The ACT is unlikely to sign up to a national energy agreement which ACT Climate Change Minister Shane Rattenbury says has "weak" emissions targets and would allow major retailers to dominate the market.
A discussion paper on draft options for the National Energy Guarantee (NEG) was released on Thursday.
Under the agreement, retailers would have to invest in generation or storage that would be able to meet consumer demand affordably and reliably while cutting emissions.
But according to the discussion paper, retailers could be allowed to defer or carry forward a proportion of their emissions reductions each year under the scheme.
Companies could also be allowed to purchase offsets, such as Australian Carbon Credit Units from domestic markets, or equivalent international credits in order to meet their obligations.
Mr Rattenbury told the ACT Legislative Assembly on Thursday there were "quite a few" problems with the draft agreement.
"Its emission reduction targets are too weak. The government's target of 26 to 28 per cent reduction in the electricity sector is not compatible with Paris targets to keep global temperature rises below 2 degrees - especially as it will leave a disproportionate burden on other sector," Mr Rattenbury said.
"Furthermore, it also only models outcomes to 2030, when we must be developing long term targets."
Mr Rattenbury also said the agreement would "stymie" the development of renewable energy and prevent states and territories from exceeding the "weak" targets.
"It is likely to cement the dominance of a few big energy companies, otherwise known as 'gentailers'. The obligations it places on the retail sector are likely to help entrench the dominant energy companies, which is bad for competition, prices and innovation," Mr Rattenbury told the Assembly.
"It stymies the development of renewable energy, as it only adds 1-4 per cent additional renewable energy capacity over 10 years, compared to business as usual.
"This means the NEG will create little, if any, new renewable energy investment and it artificially extends the life of highly polluting fossil fuels like coal.
"Given the significant effort by numerous state and territory governments to develop ambitious renewable and climate change policies, it is an absolutely travesty that the Commonwealth proposes to undermine those efforts."
A stakeholder forum and webinar will be held on the NEG on February 26. Submissions are due on March 8, and a draft design will be given to the COAG Energy Council in early April. National energy ministers will consider the report at the COAG meeting in late April.