The Australian Capital Territory has floated a compromise on setting an emissions reduction target in an attempt to break the current impasse on the national energy guarantee, as Victoria toughens its negotiating stance.

The Andrews government, after a cabinet deliberation on Monday, has now set four concrete conditions it says it wants met, which if insisted upon, could torpedo the national energy guarantee.

Victoria says emissions reduction targets can be only allowed to increase over time “and never go backwards”; future targets will need to be set by regulation; the targets will need to be set every three years, three years in advance; and it wants a the emissions registry to be fully transparent.

As the Victorian government settled its final negotiating position in the lead-up to a meeting of the Coag energy council this Friday, the ACT’s climate change minister, Shane Rattenbury, wrote to the federal energy minister, Josh Frydenberg, outlining a possible way forward on the current fight over the emissions reduction target.

In the letter to Frydenberg seen by Guardian Australia, Rattenbury acknowledges that the federal minister can’t offer the states a higher target than the 26% the Turnbull government is pursuing.

“Recognising that you do not wish to increase this target, I would like to suggest another option for your consideration,” the ACT minister tells his federal counterpart.

“My suggestion is that the target is reviewed no later than 2024, and that the final design of the Neg includes a mechanism to initiate a review immediately should electricity sector emissions reach a 24% reduction on 2005 levels.”

“I believe this is a position that can address concerns of some stakeholders and I am happy to discuss this with you further.”

At the moment, the stand-off between the commonwealth and the states relates to the current 26% target being too low to see Australia meet its commitments under the Paris agreement.

The states are pushing Frydenberg to agree to a mechanism that would make it easier for a future government to scale the target up – a campaign the federal energy minister is resisting on the argument that targets are set by the national government of the day, not by the states.

Frydenberg has offered the states an olive branch on process, flagging a review of the target in 2024, but Rattenbury’s proposal would have the review take place two years earlier, given the Energy Security Board predicts electricity emissions will be 24% lower in 2021.

A range of business and energy stakeholders have called on the states to get behind the Neg.

But while cajoling the states to get on board, the groups also counselled the federal government to be flexible in landing a final policy position, including on the ultimate resolution of the target.

The joint statement from groups including the National Farmers Federation, the Ai Group, and the big energy players noted that “given current deep political disagreement over targets, compromise will be needed from all sides to deliver the greatest achievable certainty”.

“Success will likely require a flexible approach, with a pathway for governments to amend targets subject to an adequate notice period and proper process,” the joint statement said.

“Together with Coag agreement on the guarantee mechanism, such a compromise would sharply reduce policy uncertainty and help the electricity sector deliver affordable, reliable and clean energy”.

The policy will be discussed by the Coag energy council on Friday before Frydenberg attempts to achieve Coalition party room sign off on the legislation giving effect to the emissions reduction components next Tuesday. Internal government critics of the Neg have publicly warned Frydenberg will encounter turbulence next week.

If the states ultimately agree to the Neg, the political fight over the target will return to Canberra, with federal Labor signalling it will move to increase the emissions reduction objective to 45%.

It is unclear whether the ALP will have the numbers to amend the government legislation in the Senate, but it looks possible on current indications.

The Greens have signalled they want to push the level of ambition beyond 45%, and argue Labor should pursue an electricity target of at least 60%, but the Greens climate spokesman, Adam Bandt, said “we will consider supporting amendments that will meaningfully help cut pollution”.

The Centre Alliance’s Rex Patrick told Guardian Australia he was “open” to considering an amendment increasing the electricity target to 45% “but the effect of going to 45% needs to be spelled out”.

“We are very interested in achieving clean energy but foremost in our minds are the people suffering high prices – we can’t ignore that,” Patrick said.

The South Australian independent Tim Storer said he thought the Turnbull government should not seek to “handcuff” future governments to decisions of the current parliament. “I am attracted to the idea of automatic escalation of the emissions reduction target beyond 26% being entrenched in the legislation.”

If Labor, the Greens, Centre Alliance and Storer ultimately coalesce around a higher target, that would leave the group one vote short of amending the government legislation in the Senate – putting the Victorian crossbencher Derryn Hinch in the box seat.