State and territory energy ministers have agreed to continue discussions on the National Energy Guarantee (NEG).

The NEG is the latest attempt to create energy policy certainty in Australia and ensure a reliable and affordable supply of power that is in line with Australia’s climate targets.

The national targets seek to cut emissions from the electricity sector by 26 per cent compared to 2005 levels by 2030.

After ministers met last week, federal energy minister Josh Frydenberg said “there is still a lot of work to be done”, but that the states and territories would hopefully sign up to the NEG later this year.

The states have agreed to keep talking about the NEG, but some argue it is too low to drive any new investment.

Queensland Labor Minister Anthony Lynham says he will continue the talks reluctantly.

He said the Federal Government had not given any details on how the energy plan will actually work, including crucial aspects like how emissions reductions would be divided up between the states and territories.

Australian Industry Group chief Innes Willox said it is good that the ministers can continue working on the NEG, but that there are significant outstanding issues that need to be resolved.

He said there would have to be some compromise over how ambitious the reductions target is.

“It is clear that the scope of ambition will continue to evolve, and that all sides are committed to their approaches,” Mr Willox said.

“The challenge will be to find ways to accommodate these clear differences without perpetuating the current deep uncertainty or preventing the badly needed fall in energy costs.”

Some analysts say the energy sector should make deeper cuts than other sectors of the economy because renewables make it cheaper to achieve those cuts.

John Grimes from the Smart Energy Council says that because the nation is on track to meet the 26 per cent emissions reduction from the electricity sector by 2020, the NEG will actually work to freeze investment in new projects built in the following decade.

“This policy is designed to put a cap on renewable energy and lock in the central place of coal,” Mr Grimes said.

“It will not encourage uptake of renewables. It will not provide investment certainty. The only certainty it provides is no large-scale projects will be built.”