Australian Prime Minister Tony Abbott has come under fire from the opposition and investors after ordering the government's A$10 billion ($7.45 billion) Clean Energy Finance Corporation (CEFC) to stop investing in wind and solar power.
Abbott, who has described wind farms as "visually awful" and made no secret of his desire to axe the CEFC put in place by the previous Labor Party government, argued the funds would be put to better use in less established clean technology.
But opposition politicians, investors and green groups said the move would further isolate Australia ahead of talks in Paris in December aimed at securing a United Nations climate deal.
Australia is one of the world's biggest carbon emitters on a per capita basis but last year scrapped a carbon tax and an emissions trading plan, arguing they would burden for industry, and recently cut the country's renewable energy target.
"The best thing that the Clean Energy Finance Corporation can do is invest in new and emerging technologies, the things that might not otherwise get finance," Abbott told reporters on Monday, a day after announcing the move.
"That's why we've got this draft direction there."
Windfarms are Australia's No. 2 renewable energy source, behind hydropower but ahead of solar, providing a quarter of the country's clean energy and 4 percent of its total energy demand.
But investment in the sector froze after the government said last year it wanted to cut Australia's Renewable Energy Target (RET).
General Electric Co last month said it would help fund a $348 million windfarm, Australia's third largest, after political leaders ended a deadlock over state subsidies that had stalled the $13 billion industry for over a year.
Abbott's conservative coalition government does not control the upper house Senate, and has twice failed to abolish the CEFC through parliament.
Labor Party Shadow Environment Minister Mark Butler called the directives part of a larger "war on renewable energy" that would isolate Australia internationally and allow Abbott to circumvent his lack of support in parliament.
The uncertainty around renewables is increasingly alarming foreign investors, said Warwick Forster, an Australia-based energy trading manager for wind farm company Union Fenosa, owned by Spanish energy giant Gas Natural.
"Being the child of a parent organisation in Europe, all these announcements about cutting back and reduced targets has certainly added concerns about sovereign risk of investing in Australia," he said. ($1 = 1.3430 Australian dollars)