Malcolm Turnbull is weighing up changes to the National Energy Guarantee in a bid to quell a revolt over the Liberal leadership.
While senior government members insist there is no challenge in the wind, the prime minister is under intense pressure not to legislate Australia's 26 per cent cut to emissions by 2030 pledged under the Paris agreement.
It is understood cabinet may consider on Monday an alternative plan to put the target in regulations, rather than legislation which would have to run the gauntlet of disgruntled coalition MPs and parliament.
Former prime minister Tony Abbott during Question Time. Source: AAP
However the main criticism of regulations has been that a future Shorten Labor government could raise the emissions target to its proposed 45 per cent cut, without having to legislate it.
This could be countered by putting in place some form of review mechanism making it harder for future governments which seek to raise the target.
Labor concedes certainty on energy policy is key but claims the coalition needs to settle its own internal divisions before the opposition can take a stance.
"It was a terrible signal to send the international community on the issue of emissions reduction," Labor frontbencher Ed Husic told the ABC on Saturday.
"The difficulty is this: We are being asked to comment on elements of policy that shift before us like a kaleidoscope."
The plan is also expected to include what cabinet minister Christopher Pyne described as a "big stick" approach to electricity prices, which would ensure greater competition and transparent prices among retailers.
A deal on the NEG would take pressure off Mr Turnbull amid speculation about his leadership.
Media reports suggest Home Affairs Minister Peter Dutton is gearing up for a challenge.
"I'm not aware of any such talk, nobody has raised that with me," Finance Minister Mathias Cormann told Sky News on Friday.
Mr Pyne said there was some "hyperventilating" from colleagues.
"The cabinet is 100 per cent united behind Malcolm Turnbull, and in the party room on Tuesday only four people said that they reserved their right not to vote for the NEG," Mr Pyne said.
A spokeswoman for Mr Dutton said the minister was not adding to his comments on 2GB on Thursday, when he said he was loyal to the prime minister and would resign from cabinet if he no longer felt that way.
At least 10 coalition MPs have either flagged they would cross the floor on NEG legislation or were concerned about aspects of the policy.
Loy Yang power station, Victoria Source: AAP
A spokeswoman for Mr Dutton said the minister was not adding to his comments on 2GB on Thursday, when he said he was loyal to the prime minister and would resign from cabinet if he no longer felt that way.
At least 10 coalition MPs have either flagged they would cross the floor on NEG legislation or were concerned about aspects of the policy.
The prime minister last week said regulation would "deny the parliament a voice" on the policy.
Liberal MP Craig Kelly told Sky News that regulation, rather than legislation, "could make this thing worse".
"The great concern is if you put it in regulation, that gives a future Labor party, a minister, just by a tick of a pen or a stroke of a pen to change the regulation and put the target up higher even without taking it through the full democratic process of both the House of Representatives and the Senate," he said.
