Victoria says it is "open for business" for new brown coal projects as it bids to drive jobs growth in the Latrobe Valley and Gippsland.
"(We are) adopting an 'open for business' approach to supporting new investment and research opportunities in projects using coal," the government said in a statement on Friday.
"These projects could provide new economic development and trade opportunities, bringing high-skilled jobs and investment to the Latrobe Valley and Gippsland."
Under the policy, Victoria will set an emissions standard applying to projects using more than 27,000 tonnes of coal per year.
But projects will be able to offset emissions using carbon capture and storage technology.
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New coal licences will only be granted to applicants unable to access coal from existing mines, and preference will be given to proposed coal fields adjacent to existing mines.
Victorian Greens leader Greg Barber said the policy failed to provide a pathway to transition away from brown coal.
"After two years of dithering, (Premier) Dan Andrews picked a side. He's the coal guy," he said.
Latrobe City Council mayor Kellie O'Callaghan said the policy provided "focus and direction" for the Latrobe Valley, which has been suffering with job losses since the closure of the Hazelwood coal-fired power station.
