A report by economist Ross Garnaut has warned Australia must take a lead role in tackling climate change or risk becoming the most badly damaged country in the developed world.

Professor Garnaut has handed down his interim report on carbon emissions targets and the creation of an emissions trading scheme today.

The report was commissioned by the federal, state and territory governments to help develop major policies on climate change.

Professor Garnaut says Australia's large agricultural sector and a reliance on trade with developing nations in Asia, that are also put at risk by rising temperatures, makes it one of the most vulnerable countries in the developed world.

"Without action we are running towards dangerous points more quickly that a lot of the earlier analysis has suggested," he said.