Canberra, Oct 14 (IANS): Reserve Bank of Australia's (RBA) Deputy Governor Guy Debelle on Thursday outlined the risks climate change and the green energy transition poses for the country's fossil-fuel reliant economy.

Debelle separated the risks into "physical risks", the direct impacts on the economy from climate events such as bushfires or floods, and "transition risks", the risks posed as Australia restructures its economy away from fossil fuels and towards cleaner energy sources, reports Xinhua news agency.

"It (climate change) has a broad-ranging impact on Australia, both in terms of geography and in terms of Australian businesses and households," said Debelle.

The address came ahead of the 2021 UN Climate Change Conference (COP26) to be held in Glasgow between October 31 and November 12.

The event is expected to further increase international pressure on the Australian government to commit to net zero emissions by 2050, a target which Prime Minister Scott Morrison has previously tip-toed around.

According to the most recent governmental figures, over 98 per cent of Australia's energy generation comes from non-renewable energy sources, dominated by coal, oil and gas.

Debelle noted that as jurisdictions across the country implement policies towards net zero and investors adjust to climate risks, the cost to Australia's fossil fuel industries will rise.

"Both of these are effectively increasing the cost of emissions-intensive activities in Australia. So, irrespective of whether we think these adjustments are appropriate or fair, they are happening and we need to take account of that. The material risk is that these forces are going to intensify from here."

He said that Australia's path forward would soon need to be paved "in a much cleaner and more sustainable way", but warned that a transitional period would be necessary.

"Countries and economies need to transition sustainably. Some projects that are not 'green' will nevertheless be needed to assist an economy transition to net zero," he said.

"There are plenty of opportunities for Australia to continue to take advantage of its natural endowments of renewable resources and continue to be an exporter of energy to the world, but in a much cleaner and more sustainable way."