The government allocated $100 million to HRL's Integrated Drying and Gasification Combined Cycle (IDGCC) project and $50 million to International Power Hazelwood's 2030 project, in last week's Federal Budget.

The funds are part of a $1.5 billion allocation for energy technologies.

Resources and Energy Minister, Martin Ferguson said the funding enabled brown coal to play a part in the Valley's future.

``The Hazelwood 2030 Project aims to deliver a commercially viable technological solution for low emissions electricity generation, utilising dried brown coal as a feedstock,'' Mr Ferguson said.

``This solution will adapt German fluidised bed coal drying technology to Victorian brown coals and also include the installation and operation of a post-combustion carbon capture facility on associated units.

``Clean coal technology holds the promise of Victoria joining the ranks of Australia's coal exploring state and this would potentially deliver a brand new industry and thousands of jobs throughout Victoria.

``Latrobe Valley brown coal power is a significant contributor to Australia's energy market so we see it as a priority to achieve large emission reductions quickly.''

Mr Ferguson said the Rudd Government was also establishing a $500 million National Clean Coal Fund to support the National Clean Coal Initiative.

This is aimed at the deployment of low emission technologies to 2030.

``There are many demonstration projects already underway in Australia and we have a lot to learn from them,'' Mr Ferguson said.