Eligible New Brunswick community groups with "great projects" were denied money from the province's Environmental Trust Fund this year even as government took $4 million for its own use, Environment Minister Bruce Fitch acknowledged on Friday.

"There were a number of groups — 150 groups that didn't receive funding unfortunately," Fitch told reporters.

"There are a number of projects in there that are very good and there's some projects in there that we can't fund because there's only a limited amount of money that we fund."

On Friday Fitch revealed the province is awarding itself $4 million from the environmental trust fund to help pay for flood relief government promised to residents of Perth-Andover last year. The cash-strapped provincial government is spending a total of $11.2 million in the western village, he said.

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Liberal MLA Bernard LeBlanc questioned Environment Minister Bruce Fitch on the Environmental Trust Fund on Friday. (CBC)

The $4 million is the single largest grant made in the trust fund's 23-year history, but Fitch said it meets the trust fund's eligibility requirements because the flood was an event related to climate change.

"Climate change is here and the adaptation and mitigation of that climate change is something that falls under the options of the environmental trust fund," Fitch told a legislative committee studying his department's budget.

Most of the money will be used to buy, move or flood proof some of the 80 Perth-Andover homes damaged by water in March of 2012 when warm weather caused the river to back up behind huge ice jams. It was the third major flood to hit the community in 25 years.

Liberal Environment Critic Bernard LeBlanc said he agreed with helping Perth-Andover, but not using the Environmental Trust Fund to do it.

"The mandate of the ETF (Environmental Trust Fund) is to protect the environment, not to protect homes from the environment," said LeBlanc.

'It's unacceptable. This is the environmental trust fund and it should be used to meet environmental goals.'—Green party Leader David Coon

Green party Leader David Coon called for the decision to be reversed, and the money to be given to community groups who were rejected for funding.

"It's unacceptable," said Coon. "This is the environmental trust fund and it should be used to meet environmental goals."

Details about how the $4 million from the trust fund was going to be used have been shrouded in mystery for months.

In the March budget, the provincial government announced plans to release $8.5 million from the trust fund in 2013, the largest expenditure in 14 years and 89 per cent more than was spent from it last year. Initially, that raised the possibility that community groups would get a major increase.

But on Tuesday it was revealed community groups were awarded just $4.1 million of that amount in 174 separate grants.

Fitch acknowledged many of those grant amounts were less than groups applied for, with 148 applications rejected completely, including "a number of great projects." Others were given less than requested, he said.

"The ask was bigger than we can deliver," Fitch said.

The environmental trust fund is financed entirely through the province's bottle deposit program. It earns close to $9 million a year and has built up an accumulated surplus of about $18 million — one of the few government programs with excess money.

The trust fund was set up in 1990 under the McKenna government as a dedicated source of money for community groups undertaking environmental projects.