Environmental groups have applauded the ACT government's promise to power Canberra with 100 per cent renewable energy by 2025.

ACT Chief Minister Andrew Barr announced Canberra will be the first capital and largest city in Australia fully powered by renewable energy, building on a previous target of 90 per cent renewable energy by 2020.

The government is also divesting the ACT investment portfolio of high-carbon emitting companies and sectors “all without costing the Canberra community one cent in lower returns”, he said.

“We are delighted to see the government stand up for a safe climate and clean energy future by committing to get the territory’s money out of coal, oil and gas companies,” said 350.org spokesman Josh Creaser.

The move showed Canberra was leading the way on climate action, he said in a joint statement of support with the ACT Conservation Council.