The federal government says the nation's so-called green bank is doing what it was meant to do - fund large, not small-scale, solar projects.
Labor believes a government investment ban on wind energy has been extended to projects such as rooftop solar, based on a second revision of a directive to the Clean Energy Finance Corporation.
But Finance Minister Mathias Cormann says the new directive takes the CEFC back to its original policy to focus on new, rather than established or "mature", technologies.
Investing in wind farms wasn't what the corporation was set up for, he argued.
"While the CEFC continues to exist it should focus on the next opportunity - large scale solar and better energy storage," he told ABC radio on Monday.
"We want to push it to the next level."
Prime Minister Tony Abbott reiterated his commitment to abolish the corporation, but said in the meantime it should only fund "things that might not otherwise get finance".
"As long as it exists it might as well be as useful as possible," he told reporters near Goulburn in NSW.
Opposition environment spokesman Mark Butler says the corporation's original purpose was to develop a mature lending market that would eventually encourage private banks to invest in renewable energy.
"The parliament set up the corporation with a very expert board and very expert staff to make these decisions free of political interference," he told ABC radio.
"What we see now is Tony Abbott trying to nobble this corporation for his own ideological purposes."
Mr Butler says the corporation, which the government has twice tried to scrap, is being set up to fail after again been asked to increase its rate of return but not increase its risk profile.
Asked if the government was taking a back-door approach to nobbling the corporation, Environment Minister Greg Hunt said, "I respectfully and categorically disagree".
"Its purpose was to focus on innovation."
Emerging technologies are not going to help us now: Climate Council
The Climate Council's Tim Flannery said the corporation was making money for the government and helping low-income earners access low-cost renewable energy through its investments.
Australia should be pushing both wind and solar if it wanted to meet its international obligations.
"Emerging technologies are not going to help us now," he told Sky News.
"What we need now is reductions."
Wind and solar a source of jobs in SA
The South Australian government says a commonwealth ban on supporting solar and wind energy scheme will make it harder to create jobs.
The commonwealth has directed the Clean Energy Finance Corporation not to back any further wind energy projects as well as rooftop solar schemes.
But South Australian Treasurer Tom Koutsantonis says wind energy is a source of immediate and future jobs and putting barriers in the way of investment will make it more difficult to cut SA's unemployment rate, which climbed to 8.2 per cent in June.
"South Australians are told by the commonwealth government that we are not allowed to build cars, we're told we are not allowed to build submarines, now we are being told we shouldn't build wind farms when we have investors ready to spend their money and create jobs now," he said.
Climate Change Minister Ian Hunter will meet his interstate counterparts this week and says they will call on the federal government to end its ideological opposition to renewable energy.
"The message being sent to renewable energy investors by our federal government is `look elsewhere - don't spend your money in Australia and don't create jobs here'," he said.
