A government-appointed panel recommended in August that Australia weaken or phase out the target in favour of a lower-cost approach to cutting greenhouse-gas emissions.
But the two parties differ on what a Renewable Energy Target (RET) should look like.
Any changes face the real possibility of being blocked in the Senate by Labor, the Greens and some crossbenchers.
The RET is a bipartisan target which requires one-fifth of Australia's energy use to be sourced from renewable energy by 2020.
The RET is designed to mandate the proportion of electricity generated from selected renewable sources.
It is a policy that taxes electricity users to subsidise selected renewable-energy producers who buy renewable-energy certificates.
They can sell to other energy producers if they meet their set targets for renewable-energy production.
The current legislation specifies the target as 41,000 gigawatt hours.
But following a review by businessman Dick Warburton, the Government says changes in Australia's energy use mean that figure is likely to represent much more than 20 per cent by the end of the decade.
The large-scale target was set at 41,000 gigawatt hours in 2008, when it was projected to be 20 per cent of demand in 2020.
However, electricity demand has fallen instead of rising, leaving that target more likely to represent 27 per cent of demand.
Industry Minister Ian Macfarlane said the Coalition only ever signed up to a 20 per cent RET.
Mr Macfarlane has indicated the changes would include exempting all trade-exposed industries, including aluminium, from the large-scale Renewable Energy Target but there would be no change to the household, rooftop solar scheme.
"We will maintain the RET at 20 per cent real," he said.
"And we will exempt from the target all energy-intensive, trade-exposed industries as currently defined in the Act, and that includes, of course, aluminium, but a number of other industries which are under pressure,
"The jobs in those industries are under pressure from costs overall, and so maintaining pressure on those industries by maintaining them in the RET is illogical."
Those industries include copper smelting, zinc and cement.
Labor has said it is open to talks on the issue.
But already, Opposition leader Bill Shorten has expressed his unhappiness with the government's plan to scale back the amount of renewable energy produced.
"Labor has made it clear that we will engage in discussions, but we've got no-go zones," he said.
"You know, the government says they want a real 20 per cent. I call it a fraud 20 per cent, a fake 20 per cent."
Mr Macfarlane admits he does not expect a resolution this year, but he has warned Labor he would deal with the Senate crossbench if necessary.
"If the Labor Party and the Coalition are able to negotiate an outcome, then the industry can go forward and invest confidently," he said.
"If we can't, it's the renewable-energy industry that will get hurt."
Greens leader Christine Milne is seeking talks with Prime Minister Tony Abbott on climate policy.
She claims weakening the RET would decimate the solar and wind industries and the jobs they created, as well as drive up power prices.
"This is a death sentence to the renewable-energy industry, and Labor should not be negotiating," she said.
"Labor should stand firm and block this, because we have the numbers in the Senate not to pass any changes to the Renewable Energy Target. So why would Labor be deciding to cave in on the side of coal, rather than hold the line on renewables and force the Government to back down and to start closing some coal-fired generators? That's really the choice here."
Clive Palmer has ruled out any changes to the RET before the 2016 election, and the industry says any deal must be between the major parties to restore investor confidence.
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