In a move that will pressure Prime Minister Tony Abbott to retain Australia's goal of producing at least 20 per cent of all electricity from renewable sources by 2020, the Australian Industry Group has urged the government not to abolish or drastically cut the target.

AIG, which represents more than 60,000 businesses, said the RET had lowered wholesale power prices and there would be little benefit to consumers if the target was lowered.

The comments are in contrast to statements Mr Abbott made last year that the RET was causing electricity price rises at a time when Australia ought to be ''an affordable energy superpower''.

There are growing fears that the government plans to scale back the target after Australia's flagship clean energy development agency - the Australian Renewable Energy Agency - was axed in last week's budget.

In a submission to the government's review of the RET, the AIG said unwinding the target would require major compensation to businesses that had already made significant investments in renewable energy. It said this would have to come via the federal budget or ''an ongoing payment by electricity retailers - and ultimately energy users - in a closed, grandfathered version of the RET''.

AIG chief executive Innes Willox said on Tuesday that neither deep cuts in the target nor abolishing the RET altogether would deliver ''overall benefits to energy users''.

''After consulting with our diverse membership and reviewing the evidence currently available, we have judged that reducing the RET is likely to cost energy users as much in higher wholesale prices as it saves them in direct RET charges,'' Mr Willox said.

''The RET has swings and roundabouts for energy users.

''The cost of building wind farms and solar panels is passed on to retail customers, but the extra energy generated adds to supply in the electricity market, depressing wholesale prices somewhat.''

The industry group's submission is critical of the continued upheaval of Australia's climate and energy policies and the lack of detail surrounding the implementation of the government's emissions reduction fund to cut carbon emissions.

It says the current policy parameters and uncertainty had led to concerns it would not be possible to meet the target by 2020.

The comments follow publication of modelling that found axing the RET would mean higher energy bills by decade's end.

In its submission, the Climate Institute argues the RET will become more important in reducing emissions if the carbon tax is repealed.