A double-sided CSG dilemma

 

A double-sided CSG dilemma

 

Posted 18 August 2011, by Rob Burgess, Business Spectator, businessspectator.com

 

Four years ago, fund manager John Abernethy wrote a prescient article for Business Spectator explaining how we were degrading our ‘economic environment’ just as much as the physical and biological environment.

Abernethy, executive director and chief investment officer of Clime Investment Management, knows plenty about money and his article, published in the throes of the initial 2007 sub-prime crisis, is worth re-reading as a reminder that we have been through the financial and economic equivalents of a Chernobyl, an Exxon Valdez and the American dustbowl of the early 1930s (Economic warming, November 2007).

Today we limp forward wondering whether the ‘ecological system’ of global finance and economics will collapse altogether.

Increasingly ‘economics’, the study of scarcity, and ‘ecology’, the study of the biological systems that fill our world, are different sides of the same coin.

Thus the Greens believe they are speaking great economic truths, but based on a much longer timeframe than conventional economists. If you’ll bear with me for a moment, it’s fair to say that in theory they are right – the fairly radical suite of policies they promote would, in theory, hand a better world to our great grandchildren than the one we inhabit. In theory.

On the other side of the coin, free-market thinkers within both the Labor and Liberal parties – Craig Emerson and Malcolm Turnbull spring to mind as exemplars – promote sound economic management as a means to be able to afford to save the natural world. This kind of thought sees a shorter timeframe as fundamental to solving our problems. If we do not solve the immediate problems of political economy, hungry desperate populations around the world will uproot every tree and ravage every landscape in an attempt to survive. We can’t all be middle-class Greens voters.

And in Australia right now, the two mindsets are clashing like never before over the issue of coal seam gas.

As Robert Gottliebsen has written today and yesterday, big mistakes have been made by a number of companies – small and large – in the way they handle relationships with the farmers who own property rights to the topsoil of the land in question, and who have in many cases felt their rights violated by clumsy exploration and well drilling (Beware the CSG enfants terrible, August 17; Who’ll take the CSG blame? August 18).

However, the real environmental issue lies not with unsightly well-heads, but in what happens below. The CSG majors have refined their extraction techniques in recent years to avoid the most hazardous chemicals – one, on condition of anonymity, explained to me yesterday that what is pumped down into the ground to release CSG is around 97 per cent water and sand, with the remaining 3 per cent being “essentially the kind of household chemicals you’d find in a normal home”.

Sounds pretty benign, doesn’t it. But the other view of that harmless mixture is this: imagine filling hundreds of water tankers with a 3 per cent chemical solution, then pouring the lot into an old quarry to create a wetland environment. It might do alright, but then again it might not.

Jim Cox, professor of hydrology at the University of Adelaide, explained to me yesterday the unique characteristics of the Great Artesian Basin that extends over much of the areas of Queensland and some of NSW where CSG extraction is occurring. (This report has a neat little map of where the water is.)

In many parts of the world, underground aquifers are quite discrete, so any pollution of one is likely to be contained. This is not necessarily true of the GAB – Cox explains that areas of heavy rainfall in the north create a long, percolating flow of water that makes its way south, taking perhaps 100 years to reach the southern regions.

And that is where the two sides of the ecology/economics coin come together. The flow of pollutants created by the ‘fracking’ process of extraction is either an unacceptable burden for future generations who may rely on this water to irrigate crops in an increasingly hungry world; or it is a cost that, with the right discount rate applied, is almost negligible alongside the immense benefit of the energy we extract from CSG.

Bob Brown yesterday questioned the science used by fans of CSG, who claim that as an energy source it releases 50 to 70 per cent less CO2 than coal. That, in the industry’s eyes, makes CSG a ‘hero’ energy source.

Brown’s comments seem curiously opportunistic. While attacking Tony Abbott for questioning the science of climate change, Brown seems happy enough to employ the same tactic when politics so demands.

Labor is no better, mostly siding with farmers and landholders for political reasons when CSG is an integral part of its carbon reduction package – the transitional fuel that will help use through the difficult decades while our national finances, and voter sentiment, catches up with the scientists’ calls for a clean energy future.

In effect, all major parties are favouring the bucolic vision of an unspoiled countryside over their own stated policies to begin the serious work of carbon emissions reduction. All three forces in Australian politics – Labor, Coalition, Greens – are straining to keep economics and ecology separate for political reasons. That’s a fight we’re all sure to lose.

 

(Ed Note: please visit the original site for more content associated with this article.)

http://www.businessspectator.com.au/bs.nsf/Article/coal-seam-gas-Greens-energy-Turnbull-farming-CSG-c-pd20110818-KTTSW?opendocument&src=rss#

 

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