The Turnbull government is standing in the way of the US and Japan as they try to dramatically reduce the ability of rich countries to fund coal plants in the developing world.

The move has once again prompted claims that the government is risking Australia's international reputation on climate change.

Documents seen by Fairfax Media show Australia has opposed a US-Japan plan that would in effect limit public financing of coal-generated power by Organisation for Economic Cooperation and Development (OECD) countries to only the "cleanest" coal plants available, mostly those classed as "ultra-supercritical" generators.

The proposal is to be debated at an OECD meeting next week in Paris, amid hopes it will provide a boost to the global climate summit a fortnight later.

A source familiar with the discussions said: "There would be a very real-world, material difference under this proposal".

It is expected it could reduce the funding of coal by OECD public agencies by billions by making more polluting power stations ineligible.

Japan - the world's largest public financier of coal plants - last month reversed years of opposition and will now back the US proposal. The US-Japan plan also includes a clause that a coal plant could only win public funding if cleaner alternatives, such as renewables, were not viable.

But the deal will be scuppered if Australia and South Korea remain opposed. Australia's submission, filed in response to the US-Japan plan, would still allow large "supercritical" coal plants to be publicly financed, despite their higher emissions, and would not require an evaluation of cleaner alternatives.

Australia is one of the world's biggest coal exporters, but its export credit agency, the Export Finance and Insurance Corporation, does not fund coal plants.

The source familiar with the talks said countries supporting the current position were, in effect, supporting a "negative carbon price" – an incentive for developing countries to build coal plants rather than look for cleaner alternatives.

Australia has pledged $200 million to the Green Climate Fund to help the poorest cope with global warming, so the source said the proposal to keep the current rules on coal funding was "akin to bailing water out of sinking canoe while at the same time making a larger hole in the hull".

Through a spokesman, Trade and Investment Minister Andrew Robb said Australia's objective was to ensure developing countries had access to the "best high efficiency, low emissions technologies at the cheapest price to support development and to alleviate poverty".

"Australia is working constructively with other OECD members and negotiations are continuing," Mr Robb said.

Jennifer Morgan, global climate director at the Washington-based World Resources Institute, said Canberra's submission meant it would like the OECD to continue to support funding of coal.

"Its proposal would effectively continue the status quo," she said.

"Internationally, people are looking to see whether the Turnbull government will differentiate itself from the Abbott government and join the rest of the OECD in charting a path for clean energy."

In Australia, 10 environment and like-minded groups including Greenpeace, WWF, the Wilderness Society and the Australian Conservation Foundation have written an open letter to the government calling on it to back the US and Japan and ratify a deal.

The letter says it would be "deeply embarrassing" for Australia if it were the only country to not support or further weaken an agreement – "particularly when countries such as Japan and Germany, which export coal plant technology, have agreed to limit support for coal plants".

In Parliament on Tuesday, in response to a question from Greens deputy leader Larissa Waters on why Australia was blocking the US-Japan deal, government leader in the Senate George Brandis said the country "believes in the coal industry".

"We know that Australia produces some of the cleanest coal in the world... and it is a very important source of prosperity for the Australian economy, and very important source of jobs for Australians," Senator Brandis said.

Export credit agencies provide government-backed loans for companies doing business abroad. Across the 34 OECD countries, they provided about $32 billion in public support of coal plants between 2007 and 2013. More than half was from Japan.

The European Union has made a separate submission, but is considered more open to reaching an agreement with the US and Japan than Australia and Korea.

The call for the Australian government to change its stance comes as ministers are engaging in climate negotiations at a level not seen under former prime minister Tony Abbott, widely seen to be a climate sceptic.

Foreign Minister Julie Bishop has announced Australia will lead the Global Climate Fund and Environment Minister Greg Hunt is this week in Paris at a preparatory meeting for the conference. Along with Prime Minister Malcolm Turnbull, both ministers will attend the United Nations summit.

That meeting will be held against a backdrop of a "keep it in the ground" campaign, based on scientific advice that the world has five times more fossil fuels available than it can safely burn.

US President Barack Obama cited this argument when he last week rejected the Keystone XL pipeline, which would have pumped 800,000 barrels worth of oil each day from the Canadian tar sands to the Gulf of Mexico. It was the first major project blocked by a global leader on climate grounds.

In Australia, ANZ last month announced it would only fund new coal technology with emissions intensity below 800 kilograms per megawatt hour – just short of the threshold for ultra-supercritical. It won support from the Minerals Council of Australia.

Ultra-supercritical coal plants emit carbon dioxide at little more than half the rate of Hazelwood, a 50-year-old subcritical plant in Victoria's Latrobe Valley. Supercritical plants have lower emissions than that old technology, but are not as efficient as ultra-supercritical generators.

Before changing its position, Tokyo had argued against the restrictions on the grounds China was likely to fund dirtier coal plants in developing countries if OECD countries stopped. Advocates for tighter restrictions suggest this misreads Beijing's plans. In a recent agreement with the US, China said it would increase low-carbon development and "strictly control" public investment in high pollution projects.

The Climate Institute, not a signatory to the letter from environment groups, said Australia had an opportunity to help clear a path to cleaner energy technologies if it supported the restrictions.

"Disappointingly, by pushing for more polluting coal plants to be financed Australia risks enhancing a reputation as a roadblock to innovation in advance of the Paris climate summit," deputy chief executive Erwin Jackson said.