A Greens MP in the New South Wales Parliament, Ian Cohen, says it's the state's ethical duty to relocate the entire 90,000 people on Kiribati.
This follows the Kiribati President, Anote Tong, saying his country may be uninhabitable in 50 years because of the effects of climate change.
Mr Cohen says because of the quantities of coal the Australian state sells to the world it is ethically obliged to help the people of Kiribati.
He says New South Wales could easily absorb the numbers over a 50-year period.
Mr Cohen says there needs to be a change to the weighting of immigration policy from favouring those who can pay their way to helping those most in need.
He says if royalties on coal were lifted to 10 percent this could help fund the relocation of Australia's Pacific Island neighbours and future climate refugees, including the people of Kiribati.