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Regulating the mining of coal seam gas « Previous | |Next »
December 1, 2011

The Senate's Rural Affairs and Transport References Committee has published an interim report into the impact of mining of coal seam gas in the Murray-Darling Basin. It is part of its inquiry into the management of the Murray-Darling Basin and it was handed down yesterday.

It recommends that coal seam gas exploration be suspended in Queensland and New South Wales "in that part of the Murray-Darling Basin overlying the Great Artesian Basin". There was tripartisan support---the Coalition, Labor and the Greens---for the suspension, and by implication a criticism of the pro-development ethos in Queensland and the Queensland Government’s policy of "adaptive management", which primarily means approving exploration until it can be proven that it is a danger to the environment.

Coal seam gas is a form of gas mining in which coal deposits under the earth are hydraulically fractured, using a dirty mixture of water and chemicals, allowing the methane gas to bubble up and be captured. The danger in this case is de-watered aquifers, millions of tons of salt piled up, polluted water from the chemicals used in fracking, as well as the despoilation of prime agricultural land.

Both the NSW and Queensland state governments want the mining tax revenues and they sided with the cowboy exploration mining companies, who pretty much demanded that the farmers get out of the way. The federal government is eying a billion dollar project, and it has come firmly down on the side of the miners.

Apparently it is now a violation of neo-classical economics principles to require miners to internalize the cost of negative externalities. That is contrary to economics and would lead to a poisoned world in which firms that spent money to restrict harmful externalities who would be driven out of business by their competitors who avoided such expenses and obtained a decisive cost advantage. Policy uncertainty is choking development.

Parliament, in contrast, has taken the opposite stance to a neo-liberal mode of governance (ie., markets are self-correcting, bubbles are impossible, and economic crises are impossible). Parliament is concerned to limit the market for social and environmental objectives. The Committee says that:

it has seen examples of land degradation caused by seepage from extracted water storage ponds, leaking gas pipes, untreated water seeping into watercourses and erosion caused by poorly installed pipelines. It has heard from landholders who felt bullied or patronised by gas company representatives seeking access to their land. ....In addition many submissions to the committee have suggested that the regulatory framework is not sufficiently robust, and particularly that the regulatory authorities lack the resources to monitor such a dispersed and complex industry.

It is going to be interesting to see how the state and federal governments will respond to this report, especially with respect to the Great Artesian Basin and the revision of the Environment Protection and Biodiversity Conservation Act 1999 to include the ground water that forms part of the Great Artesian Basin.

The miners will act to prevent effective regulation. Their attacks on regulatory policy reform become “policy uncertainty,” which becomes a purported empirical basis for preventing effective regulation.

| Posted by Gary Sauer-Thompson at 1:49 PM | | Comments (1)


Don't hold your breath waiting for something sensible from the Qld govt. Along with the mines there are plans for several processing plants and deepwater shipping harbours up and down the coast. The Great Barrier Reef doesn't enter into it, so why should a mangy old artesian basin? We keep being told it's all ok because the gas will give us cleaner energy than coal, yet they can't export the liquid gas fast enough.

The feds have the final say in most of these projects, and as far as I know, they haven't knocked one back yet. One mine has been closed for seeping chemicals into cows drinking water. Les might know more about it, but that was ages ago and it's probably started up again now that the publicity has died down.