfarlane said.

But Brown said on Monday that the focus for reducing greenhouse emissions should instead be on introducing a price on carbon and mandating a renewable energy target of 15% by 2012.

He said the money would be better spent on solar, wind, solar-thermal and geothermal energy alternatives.

“It’s like putting $100 million into developing low-tar cigarettes. The end result will be burning brown coal with greenhouse gas pollution levels reduced to those of current black coal pollution,” Brown said.

“It is not clean coal. It is $100 million that should have gone to backing non-polluting alternatives like the 300MW solar-thermal power station at Moree or the sliver cell solar technology which Origin Energy and the Australian National University have ready to go.”

Work on HRL's power generation plant is expected to start mid-2007 and be completed by the end of 2009, creating around 300 new jobs during construction and 36 new jobs for the plant's operation, Macfarlane said.