EMMA ALBERICI, PRESENTER: A billion dollar coal industry fund which was supposed to drive development of clean coal technology has changed its purpose allowing it instead to promote coal use here and overseas.

After seven years and no sign of any carbon capture and storage of coal emission, the Coal 21 fund has quietly broadened its goals.

The former chairman of the Australian Coal Association says it shows the coal industry is ignoring what he's described as a global climate emergency when instead it should be phasing out coal production an idea rejected by the industry's current leadership.

KERRY BREWSTER, REPORTING: Set up in 2006, Coal 21 was billion dollar proof said the Coal Association of the industry's commitment to significantly cut Co2 emissions through carbon capture and storage, or CCS. The aim to bury goal generated greenhouse gases was backed by successive governments.

JOHN HOWARD, PRIME MINISTER: Australia must aspire to be a world leader in clean coal technology.

KERRY BREWSTER: And today Coal 21's commitment still stands.

NIKKI WILLIAMS, CEO, AUSTRALIAN COAL ASSOCIATION: We have to capture that Co2 because the world currently generates 40 odd per cent of its electricity from coal plus gas and oil and in Australia the figure is 75 per cent of our electricity is coming from coal.

KERRY BREWSTER: But seven years after the initial commitment there's still no sign of carbon capture and storage. And having spent only 20 per cent of its pledged billion dollars the Coal Association has altered the funds' constitution.

ASIC document though Show that last December it significantly broadened the purpose of Coal 21. Now its objectives include:

(EXTRACT FROM COAL 21 CONSTITUTION)

"Promoting the use of coal both within Australia and overseas and promoting the economic and social benefits of the coal industry."

NIKKI WILLIAMS: The change in constitution is actually a simply an expansion of the original constitution which always contemplated apart from obviously investments in R and D and the scientific and technological part that we would necessarily need to talk about the role of coal.

KERRY BREWSTER: Alarm bells are ringing in the coal mining union, the CFMEU.

TONY MAHER, NATIONAL PRESIDENT, CFMEU: It's always been considered by many as being a fig leaf, the Coal 21 fund. We supported it even though we thought it was insufficient money, they could afford a lot bigger investment and diverting money to other causes is sending all the wrong signals at the very time when the industry is under threat from those who would like to close down the industry.

KERRY BREWSTER: The former chair of the Australian Coal Association Ian Dunlop is surprised Coal 21's funds may be diverted.

IAN DUNLOP, FORMER CHAIRMAN, AUSTRALIAN COAL ASSOCIATION: The Coal 21 fund is very specific research and development fund particularly to get carbon capture and storage up and working and to get other clean coal technologies. The money that is being spent is really minor compared with the total, I think it's a billion dollars overall. We spent around $200 million at this point in time. That that's taken place over the last seven years or so, or slightly more probably and I think that is just recognition that there is no serious intent to this forward. If you look at the climate problem, it is a global emergency.

KERRY BREWSTER: The Climate Commission has warned that up to 80 per cent of the world's fossil fuels have to stay in the ground to avoid dangerous warming. Its prediction is backed by numerous scientific organisations and the international energy agency, which says that under a business as usual scenario temperatures may rise six degrees this century.

The coal and gas executive for decades Ian Dunlop says Australia must phase out coal.

IAN DUNLOP: They knew three decades ago that the constraint on carbon emissions was going to constrain the coal industry at some point and that point has now come. They need to stop pretending this is a minor problem, they can keep going the way they have done in the 20th century, get real about taking serious action and accept what their leaders now have to do is start the intelligence phase out of coal.

KERRY BREWSTER: The Coal Association rejects the notion.

NIKKI WILLIAMS: We are a $60 billion sector for this country. And employ 180,000 people directly and indirectly. And there are 1.2 million people in Australia at this time who work in energy intensive business and whatever the fate of the manufacturing sector which is looking not wonderful at this point in time, the fact is the manufacturing sector relies on coal. So the notion that coal can be switched off or should be switched off is not one that we clearly support if you talk about it from a vested interest point of view.

But it is clearly not in the interests of Australians if they are unaware of that fact.

KERRY BREWSTER: The Climate Institute fears the industry will simply put profits before the planet.

JOHN CONNOR, CEO, THE CLIMATE INSTITUTE: We are at the brink now and seeing investors starting to wake up to this concept of unbearable carbon. I think that what we are seeing and what I fear seeing is just a dash to exploit a dash for cash on fossil fuels. That is just radically irresponsible and it's very disappointing to see the industry's fund being opened up to other uses and very disappointing to see the people like the Minerals Council start to attack as extremists those who even raise this notion of a carbon budget.

Kerry Brewster, Lateline.