NSW govt denies it's pushing carbon tax

The NSW government is calling on a federal review to consider a market mechanism for an "orderly energy generation transition" - but denies that's code for a carbon tax.

"A tax is a tax, an intensity scheme is something quite different," state energy minister Don Harwin told the Seven Network on Monday.

In its submission to the inquiry into the future of the national electricity market, the state government says the lack of a nationally integrated energy and climate policy has prevented investment in transitional energy sources.

"The NSW government urges the review to consider the need for a mechanism that provides market signals and framing for orderly generation transition and ensures an appropriately diversified energy mix within the national electricity market."

Such a mechanism should welcome new technologies and allow them to provide energy services on a level playing field.

Mr Harwin said the review should "look at all of the options" to create new investment in energy.

"The scheme is something that the Finkel review needs to look at."