The fund is an extension of the COAL21 program launched in 2004 by industry and government to identify greenhouse gas abatement technologies.

Reducing emissions from coal-fired power stations will be a priority area using technologies such as coal gasification, geosequestration and oxy-fuel combustion, a means of reducing the cost of capturing carbon dioxide at conventional power stations.

Generally COAL21 will fund a third of any project cost with two-thirds to come from industry, including producers and power generators.

No projects have yet been chosen for funding but those that can be successfully undertaken in Australia and that complement other overseas efforts will be prioritised.

Most of the technologies expected to be entering the marketplace within a decade, according to Australian Coal Association executive director Mark O'Neill.

"We are already working closely with power generators on a number of key demonstration projects," O'Neill said.

"To meet the twin challenges of climate change and growing energy demand, major reductions in emissions from the use of existing energy sources are necessary. There is no single solution: more renewable energy, energy efficiency, clean coal and gas, and other low emission sources of energy are all part of the necessary portfolio response. The coal industry is putting its money where its mouth is."

But Oxford professor and famed conservation biologist Norman Myers, currently visiting Australia, has said he was sceptical of the coal sector's promise of cleaner technologies.

Myers told the National Press Club that for many years the industry had been promising promised clean-coal technologies were imminent, but nothing substantial had yet been developed.