Environment Minister Melissa Price's office told an energy company the Minister would request a review of how coal-fired power stations can earn money from the Government's Emissions Reduction Fund (ERF), after the company complained it was not allowed to bid into the fund to upgrade its New South Wales power station.

Key points: Delta Electricity wanted to bid for taxpayer-funded carbon credits to replace turbine blades and improve efficiency

Delta Electricity wanted to bid for taxpayer-funded carbon credits to replace turbine blades and improve efficiency An adviser for Ms Price promised Delta the Minister would ask for a review of the ways coal-fired power stations could earn money from the ERF

An adviser for Ms Price promised Delta the Minister would ask for a review of the ways coal-fired power stations could earn money from the ERF The Minister's office said the ERF was reviewed regularly to ensure projects from across the economy could participate

Documents obtained through freedom of information show Melissa Price's office made the offer after repeated lobbying by a representative of Delta Electricity, whose chairman is political donor and energy businessman Trevor St Baker.

Late last year Delta Electricity wanted to bid for taxpayer-funded carbon credits to replace turbine blades at its Vales Point Coal Fired Power Station in New South Wales, the documents show.

The Clean Energy Regulator rejected the request.

In emails John Short, a representative of Mr St Baker's company, disputed the regulator's decision. Mr Short requested a meeting between Ms Price and Mr St Baker as "a matter of urgency".

The emails suggest the meeting never happened, but an adviser to Ms Price told Mr Short that while the Minister was unable to direct the regulator on individual matters she would ask the Emissions Reduction Assurance Committee to carry out a review covering "the ways coal-fired power stations can earn credits" through the ERF.

"The Minister also notes it is important the ERF provides opportunities for participation from projects across the economy, including industry," the Minister's adviser wrote.

The ERF uses taxpayer money to pay for carbon abatement — usually activities like tree planting or avoided deforestation.

Kelly O'Shanassy said Ms Price should have rejected Delta's request. ( Twitter: Kelly O'Shanassy )

In the emails, Mr Short wrote the regulator's rejection of the Vales Point project was to "effectively discriminate against a carbon abatement project involving a coal-fired power plant and as a result… is inconsistent with the Government's Energy Policy, which is technology neutral".

Kelly O'Shanassy, the chief executive of the Australian Conservation Foundation — which submitted the freedom of information request — said even though it was within the Minister's purview to ask for the review, Ms Price should have rejected Delta Electricity's request for help.

"Minister Price chose to pull a review leaver, so simply she asked the regulator to review the rules that manage this program to determine if it could include funding coal-fired power stations as part of this climate program," Ms O'Shanassy said.

Funds sought to replace turbine blades at Vales Point Power Station

Mr St Baker says his company was seeking $15 million to $16 million from the fund to replace turbine blades at the Vales Point Power Station, which he said would make the plant more efficient and reduce its carbon emissions.

That same upgrade has now been shortlisted by the Government as one of the energy projects it is considering underwriting, Mr St Baker said.

Vales Point Power Station on Lake Macquarie has a projected life expectancy of another 10 years. ( ABC News: Ben Millington )

Mr St Baker has not ruled out the company funding the upgrade itself if it were unsuccessful in getting backing from either the ERF or the underwriting process.

"We will look at that separately," he told the ABC.

In 2017, the St Baker Family Trust made a $50,000 donation to the Liberal Party, but Mr St Baker said he has probably given more money to the Labor Party over the years.

"We made payments to attend business programs of both the Labor and Liberal and National Party every year — we've been doing that for years, the same as all businesses do," he said.

In a statement, the Environment Minister's office told the ABC: "The Government frequently reviews existing [ERF] methods to ensure they continue to meet offset integrity standards, and continue to provide opportunities for participation from projects across the economy, including industry."

Should taxpayer money be used for coal-fired power plants?

Economist Paul Burke, an associate professor at the Australian National University, said there were better ways to make coal-fired power stations more efficient than using taxpayers' money.

"We have much better policy approaches that could be used for the fossil fuel sector, for example carbon pricing or regulation of emissions," he said.

Trevor St Baker says he has probably donated more to Labor than the Liberal Party over the years. ( AAP: Patrick Hamilton )

The Vales Point Power Station is 40 years old and due to come to the end of its life in about 10 years, but Mr St Baker has flagged the possibility of keeping it open longer.

He said the turbine upgrade would not assist in extending the life of the power station.

"The investment we are making now has insignificant relationship to whether that power station extends beyond 2029," he said.

Professor Burke it was hard to know what impact the upgrade would have on the future of the plant.

"Remember coal plants are often underused in terms of their capacity factor, they could be used more as well, so this in economics this is called a rebound effect — if you improve here the emissions efficiency of the plant, this could lead to the plant being used more," he said.

"It could also lead to the plant being used for longer as well."