Climate Change Performance Index, conducted since 2005, ranked the nation 57 out of 58 other countries. Saudi Arabia came last.
Each country was ranked on indicators ranging from CO2 emissions per capita, share of renewable energy and energy efficiency.
The report attributed Australia's less than stellar rank – dropping 21 places since last year – to the "new conservative … government".
"The … government has apparently made good on last year's announcement and reversed the climate policies previously in effect," the report said.
"As a result, the country lost a further 21 positions in the policy evaluation compared to last year, thus replacing Canada as the worst performing industrial country."
Current situation 'to get worse'
Guy Ragen, a campaigner from the Australian Conservation Foundation and then adviser to former ALP Minister for Climate Change Greg Combet, said the poor ranking was a result of Australia's modest emission reduction goals and high per capita pollution.
Ragen said the Coalition's move to scrap the carbon price earlier in the year, along with its more recent attempt to slice the Renewable Energy Target through Senate support, would probably see the policy rating drop even more.
"While the developed world is going in one direction, Australia is going in the opposite," he said.
"You'll have to assume [the policy rating] will get worse."
Denmark, Sweden and the UK were ranked the top three nations in the survey; Canada and Kazakhstan occupied the slots above Australia.
The release of the report coincides with key climate talks currently taking place in Lima, Peru, where global leaders are working towards getting a climate treaty drawn for the United Nations Climate Change Conference in Paris late in 2015.
