The New South Wales government’s call to end the “climate wars” has won a tick of approval from the Australian Industry Group, which represents Australia’s largest industrial energy users.

The employer body’s chief executive, Innes Willox, told Guardian Australia an emissions reduction obligation in national policy was “vastly superior” to separate state schemes and also pushed for policies to reduce emissions outside the energy sector.

AiG was one of a number of business groups – including the Business Council of Australia, Australian Chamber of Commerce and Industry and National Farmers Federation – which supported the Coalition’s national energy guarantee (Neg) before the emissions reduction component was dumped by Malcolm Turnbull in August.

After months of lobbying from the Labor states, on Wednesday the NSW energy minister, Don Harwin, joined calls to restore that component with a plan to ask the Energy Security Board to draw up a new emissions reduction trajectory. The issue was deferred at the energy council meeting in Adelaide after intervention by the federal energy minister, Angus Taylor.

On Thursday Willox said that “adding emissions reductions to the objectives of reliability and affordability, as the Neg proposed, was a way to facilitate investment in generation by giving investors greater certainty”.

“We would support minister Harwin’s call for an end to the ‘climate wars’ and a resumption of an approach to energy that reinserts the objective of emissions reduction,” he said. “We also agree that a national approach would be vastly superior to having a myriad of state and territory approaches.”

NSW plans to ask the ESB for options to achieve zero net emissions in the electricity sector by 2050, the state government’s preferred target.

Willox said that approach “wouldn’t hurt but we need to bear in mind that the energy sector accounts for about 40% of Australia’s emissions”.

“In any national target we need to have contributions from other sectors and we need clarity about the policies that will govern how we meet those targets,” he said. “Energy is a big part of the equation but far from the only one.”

On Thursday Harwin told Radio National the Neg “has wide support among the stakeholders and was the right policy in terms of securing Australia’s energy supply into the future with new investment”.

“We’ve got one half of [the Neg], the reliability obligation … my point yesterday is we need the other half of it as well,” he said.

The South Australian energy minister, Dan van Holst Pellekaan, told Guardian Australia it had also reiterated its “ongoing support for the emissions reduction obligation” in the Neg but the “earliest opportunity” to consider it is an out of session meeting in February.

Harwin denied that the Berejiklian government was spooked into action by the impending March state election, arguing it had “been advocating for a policy for a lower emissions future for some time”.

He said it had “consistently supported” the work of the former federal energy minister Josh Frydenberg and the former prime minister Malcolm Turnbull to achieve the Neg.

Echoing a favoured dictum of Turnbull, Harwin said he supported emissions reduction targets “backed by economics and engineering”, agreeing with Taylor that “Labor’s target is too much too fast and would cause substantial upward pressure on prices and cause a reliability problem”.

Federal Labor’s shadow cabinet and national conference have endorsed a target of 45% reduction in the electricity sector by 2030.

Harwin said Labor’s targets were “as much of a risk as the fact we don’t have a Neg at all”.

Since the emissions reduction obligation was ditched in August, the Morrison government has failed to release new climate policy to drive emissions in the electricity or other sectors.

On Thursday Taylor defended the government’s claim Australia will meet its Paris target to reduce emissions by 26% by 2030, telling Radio National that “departmental numbers” show in the electricity sector a 28% reduction will be achieved by 2023.

Taylor conceded the figure applied only to the energy sector and dismissed the latest data showing Australia’s emissions are climbing by claiming “from year to year you see ups and downs”.

By 2020 Australia will beat its Kyoto target by 300 million tonnes and the Coalition is “very confident” it will then meet the 2030 Paris target, Taylor said, against the advice of climate scientists and economists.

At the latest round of UN climate talks Australia lobbied to exploit a controversial climate loophole, using carryover carbon credits from the Kyoto protocol to meet its Paris targets.

The Climate Council’s acting chief executive, Martin Rice, accused Taylor of “misleading the public” by citing electricity sector figures when Australia’s commitment is for economy-wide reductions.

“His government’s own published data clearly indicates Australia is not on track to meet its Paris commitments,” he said. “The energy minister is using very slippery language. The fact is Australia’s greenhouse gas emissions have risen for four years in a row.”