Australia’s two renewable energy agencies will be allowed to invest in low emissions technologies under new legislation set to be introduced by the Federal Government.

Currently, the Australian Renewable Energy Agency (ARENA), which manages the Government’s renewable energy programs, can only support renewable energy.

The Clean Energy Finance Corporation (CEFC) is allowed to invest in a range of projects but they must produce less than half the emissions of the grid average, which rules out coal, but not gas.

Under the Government’s new plan, both the CEFC and ARENA will be allowed to support technologies that produce low emissions.

The plan does not say how “low emissions” would be defined, but does flag a number of technologies which it says would qualify.

They include soil carbon sequestration, where carbon is removed from the atmosphere and stored in soil; carbon capture and storage; production of “green steel”; and other ways to reduce energy use.

The changes have been included in the Federal Government’s $1.9 billion announcement that wraps in ongoing funding for ARENA, CEFC and the Clean Energy Regulator.

As part of the package, $67 million will be put towards supporting microgrid projects in regional and remote communities, to encourage people to switch from diesel generators to cleaner technology.

The Government is also putting $95.4 million towards a Technology Co-Investment Fund to help agriculture, manufacturing, industrial and transport businesses reduce their emissions.

The fund was a recommendation from a review into the Government’s Climate Solutions fund, completed by former Origin Energy boss Grant King.

It is also committing $35.4 million to upgrade the tracking of energy and emissions data.

The review also recommended “an expanded, technology-neutral remit so CEFC and ARENA can support key technologies across all sectors”.

“The Government will now focus its efforts on the next challenge: unlocking new technologies across the economy to help drive down costs, create jobs, improve reliability and reduce emissions.

“This will support our traditional industries — manufacturing, agriculture, transport — while positioning our economy for the future.”

Minister for Energy and Emissions Reduction Angus Taylor said the success to date of the agencies meant a promising future for the low-emissions technology industry.

“The Government recognises the strong growth in emerging energy technologies that will play a role in Australia’s energy mix into the future. We need to get the balance right and our investment to re-energise ARENA will deliver that,” he said.

“ARENA has played an important role in this growth, and as the cost of renewable technologies has fallen dramatically, the Government is investing in the future of ARENA to support the next generation of energy technologies.”

The CEFC and ARENA were both established in 2012 under the then-Gillard government but faced opposition from former prime minister Tony Abbott, who tried to have both dismantled.

The move was blocked by the Senate and the attempt to remove them was dropped when Mr Abbott as prime minister by Malcolm Turnbull.