Federal Energy Minister Josh Frydenberg has revealed the Government is considering lifting a ban on allowing the Clean Energy Finance Corporation (CEFC) to invest in carbon capture and storage.

Key points: CEFC currently prohibited from investing in carbon capture technology or low-emission coal-fired power plants

CEFC currently prohibited from investing in carbon capture technology or low-emission coal-fired power plants Frydenberg says Government interested in changing rules to ensure energy stability

Frydenberg says Government interested in changing rules to ensure energy stability Opposition would oppose changes, says market "not talking" about new coal-fired plants

The technology involves capturing carbon dioxide from a power plant and burying it underground in a bid to reduce emissions.

"Carbon capture and storage is an important technology," Mr Frydenberg said.

At the moment the CEFC, the Government's green bank, is not allowed to invest in it.

But amid the Coalition's renewed support for coal-fired power, Mr Frydenberg said that could change.

"We're going to look at all our options because of the challenges that we face, namely to ensure energy security [and] energy affordability, as we transition to a low-emissions future," he said.

Shadow Energy Minister Mark Butler said it would require the kind of legislation Labor would strongly oppose.

"This would be an outrageous act of vandalism against a successful financing mechanism for renewable energy, for energy efficiency projects and for genuine low-carbon technology," he said.

"It's no real surprise, I guess, because the Liberal Party has never really supported the CEFC.

"It tried to abolish it for three years and now seems committed to making it a finance mechanism for the coal industry, which is unable to attract finance from the private sector."

Government interested in low-emission coal-fired plants

Mr Frydenberg said he was also interested in investment in high-efficiency, low-emission coal-fired plants.

Currently they are not green enough for the CEFC to invest in, but Mr Frydenberg has flagged changing the rules.

How does CCS work? Carbon capture and storage (CCS) traps up to 90 per cent of carbon dioxide emissions produced from the use of fossil fuels

Carbon capture and storage (CCS) traps up to 90 per cent of carbon dioxide emissions produced from the use of fossil fuels The carbon dioxide is then transported by pipeline or ship for storage

The carbon dioxide is then transported by pipeline or ship for storage It is usually stored in an underground geological rock formation

It is usually stored in an underground geological rock formation The aim is to prevent large quantities of carbon dioxide entering the atmosphere Source: The Carbon Capture and Storage Association

"The Government could issue a new mandate to the CEFC which would then inform its guidelines and would make possible an investment in a high-efficiency low-emission power plant," he said.

"We're looking at all our options because we're intent on stabilising the system.

"Right now we need more baseload power. Cleaner coal is one of those options together with gas fired power, as well as ensuring more storage capacity for intermittent sources of generation, namely wind and solar.

"Our focus is on stabilising the system and not allowing a repeat of what happened in South Australia [with blackouts] to happen anywhere else in the country."

But Mr Butler said the market was not interested in the kind of plants Mr Frydenberg was suggesting.

"It doesn't reflect the reality in the electricity industry. No-one in the industry is talking about the reality of building new coal-fired power stations," he said.