That review – headed by businessman and climate change sceptic Dick Warburton – recommended Australia's target to have at least 20 per cent of electricity come from renewable sources by 2020 be either closed to new projects or scaled back dramatically on the basis of yearly reviews. But those options have been largely dismissed as unattractive, even within government. And Coalition sources also said the political argument that the target pushed up household electricity prices was "largely dead" thanks to modelling commissioned for the review that found bills would in fact fall from 2021 if it was kept. Big energy companies, who want the target scaled back to reflect falling electricity demand (an option dubbed "real 20 per cent"), have also been left privately confused at the review panel's recommendation to tack on yearly reviews to that option, which is regarded as unworkable due to business needs for greater certainty. Senior Coalition figures are now flagging they will have to try cut a deal with Labor, which wants little or no change to the target. But without bipartisan support, the political cloud hanging over the industry will continue, and investment dollars for new wind and solar farms, that have ground halt, will not return.

On Wednesday, at Prime Minister Tony Abbott's request, Environment Minister Greg Hunt and Energy Minister Ian Macfarlane held talks with about 40 MPs to canvass the party room's views on the target. One source said the majority view among the backbench had appeared to have swung away from closing the target to new projects, with up to 80 per cent now favouring a "real 20 per cent" option. But cabinet appears more divided. One government source said Mr Abbott, Treasurer Joe Hockey, Finance Minister Mathias Cormann and Health Minister Peter Dutton were the main proponents for closing the scheme altogether, although another disputed Mr Hockey held this view. Scaling back the target to "real 20 per cent" is still likely to be blocked in the Senate with Labor, the Greens and the Palmer United Party all opposed. And the renewable energy industry says the impact of a scaled-back 20 per cent target would be devastating as it represents a 60 per cent cut from where the target now stands. One senior MP believed the government would use the scaled-back 20 per cent in any negotiations as the "starting point" in the hope a final position could be reached ideally with Labor or, failing that, the Palmer United Party.

Executive general manager of wind firm Pacific Hydro, Lane Crockett, said the Abbott government had shattered investor confidence with its general hostility to clean energy. "Whatever it comes to, what is needed is strong bipartisan support in both houses of Parliament," Mr Crockett said. "And that has to be backed up by the Prime Minister making strong unequivocal comments that this government is completely behind a fixed renewable energy target for large-scale investors, and that [it] won't be changed and will not be reviewed prior to 2020." Members of the renewables industry and some political figures have begun quietly floating alternatives that might break the impasse. One was keeping the fixed target of having 41,000 gigawatt hours of electricity produced from large-scale renewable energy projects that is part of the scheme, but pushing back the date to achieve it from 2020 to 2022.

Others canvassed pushing the target back to 2025. Adopting a higher target at a later date, such as 30 per cent by 2030, was also in the mix, although government sources said that might be too much for it to accept. Nathan Fabian, who represents major institutional investors on climate change, says a solution needs to be found, but concedes there is no agreed model. "Obviously we have an interest in finding a landing place which continues to set a strong price in the market and encourages further renewables build," he said. "And at this stage it doesn't appear the Parliament is going to be able to respond to that." Senior Labor figures say they are yet to be approached by the government for talks. Many in the ALP want to stick with the target as it stands. Others said Labor may accept changes, but only minor ones such as the 2022 option, if it allowed the Coalition to save some face while not harming the industry. There is scepticism, however, that Mr Abbott would agree to only small changes to the current regime.

While the government is still pursuing changes to the target for large-scale projects, it has rejected the Warburton review's recommendation that support for rooftop solar be closed immediately. But phasing it out more quickly remains under consideration.