A breakthrough in the long-running stand-off over Australia's renewable energy target appears closer than ever, with the government and clean energy industry expressing optimism a deal can be done.
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A compromise would unlock investment in Australia's $20 billion renewable energy industry, which has been frozen since the Coalition won power in 2013.
It has been more than 12 months since the Abbott government launched a review of the bipartisan target, which calls for 41,000 gigawatt hours of annual renewable energy production by 2020.
There has been a political impasse after Labor rejected a push by the government to reduce the target to about 26,000 gigawatt hours – a figure regarded as a "true 20 per cent" of electricity production given declining energy consumption.
Labor refused a fresh offer this week that would have set the figure at 31,000, which the industry says is too low and would devastate investment and jobs.
Environment Minister Greg Hunt has resumed talks with the sector and both sides say momentum is now building toward a deal.
"I would regard this as the most significant discussion yet with the industry," Mr Hunt said on Wednesday.
"The potential exists for a breakthrough.
"I don't want to overstate it, but we've had our most constructive discussions."
It is understood a compromise could address the volume of surplus renewable energy certificates in the market, a problem that has arisen in part because of ongoing investment uncertainty due to the review.
Companies liable under the RET are required to purchase renewable energy certificates, with the proceeds going to renewable energy projects.
Clean Energy Council chief executive Kane Thornton said a deal could see the target increased in the short term to absorb a surplus of about 14 million certificates over the next two to three years.
The overall target by 2020 would still face a cut but it remains unclear what the final figure would be.
Mr Thornton said there appeared to be a willingness from both sides now to reach a resolution
"Both Minister Hunt and (Industry Minister) Ian Macfarlane have said that's part of what they're considering," Mr Thornton said.
"We're getting a pretty positive response now … there's momentum and hope it will be resolved.
"Obviously there will be a debate and negotiation about the numbers."
A final figure by 2020 could still prove a sticking point, with the industry seeking a figure in the mid- to high-thirties and the government preferring a target below that.
Ultimately, for a new target to be set it must be acceptable to the Opposition, whose votes are needed in the Senate.
To date, Labor has been holding out for a higher target, but it is understood it could soften its position if industry is on side with a compromise.
Labor has always said it would take its cue from the industry.
Mr Hunt is leading the latest round of negotiations and has had talks with the Australian Industry Group and renewable energy companies to canvass their views.
The government is still seeking a deal that provides some relief for emissions intensive industries such as the aluminium sector.
"We are clearly serious about striking an agreement which is both sustainable but which also provides the opportunity for a doubling of existing renewables over the next five years," Mr Hunt said.
Comment was sought from the the opposition's environment spokesman Mark Butler and resources spokesman Gary Gray.
