Environment Victoria has signalled its opposition to compensation for Latrobe Valley power generators in a submission to a key parliamentary climate change committee.
In a memorandum submitted to the Federal Government's Multi-Party Climate Change Committee, Environment Victoria has recommended no compensation be provided to generators "to ensure that the price signal (from carbon legislation) delivers the desired emissions reduction outcome".
Environment Victoria campaigns director Mark Wakeham described the case for providing compensation to electricity generators following the introduction of a carbon price as "weak" and said it made less sense following the shift from an emissions trading system to a carbon tax.
"The point we've made is we don't think there's a case for compensation at all," Mr Wakeham said.
"If the Federal Government is hell bent on compensating generators they should ensure any compensation package leads to the replacement of our most polluting power stations."
He said Environment Victoria wanted money raised from carbon pricing to be used to mitigate the impacts of the proposed carbon tax.
"Most of the revenues raised through the price on carbon should go to supporting low-income households to deal with the pass through costs of a price on carbon," Mr Wakeham said.
"We also think there should be significant funding for new clean energy technology and projects."
He said Environment Victoria also wanted to see "targeted investment" in areas like the Latrobe Valley which would be affected by carbon pricing.
"Every year we delay an inevitable shift into a low-carbon economy, we delay investment into clean energy sources," Mr Wakeham said.
He said people in the Latrobe Valley knew existing power stations would eventually be replaced and people in the area were forced to live with "considerable uncertainty".
"Uncertaint y is nobody's friend apart from the big polluters who want to continue with business as usual," Mr Wakeham said.