Environment Minister Rebecca Vassarotti on Thursday released the newest State of the Environment report, which is understood to recommend legislating a boundary to contain urban expansion.

The report, prepared each year by the ACT's Commissioner for Sustainability and the Environment, will give renewed weight to the ACT Greens' push to establish city limits for the ACT and highlight the party's divergence from Labor, which believes new greenfield suburbs will be needed.

"The commissioner's report says that if we are to prevent environmentally destructive impacts of urban development, we must focus on building more houses inside our current city footprint instead of continuing to spread out," Ms Vassarotti said.

Ms Vassarotti, the deputy Greens leader, said the environment was in crisis, with urban expansion, bushfires and a warming climate contributing to the bush capital's decline.

"Nature doesn't respect the boundaries of ministries. The message to the government in this report is clear: we need to consider and give greater priority to the environment in every decision we make," she said.

"Previous State of the Environment reports have shown that Canberra's footprint is expanding, contributing to environmental destruction on the outer edge of our city.

"Fast forward to 2024 and Canberra's city boundaries continue to expand in the north and west with several developments in the Molonglo Valley, Gungahlin and West Belconnen.

"With the ACT's population is projected to grow by 70 per cent by 2060, we have a long way to go to sustainably manage our growing city."

The ACT Greens last year endorsed a policy position backing "city limits" on Canberra,

"Our party has agreed we should define 'city limits' within the ACT, which would prohibit development outside our current footprint to simultaneously address the climate emergency and biodiversity crises that Canberra is not immune to," Ms Vassarotti said in August.

Chief Minister Andrew Barr last week told a Committee for Economic Development of Australia event that new suburbs would need to be built to meet the needs of the city's growing population, alongside more infill housing.

"We want more people living in our CBD, but we will also need new suburbs," Mr Barr said.

"The approach to meeting that housing supply needs to be multifaceted. It can't just be all infill, nor can it just be new suburbs. So it needs to be the totality of our city footprint, some new areas and a particular focus on new housing associated with employment centres and transport corridors, which has really been the direction of the policy planning policy in the territory for two decades."

The State of the Environment report said the government should "minimise the growth in urban greenfield development by encouraging and providing opportunities for medium- and high-density dwellings, and residential infill developments".

"Land development driven by population growth continues to be an environmental challenge for the ACT," the report said.

"The ACT's projected future urban growth does not support a compact and efficient city."

The State of the Environment report recommended developing climate change adaptation plans for key ACT sectors, such as education and health.

The report has also recommended greater independence for environmental statutory officeholders, including the Conservator of Flora and Fauna.

The conservator should be established as a standalone, independent role outside ACT government directorates, the report recommended.

Water, Energy and Emissions Reduction Minister Shane Rattenbury said the report highlighted the damaging impact of urban development and nutrient pollution on local waterways and lakes, as well as the negative effect of the Orroral Valley bushfire.

"The combined impacts of climate change and urban development are making it more important than ever that we take good care of our waterways by improving water quality, restoring vegetation along rivers and creeks and managing sediment runoff from urban development and rural land use," Mr Rattenbury, who is also the Greens leader, said.

"In good news, despite these pressures the report found that we are making progress, noting the positive outcomes for urban water quality of our Healthy Waterways work and the adoption of water sensitive urban design approaches."

The State of the Environment report recommended setting scope 3 emissions targets for all ACT government operations. Scope 3 emissions are indirect greenhouse gas emissions and the government has previously rejected a recommendation to expand its emission-reduction target to include scope 3 emissions.

The report recommended the government develop an extreme heat policy for the ACT and consider establishing a chief heat officer.

"The chief heat officer would oversee the implementation of heat wave-related preparedness, response and recovery and co-ordinate effort across government, private sector and community," the report said.

The territory government should also incentivise reuse and redevelopment of existing buildings and materials, including potential rebates.

The government should "commit to achieving best practice thermal comfort and energy efficiency standards in the maintenance, repair, modification and construction of public housing", the report recommended.