The country's total carbon output was 543 million tons, excluding agricultural emissions.
To meet its international emissions obligations, Australia's emissions shouldn't exceed 475 million tons. Australia's target under the Kyoto Protocol is to limit carbon pollution in the 2008-12 period to 108 percent of 1990 levels.
The report indicates that carbon pollution from the energy sector increased 44 percent from 1990 to 2010.
As the world's largest polluter per capita in the developed world, Australia relies on coal for 80 percent of its electricity.
Carbon emissions from industrial processes increased 13.4 percent, the report says, fueled by a surge in iron and steel production.
"What this demonstrates is the importance of taking action on climate change, in order to cut our carbon pollution and drive investment in a clean energy future," said Australian Minister for Climate Change and Energy Efficiency Greg Combet in a statement.
The report comes as opposition grows toward the government's proposed carbon pricing scheme, which would apply to the energy sector, transport, industrial emissions and waste.
Under the government's proposals, Australia would introduce a price on carbon emissions from July 2012, with an emissions trading scheme that could begin from 2015.
The plan is subject to federal Parliament passing the legislation.
In a joint industry letter to Prime Minister Julia Gillard, executives from 45 mining, energy, agriculture and food firms raised concerns about the proposed carbon pricing scheme. They warned of job losses in emissions-intensive industries that must compete with global rivals that don't tax carbon.
"These businesses operate in fiercely competitive global markets and have no capacity to pass direct or indirect carbon costs on to our consumers," the letter says.
The executives called on the prime minster to confirm that the government will ensure Australia's trade exposed sector won't be unfairly disadvantaged by a carbon tax.
"A carbon pricing scheme that fails to include measures to fully preserve the international competitiveness of Australia's export and import-competing industry during a period of uneven or limited international action will cost jobs, investment and reduce the living standards of all Australians," they wrote.
"This could lead to a perverse outcome whereby global greenhouse gas emissions actually increase as market share or new investment shifts to nations using less-efficient production methods," the letter said.