Australia is poised to flourish in terms of future coal and gas exports but it needs to address infrastructure bottlenecks and workforce shortages, International Energy Agency executive director Maria van der Hoeven says.
Global energy demand is set to grow by one-third to 2035, with China, India and the Middle East accounting for 60 per cent of the increase.
Despite the growth in low-carbon energy sources, fossil fuels remain dominant.
The growth of demand in emerging countries is set to outweigh the reduction of demand in OECD countries as they shift away from coal and oil to renewable energy.
Ms van der Hoeven said Australia was expected to become the world's largest coal and gas producer, with potential to be the second-largest LNG exporter.
"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, providing an in-depth review of Australia's energy policy.
"So better coordination between the states and within the states, possibly involving industry, could be helpful.
"And federal and state governments should take a proactive approach in order to address workforce shortages in terms of education, training and attracting overseas workforce."
Australia's existing electricity models had served it well and the recently released energy white paper was commendable, Ms van der Hoeven said.
"Should it be implemented Australia will be well positioned to lead the transition towards a low carbon economy while remaining a major global energy provider," she said.
The government's commitment to carbon capture and storage was praiseworthy but Ms van der Hoeven said there was a lack of public awareness of it.
She applauded the federal government's introduction of a carbon price and its efforts to link it to international schemes.
But the world needed to wake up to energy efficiencies, which stood to cut global primary energy demand by one fifth of 2010 levels by 2035 in an efficient world scenario.
Ms van der Hoeven said creating further efficiencies was about doing more with less and there had been a major failing in the area in many parts of the world.
The former Dutch economics minister hoped energy intensity targets set by China and tighter car standards in the US and European Union were the start of an unconventional revolution for "hidden fuel," which was fuel not used.
Energy Minister Martin Ferguson said the IEA's review of domestic policy confirmed Australia was well placed to meet domestic and regional energy challenges.
The IEA's world energy outlook had identified untapped opportunities to improve global energy efficiencies, with four-fifths of potential in the building sector and more than half in industry not yet realised, he said.
"Australia has demonstrated through programs such as the Energy Efficiency Opportunities program, that to unlock, this potential energy efficiency needs to be integrated into business decision making," Mr Ferguson said.
Australia's biggest energy users were implementing projects to reduce energy consumption and greenhouse gas emissions worth up to $800 million-a-year in saved energy costs, the minister said.
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