National emissions have been rising in Australia since the abolition of the carbon tax,but flatlined in the last financial year due to the drought and growth in renewable energy.
"In no country,especially a developed country like Australia,increases in emissions is not good news. We have to see emissions decline,"Dr Birol said.
He said Australia was a"responsible country"and"should take steps in line with the reputation it has around the world".
Newly released Department of Environment and Energy projections shows Australian carbon dioxide emissions would need to fall by 462 megatonnes between 2021 and 2031 to achieve the 28 per cent reduction pledged at Paris. The government has argued it will achieve that by cutting pollution as well as using controversial'carry-over'credits from the Kyoto protocol.
Dr Birol,who is also the chair of the World Economic Forum's energy advisory board,said the overwhelming percentage of global emissions originated from the energy sector and urged a technology agnostic approach to the dilemma.
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"Without fixing the problems in the energy sector and sorting out that,we have no chance of reaching our climate goals,"he said.
"I know the lifetime of[the NEG] was not very long,but I still believe that there is a system needed in Australia which brings emissions down,and secures electricity supply. This is very important and I hope the discussions do not become victim to political ambitions."
Describing coal as the"nerve centre"of the climate debate,the IEA chief conceded Australia would remain a major exporter to the booming Asian market but said other technologies were available to mitigate domestic reliance on fossil fuels,citing carbon capture and storage,hydrogen and solar.
"You have the financial means,you have the citizens who support it and you have the wonderful innovative brains within the country,"Dr Birol said,adding he felt"so much pity"Australia had not led on carbon capture and storage technology.
"The Australian energy debate should have much more wider perspective,"he said."Rather than looking only at one tree,we should see the whole forest that is there."
Energy Minister Angus Taylor said Australia was taking"real and meaningful action"to reduce emissions.
"Carbon capture,utilisation and storage is an area where Australia has a global competitive advantage,"he said. Mr Taylor said the government was examining ways to increase carbon capture and storage through the $2 billion Climate Solutions Fund.
Mr Taylor and Dr Birol met on the sidelines of last week's Madrid climate summit and had a positive discussion about Australia's approach to hydrogen and fuel security.
Asked whether a renewed pro-nuclear push by some Coalition MPs was sensible or realistic,Dr Birol said the development of small modular reactors - which are constructed offsite and being piloted in China and the United Kingdom - should be monitored closely by Australia.
The Australian Energy Market Operator has predicted a 15-year timeframe to get a small modular reactor on-line in Australia,which would make it an option to replace the Bayswater and Tarong power stations over the next 20 years.
"If people are really serious about finding a solution to climate change,I think you don't have a simple or single solution,we need all technologies and for me nuclear is one of them,"Dr Birol said.