The federal government has backed down from plans to hand environmental approval powers to the states, upsetting business, but delighting green groups which opposed the idea from the outset.
The Business Council on Australia has attacked the decision, saying the federal government has delivered a frustrating reversal on its commitment to cut green tape for major projects.
The backdown comes after Prime Minister Julia Gillard met with business leaders in Canberra yesterday, although the issue will still feature high on the agenda of today's COAG meeting with state and territory leaders.
Another issue on today's agenda is keeping a lid on power prices and getting more money into schools.
Ms Gillard has said she will use charm and force to secure a deal on electricity prices.