Labor's support for the National Energy Guarantee will be conditional on their ability to raise emissions reduction targets if they form government.
The national energy guarantee risks locking in a low ambition emissions reduction target for the electricity sector, a new report says.
Federal Energy Minister Josh Frydenberg told the National Press Club on Wednesday the guarantee would lock in Australia's Paris Agreement target of a 26 to 28 per cent reduction on 2005 emissions levels by 2030.
Labor has vowed to increase the target to 45 per cent overall by 2030 if it forms government after the next election, based on a recommendation from the Climate Change Authority.
Energy spokesman Mark Butler said on Thursday Labor's support for the legislation, which would come before parliament by the end of the year if the NEG gets unanimous support from the states, would be conditional on their ability to ratchet up the target.
"That is certainly going to be a condition of any support we give to the proposal, it must be scalable," he told ABC radio.
A report prepared for the ACT government suggests the current low ambition targets give little confidence the NEG will last the medium to long-term.
"Low ambition gives little confidence that the scheme will remain intact in the medium to long term," the report by consultancy group Ecoperspectives says.
"A potential solution to this may be to avoid locking in ambition and making it easy to tighten ambition going forward."
Currently, individual sectors are each working toward a 26 to 28 per cent reduction to achieve the same figure nationally.
ACT Greens leader and Climate Change Minister Shane Rattenbury said that is a concern.
"We don't think that Australia can meet its Paris targets under this proposal because it doesn't extract enough emissions reductions from the energy sector," he told AAP on Wednesday.
"We know that it's a cheaper place to do it than say the agriculture sector or the transport sector, so that's certainly an issue."
The Ecoperspectives report also warned the NEG could "put upward pressure on power prices and may even fail to improve reliability".
But Mr Frydenberg said on Wednesday independent modelling had forecast a 23 per cent drop in wholesale prices between 2020 and 2030 while retailers would have reliability obligations to meet.
Australia's energy ministers will meet next Friday to consider the framework, which is yet to be released.
It requires unanimous support from states and territories and Mr Frydenberg is hopeful that will happen by August so legislation can go through federal parliament by the end of the year.