The future of the National Energy Guarantee is on the table as Energy Minister Josh Frydenberg prepares to meet with his state and territory counterparts in Sydney.
Pressure is mounting on the ministers ahead of Friday's crucial meeting, with Mr Frydenberg facing opposition from Labor governments in Victoria, Queensland and the ACT.
Mr Frydenberg says some of Victoria's 11th-hour demands for its support are "nonsensical" and the federal government could not agree to them.
The Victorian government wants emissions reduction targets to be set by regulations not legislation, that they be reviewed every three instead of five years and that a transparent register be set up to ensure the policy looks after consumer interests
"For a start, this is the responsibility of the federal government, not the state government," he told Sky News on Thursday.
"So it's a good example of overreach by Victoria."
The National Energy Guarantee centres on a target of a 26-28 per cent reduction on 2005 level emissions by 2030, while ensuring supply is reliable due to electricity retailers investing in dispatchable energy sources.
The coalition party room is set to debate legislation next Tuesday, and the architect of the scheme says if there's no agreement in the next week the plan will be off the table until the middle of next year.
"At that point it's probably gone," Energy Security Board chair Kerry Schott told ABC radio on Thursday.
Labor leader Bill Shorten says the government must not lecture the states but listen to them.
"I think that if there's no agreement it shows that Mr Turnbull is not a very good negotiator," he said.
