Tata Power along with Brisbane- based engineering company Sedgman Ltd has acquired a stake in an Australian firm, which has evolved the technology to reduce emissions from thermal power plants.

Tata Power and Sedgman have joined founding shareholder Theiss, a unit of Leighton Holdings Ltd, as investors in both Exergen Pty Ltd and its technology, a company release said.

Exergen Pty Ltd has developed a process of removing moisture and contaminants from brown coal, enabling a reduction in harmful emissions when the fuel is burnt.

"The government is acutely aware of the emissions profile of brown coal-fired power generation," Australian Minister for Resources and Energy, Hon Martin Ferguson said in a release.

Exergen has a pilot plant in Australia's island state of Tasmania, whose electricity system is linked by an underwater cable with that of Victoria, which uses brown coal for about 95 per cent of its power supply.

After teaming up with modern power generation plants, Exergen can reduce emissions by approximately 40 per cent, while the moisture removed from the coal could supply 40 per cent of a generator's cooling water.