Environmental Engineering Reference
In-Depth Information
regulatory regime - it resembles the proverbial 800-pound gorilla. It goes
pretty much where and does pretty much what it wants. To question whether
it serves the Australian interest as well as it might is to ask whether there are
serious countervailing considerations that could change to bottom line.
These might include the environmental externalities, the long-run impacts
of an exhaustible-resource-extraction enterprise with a clear expiration date,
and the leakage (from an Australian perspective) of resource rents due to
dominant foreign ownership of the industry.
1,70
The Chen-Randall findings suggest several take-away messages. First, the
overwhelming dominance of CSG in the Australian rural marketplace is not
so robust when the full environmental costs of CSG development are ap-
proximated and incorporated into the analysis. In other words, markets,
which seem to be offering unambiguous endorsement of CSG development
in Australia, provide a seriously incomplete guide to CSG benefits and costs,
especially those CSG benefits and costs that accrue to Australia.
1
Second, of all the key parameters in this analysis, NPV is most sensitive to
the price of LNG, a sobering thought given the potential entry of North
American exporters into global export markets and the longer-range possi-
bility that vast shale gas resources will developed.
Third, Australia's stake in its CSG industry depends crucially on its will-
ingness to assert stronger claims to the resource rents generated. In this
respect, recent political developments are not promising: the current gov-
ernment was elected in September 2013 on a platform that featured abo-
lition of both the fledgling carbon price and a very tentative minerals
resource rent tax.
Finally, one should not make too much of the Chen-Randall case study. It
gets so much attention in this chapter because it is unique, to my know-
ledge, in presenting a numerical, empirically based benefit-cost evaluation
of CSG development on prime Australian farmland. Nevertheless, it is not
definitive and the authors were transparent about the data limitations and
the resort to sensitivity analysis when faced with key variables of unknown
and/or uncertain magnitudes.
Uncertainties and unknowns are in fact the big story. On-going and
planned CSG development is of such magnitude that its cumulative impacts
on such a vast and complex system as Australia's Great Artesian basin are
unknown and perhaps unknowable in advance.
References
1. C. Chen and A. Randall, The economic contest between coal seam gas
mining and agriculture on prime farmland: it may be closer than we
thought, J. Econ. Soc. Pol., 2013, 15(3), Art. 5.
2. British Petroleum, Energy Outlook, 2013; http://www.bp.com/en/global/
corporate/press/press-releases/bp-energy-outlook-2030-shows-
increasing-impact-of-unconventional-oil-and-gas-on-global-energy-
markets.html, (last accessed 24/06/2014).
