A wind tower manufacturer in Portland, in south-west Victoria, says the future of its business is in doubt after the Federal Government's decision to stop new investment in wind power.

The Government has written to the Clean Energy Finance Corporation (CEFC), directing it to change its investment mandate, banning new funding for wind projects.

It wants the CEFC to instead invest in "emerging technologies".

The directive was issued as part of a deal with crossbench senators to reduce Australia's Renewable Energy Target (RET).

The general manager of wind tower manufacturer Keppel Prince, Steve Garner, said once the RET was finalised it was hopeful new jobs would be created in the region.

"For a town like Portland it's got potential to have 200 or 300 hundred people working in this industry, plus the on-flow effect of jobs," he said.

"I mean it's massive.

"If that's the way the Government want to treat it and the way they want to go then they're certainly not looking at creating jobs."

Mr Garner said the decision would savage the community.

"It's a town that's accepted it's trying to become the renewable energy hub of Australia and this is just a total backward step for our little area and our community and for the number of jobs that we hopefully would have been able to create by the end of the year," he said.

Labor and the Greens said the Government would stifle the growth of the renewable energy sector by directing investment away from wind farms and rooftop solar panels.

Labor's environment spokesman, Mark Butler, said excluding established technology would affect the renewable energy market.

"Wind technology has an enormous amount to contribute to the future of Australia's electricity system," he said.

Environment Minister Greg Hunt defended the moves, telling Radio National the purpose of the CEFC was to focus on "emerging and innovative technologies".

He said the Government's plans to focus on large-scale solar, emerging technologies and energy efficiency were detailed in a letter to crossbenchers that was tabled in the Upper House.