Taxpayers could subsidise new coal power plants as the Turnbull government pursues a "technology agnostic" approach to electricity generation.
Prime Minister Malcolm Turnbull says he can't see why the Clean Energy Finance Corporation shouldn't look at funding high-efficiency low-emissions power plants.
"A project that did involve coal, that had the effect of reducing emissions would be, or should be eligible for finance," he told reporters in Melbourne on Thursday.
"But whether it stacked up, whether it had the appropriate private sector backing is another matter."
Deputy Prime Minister Barnaby Joyce says as a major coal exporter, it's "morally prudent" for Australia to be at the forefront of technology around burning the fossil fuel.
Earlier, the energy minister said the government was looking at all options.
"But I do point out it's called the Clean Energy Finance Corporation not the Renewable Energy Finance Corporation," Josh Frydenberg told ABC radio.
"That's an important distinction."
Replacing Australia's coal-fired power stations with new ultra-supercritical technology would cost up to $62 billion, a University of Melbourne analysis found.
Mr Turnbull has pledged to make energy policy a priority this year with the aim of achieving affordable, secure and reliable power.
He sees it as a problem that energy policy has become an ideological battlefield.
"We've got to strip Labor's left-wing ideology away from this issue and focus on outcomes," the prime minister said.
The government says its 2020 renewable energy target won't be changing but coal will continue to play an important role, especially in securing baseload power.
Mr Turnbull said it was also vital to get access to more gas, criticising the NSW and Victorian governments for putting developments on hold.
Labor says even energy companies are saying no-one wants to invest in new coal-fired generation and Mr Turnbull's pursuit of them shows he's stuck in the past.
"This is a grossly irresponsible proposal, economically and environmentally," opposition energy spokesman Mark Butler said.
"While coal will remain part of Australian's energy mix for the foreseeable future, it's clear investment in new coal power stations is ridiculously expensive and will push up power prices and push up pollution."
Environmental groups say talk of new coal-fired power stations is a dangerous fantasy that gives false hope to communities who need help dealing with the transition away from coal.
"Clean coal does not exist," Australian Conservation Foundation head Kelly O'Shanassy said.
"To consider using the Clean Energy Finance Corporation to fund new coal fired power plants would be a deceitful misuse of the language and public money."
The government has also asked the CEFC and the Australian Renewable Energy Agency to prioritise funding for large-scale storage projects, including pumped hydro.
The Australian Energy Council, representing major electricity companies, says no one in the industry plans to build new coal-fired power stations.
"While lower emissions coal-fired power stations could be considered theoretically, in practice there is no current investment appetite to develop new coal-fired power in Australia," council head Matthew Warren said, noting many companies had shelved plans for coal plants and shifted focus to gas generation, renewables and storage.
The industry says it can't make urgently required investment in generation of any kind without a credible and enduring national energy and climate change policy.