Fianna Fáil and Fine Gael refused to support a Green Party proposal which would have enabled a meting of the Cabinet to assess how the €3 billion Climate and Nature Fund could be divided.
The Fund was created in Budget 2024, in order to ensure resources were available in the event of a future economic downturn so that designated environmental projects could still be advanced.
It is understood that Minister for the Environment Eamon Ryan wanted to deliver an overview to his ministerial colleagues on how the money could be used to help Ireland meet its climate targets by assisting farmers, industry and the public sector develop new income streams, and reduce their energy bills.
The emissions cutting proposal went to last night's meeting of the Coalition party leaders.
However, Green Party leader Roderic O'Gorman was blocked from bringing the plan to the Cabinet by Taoiseach Simon Harris and Tánaiste Micheál Martin.
Speaking to RTÉ Radio's Drivetime, Green Party Minister of State Ossian Smyth said that he was "acutely disappointed" that the Taoiseach and Tánaiste were "dragging their heels on this."
The Dún Laoghaire TD added: "Failing to meet our emission reduction targets will leave us open to billions of euros of EU fines."
It is understood the plan was expected to indicate how hundreds of millions of euro could be spent on retrofitting public sector buildings such as hospitals, so that they use less fuel for heating.
It also included details on promoting district heating and biomethane projects.
A similar approach would be taken to helping private companies become more energy efficient, allowing them to make substantial savings.
Further funding would also have been used to roll out infrastructure to support offshore wind energy and microgeneration.
