Australia's coal and gas exports will surge as its resource sector booms, but it faces challenges such as labour shortages and infrastructure bottlenecks, the International Energy Agency said Monday.
In a review of Australia's energy policy, the IEA also welcomed the government's carbon price mechanism to help combat climate change but said the country needed significant investment to reach its goals.
"The IEA strongly supports Australia's continuing efforts to increase and improve low-carbon energy in the country," IEA executive director Maria van der Hoeven said.
But she warned of the challenges facing the world's ninth-largest energy producer -- which is one of only three net energy exporters in the OECD -- from its unprecedented resources boom.
"One of the biggest challenges for Australia is to manage this surge and prevent increasing costs due to potential workforce shortages and infrastructure bottlenecks," she said in Canberra on Monday.
The IEA review said the scale of Australia's energy policy ambitions was "enormous and very costly even for a resource-rich nation".
"Significant investments will be needed for the clean-energy transition and building the infrastructure necessary to expand the domestic resource base," it noted.
On the carbon price, which will place a levy on about 350 of the country's top polluters and is deeply divisive politically in Australia, the IEA was supportive.
"The IEA views carbon pricing as a critical component of climate policy, and we hope its introduction in Australia will put an end to much uncertainty in the energy sector," van der Hoeven said.
"But even with a carbon price, Australia will need supplementary policies, like energy-efficiency policies to unlock low-cost abatement and technology policies to help lower the long-term cost of new technologies, including renewable energy and carbon capture and storage."
Australia's energy resource base includes coal, natural gas, oil and uranium and has extensive untapped wind, solar and geothermal resources.
The energy sector contributes between 16-17 percent of current GDP and employs approximately 100 000 people, the report said.