Australia is due to release its latest national emissions targets in September, setting out plans to decarbonise an economy built largely on mining and coal.

"The question is: how far are you willing to go," UN climate chief Simon Stiell said in prepared remarks ahead of a speech in Sydney.

"This isn't just the next policy milestone. It's a defining moment."

Australia has previously pledged to cut greenhouse gas emissions by 43 percent before the end of the decade, and to reach net zero by 2050.

It is currently developing its next round of targets -- or Nationally Determined Contributions -- a key obligation under the landmark Paris climate agreement.

"This is the moment: to get behind a climate plan that doesn't just write that vision into policy, but delivers in spades for your people," Stiell said.

"So don't settle for what's easy.

"Go for what will build lasting wealth and national security. Go for what will change the game -- and stand the test of time."

Australia has poured money into solar power, wind turbines and green manufacturing -- pledging to make the nation a renewable energy superpower.

But Australia's green ambitions are at odds with its deep entanglement with lucrative fossil fuel industries.

It remains one of the world's biggest coal exporters and continues to heavily subsidise fossil fuel sectors.

Australia has attempted to burnish its green credentials by bidding to host next year's UN climate summit alongside Pacific island neighbours threatened by rising seas.

Stiell said Australia was running out of time to make a difference.

"This can be Australia's moment," he said.

"Consider the alternative: missing the opportunity and letting the world overheat."

Australia Climate Change Authority chair Matt Kean said the country had a "fighting chance to make a positive difference".

"The stakes couldn't be higher -- but we have solved major challenges in the past, and we can do so again if we remain clear-eyed and unflinching."