Experts are urging for a ramp up in industrial investments so Australia can become a low emission exporting powerhouse.
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A new report from The Grattan Institute has warned jobs and prosperity will suffer if investments are not made into transitioning technology and industries which take over from traditional energy and high emitting sectors.
The research also warns a lack of planning would have a larger impact of regional communities which rely heavily of mining and fossil fuel energy.
Grattan's climate change director Tony Wood said traditional industries like coal mining will inevitably see a decline and projects would need to be implemented to ensure the regions in Queensland and NSW would see economic growth in a net-zero economy.
He also noted Australia has a once-in-a-century opportunity to place itself as a lead energy exporter and heavy industry manufacturer in a carbon neutral economy.
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Grattan sees export opportunities in green steel, aluminium for solar panels and expanding critical mineral mining such as lithium and nickel which are used in batteries and electric vehicles.
"Coal and gas will inevitably decline, which is frightening for people who rely on those industries for a living and challenging for governments that rely heavily on those sectors for economic growth," Mr Wood said.
"Australia must embrace the challenges and grasp the opportunities of the global net-zero revolution, because the consequences of failure are too ugly to contemplate and the benefits of success are too great to ignore."
The Albanese government has committed to a 43 per cent reduction in emissions by 2030.
Labor is also seeking to legislate the interim target. Energy Minister Chris Bowen has launched an inquiry into Australia's existing carbon offset scheme.
Grattan's report recommends greater cooperation between industry and government, and for the establishment of sovereign wealth funds to capitalise on existing and future mining booms.
It also suggests a phasing out of existing policies and programs which encourage fossil fuel extraction and for mining royalties to be distributed back to mining regions who will likely to experience and economic decline.
"If government and industry can forge a new strategic partnership, Australia will be able to create jobs and boost prosperity in a net-zero world by building export-oriented industries based on our vast renewable energy and mineral resources," Mr Wood said.
Stricter environmental protection laws on industrial and mining projects are being pushed for within the report.
It also highlights a growing need for the establishment of an industrial transformation future fund.
