Most of Australia's coal reserves will have to be left unburnt, according to a report from the federal government's Climate Commission.
The report puts the advisory body on a collision course with some of the nation's biggest export industries and marks the first time a government agency has endorsed calls for fossil fuel industries to be phased out because of their contribution to climate change.
Its findings suggest most of Australia's known coal, oil and gas reserves - many of which are already subject to minerals production licences held by companies such as BHP Billiton and Rio Tinto - must be left alone if the world is to avoid dangerous climate change.
The commission acknowledged its conclusions were ''sobering'' and that the potential for economic disruption could be serious but said there was no alternative if the world was to avoid dangerous climate change. ''How people react to this is up to the policymakers and governments, as well as investors,'' said Lesley Hughes, who co-authored the report, The Critical Decade 2013 - Climate Change Science, Risks and Responses.
''It isn't our job to reconcile the politics of this with the science; we are simply presenting the facts as best we know them. Just because the facts may be unpalatable to some people doesn't make them any less important.''
Australia's fossil fuel resources are the equivalent of about 51 billion tonnes of greenhouse gases, about one-twelfth of the world's ''carbon budget'' of about 600 billion tonnes - the amount scientists estimate can be burnt by 2050 if the world is to stop temperatures rising more than two degrees.
If that budget is exceeded, it is likely to trigger dangerous global warming that escalates up to four or five degrees this century, the report says. The world is still eating into its budget far too fast, with average global emissions rising at about 3 per cent a year, it says.
''If emissions could somehow peak in 2015 … the maximum rate of emission reductions thereafter would be 5.3 per cent, a very daunting task,'' the report said.
Climate Change Minister Greg Combet said the carbon price had driven down coal use 7 per cent and most countries buying Australian fossil fuels would soon have similar carbon prices. A spokeswoman for the shadow minister for climate action Greg Hunt said he would ''consider the report'' but ''we do not support shutting down Australia's major export industry''.