Australia's love affair with diesel cars has helped push the nation's energy emissions to a record high, new analysis shows, in a warning that road transport rivals electricity as the most pressing energy challenge facing the Turnbull government.

Respected energy analyst Hugh Saddler compiled the disturbing report on behalf of progressive think tank The Australia Institute. Dr Saddler said the failure of successive governments to invest in efficient transport infrastructure, such as rail, has allowed transport fuel emissions to keep rising - a trend bucked by the rest of the world.

Among developed nations, only Australia and Turkey are breaking emissions records for energy combustion.

The findings come as the Turnbull government grapples with how to secure affordable, reliable energy supplies while cutting carbon emissions. The rise in petroleum fuel emissions suggests the electricity sector must make even deeper emissions cuts to ensure Australia meets its commitments under the Paris climate accord.

Dr Saddler, an honorary associate professor at the Australian National University, found Australia's annual energy combustion emissions increased to 383.3 megatons of carbon dioxide equivalent in the year to June - slightly higher than the previous peak in 2009.

The findings were based on a comparison with emissions data for the year to March. They formed part of the National Energy Emissions Audit, a project of the institute's climate and energy program.

Energy combustion emissions stem from electricity generation and other fossil fuel use in sectors such as transport, construction and mining. They constitute roughly 70 per cent of Australia's total greenhouse gas emissions.

The audit found a large rise in consumption of petroleum fuels, particularly diesel, was the main cause of the increase.

The increased popularity of diesel engine cars has been driving the growth in diesel consumption, Dr Saddler said.

Diesel-powered vehicles constitute 22.2 per cent of the national fleet, up from 15.9 per cent in 2012, according to the Australian Bureau of Statistics. Sales of utes and SUVs have reportedly been central to this growth. Diesel vehicles also include buses, trucks and light commercial vehicles.

While diesel cars create lower emissions than other cars, Dr Saddler said road use was encouraged through a lack of investment in other transport modes, Australia's car fleet was less efficient than those in most other countries and Australia did not have mandatory fuel efficiency standards.

Activities such as mining, agriculture, rail transport and construction also contributed to increased diesel use.

Petrol consumption and emissions also increased for the first time in six years. Electricity generation emissions continued to fall, while natural gas emissions increased slightly.

The report concluded that Australia "has no policies likely to slow the growth in emissions from petroleum fuels" either now or in the long-term and "there is no indication of when or if growth in petroleum emissions will stop".

"The absence of any serious policy measures to curb the growth in energy consumed by road transport is a failure almost as great as the failure in electricity industry policy," it said.

The report concluded that "decisive reduction in emissions from electricity generation ... will be needed if Australia is to comply with its Paris Agreement obligation".

Environment and Energy Minister Josh Frydenberg said the government established a ministerial forum on vehicle emissions to consider possible reforms to Australia's fuel efficiency, fuel quality and noxious emissions standards.

"We continue to consult widely with key stakeholders to ensure a balanced, evidence-based approach to this important area of public policy," he said.

Mr Frydenberg said Australia has a strong record of meeting its international emissions reduction commitments, and was on track to beat its 2020 Kyoto targets by 224 million tonnes.

"Our emissions per capita and per unit of GDP are currently at their lowest level in 27 years," he said.

"In 2016, we ratified the Paris Agreement and committed to a responsible emissions reduction target of 26 to 28 per cent below 2005 levels by 2030.

"This target will see Australia's emissions per person halve and the emissions intensity of our economy reduce by two thirds."

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