Brown coal power stations in the Latrobe Valley are unlikely to participate in the Federal Government's direct action climate change policy, according to an environmental lobby group.
Environment Minister Greg Hunt announced the policy on Thursday, which provides financial incentives to reduce emissions.
Key actions in the government's policy include keeping the five per cent emission reduction target below year 2000 levels by 2020, eliminating the price on carbon and establishing the $2.55 billion Emissions Reduction Fund, to pay businesses for emission reduction projects over the next four years.
Environment Victoria safe climate campaign manager Nicholas Aberle said he did not believe brown coal energy generators could take part in the scheme.
"The only mechanisms available would be retrofitting (power stations), which is probably going to be too expensive to be available under direct action," Dr Aberle said.
He said under the carbon price, brown coal power stations had a serious incentive to reduce the emissions they generate, unlike direct action.
"The premise of the (direct action) policy is a lowest cost abatement, only providing funding for very cheap ways to reduce emissions.
"Brown coal energy generators don't have cheap ways of reducing emissions, so we're not going to get the serious cuts that we need."