The final figure of 33,000 gigawatt hours by 2020 was reached during talks between the parties in Melbourne on Friday.
The impasse began when the government launched its Warburton review of the target last year, which had been set at 41,000GWh by 2020.
The government initially proposed a "true 20%" figure of about 26,000GWh by 2020, while Labor and the Clean Energy Council (CEC) held out for around 35,000GWh.
Last month, the CEC proposed a compromise figure of 33,500GWh, which the government rejected.
CEC chief executive Kane Thornton said given the government's review of the RET had dragged on for more than 14 months, freezing investment in major projects in the process, the 33,000KWh target was a pleasing development and clearly indicated that the end was in sight.
“The renewable energy sector would reluctantly accept a resolution of the RET at a target level of 33,000GWh of large-scale renewable energy by 2020, along with the removal of legislated reviews, an unchanged small-scale scheme and the continuation and increased focus on initiatives to deliver technology diversity,” Thornton said.
However, he expressed “serious concern” over the government's proposal to retain the two-yearly review of the scheme, saying the industry has been given repeated assurances they will be removed.
Thornton said the reviews were the root cause of the crisis the industry was facing, and a deal which guaranteed another review next year could be a death warrant for the industry.
The CEC also said it would not back a last minute demand by the government to include wood waste fuel as a renewable source.
"The government also proposed the inclusion of native forest wood waste, something the Clean Energy Council does not support unless it can be verified as coming from [a] sustainably managed forest," Thornton said.
Labor environment spokesman Mark Butler said the party would not support this demand.
However, the government said biomass fuel had always been part of the negotiations and Industry Minister Ian Macfarlane told reporters he did not need the opposition to include biomass fuel as he had enough support from crossbench senators.
"We've told Mark Butler that we will be continuing to progress the issue. We'll move the legislation in the House of Representatives inclusive of wood waste," Macfarlane said.
"We will be relying on the Labor Party's support to carry the bulk of the legislative amendments which will include the 33,000 gigawatt hour target, but we would expect that the crossbench would support us on wood waste."
Either way, the CEC is urging the government and Labor to resolve all issues quickly.
“It is important these matters are resolved quickly and that a clear bipartisan deal is landed as quickly as possible, to restore the bipartisanship necessary for the sector’s future. A messy negotiation on the floor of Parliament will not give investors the confidence to commit billions of dollars to new renewable energy investment," Thornton said.
“With the Federal government and the Labor party so close to a common position, we are hopeful that common sense will prevail and the two major parties will be able to sit down and quickly resolve this crisis. No one in the industry is happy about the prospect of a reduced target for large-scale renewable energy, but it is time to put this issue to rest.
“The industry believes it is important to start focusing on providing longer-term certainty to the sector beyond 2020 and 2030, and any resolution to the current deadlock needs to recognise the important of supporting a broad diversity of technologies. This must include a commitment to the retention of the Australian Renewable Energy Agency and the Clean Energy Finance Corporation."
