Fracking operations by energy company Origin have come under scrutiny by one of the country’s biggest ethical investment companies, Australian Ethical Investments (AEI).

AEI Chief Investment Officer James Jordan told The Echo this week that he believed the controversial gas extraction method ‘poses significant environmental questions’, and as a result the company’s inclusion in its portfolio is under review.

Farmers and rural landowners, along with supporters of renewable energies have condemned the practice, which they claim involves hazardous chemicals that can potentiality poison water tables.

Fewer greenhouse emissions: WWF

And while hysteria and demonising surrounds fracking, the reality, according to Mr Jordan, is that natural gas has fewer greenhouse gas emissions than coal, and can be used at large scale immediately as the world shifts from a heavy reliance on coal, to a large reliance on renewable energy. 

‘This view is shared by leading environmental group the World Wildlife Fund (WWF),’ he says, and points to their Clean Energy Future report: wwf.org.au/ourwork/climatechange/cleanenergyfuture.

‘AEI is engaged in ongoing research and dialogue to monitor the risks and update our risk assessment, and if we form the view that the uncontrolled risks outweigh the positive ethical dimension associated with lower greenhouse gas emissions from coal-seam gas, we would divest.’

According to Mr Jordan, AEI invests according to the Australian Ethical Charter (www.australianethical.com.au/ethical-charter).

‘In broad terms we seek out companies that are doing positive things for the environment and society, and we try to avoid investment in companies that we judge to be harmful to the environment and society.’

This also means uranium, he says. ‘Australian Ethical avoids investment in uranium mining and nuclear power as we consider them to be harmful to the environment.

‘We have stuck to our guns on this, whereas a number of other ethical funds on the market dropped their uranium screens when BHP got involved in uranium mining through the takeover of WMC.’

Origin responds

Origin currently meets around 40 per cent of Queensland’s natural gas needs through coal-seam gas, and has done so for several years, says Origin’s media officer Chris Zipf.

He told The Echo that the process of CSG production is not ‘fracking’, and that Australian operations, while similar to the US, had major and important differences.

‘In the US, natural gas is produced from a variety of sources –  including conventional non-associated gas, conventional associated gas, shale gas, tight sand gas and coal-bed methane (called coal-seam gas or CSG in Australia).

‘Most of the claims being presented about the US gas industry through movies, websites and social media mechanisms concern shale-gas production, and not coal-seam gas production.’

The techniques used by the US coal-bed methane industry have the closest similarity to CSG extraction in Queensland, according to Mr Zipf. 

‘Coal-Seam Gas is almost 100 per cent methane (which is non-toxic)… and has a lot more simplified production, storage and treatment processes.’

He claims his company is not drilling into aquifers that supply agricultural water supplies. ‘It is not considered to be a potable or drinking water source given it is brackish.’

Mr Zipf also argues that a recent parliamentary committee inquiry in the UK into shale gas found no evidence that the hydraulic fracturing process involved in shale-gas extraction poses a direct risk to underground water aquifers, provided the drilling well is constructed properly. ‘The committee concluded that, on balance, a moratorium in the UK is not justified or necessary at present.’

Peak ethical body comments

RIAA (www.responsibleinvestment.org) is the peak body non-for-profit organisation that assists with governing the ethical industry.

RIAA’s Duncan Paterson told The Echo that each ethical investment fund sets its own charter. ‘Most clients have different definitions as to what is ‘ethical’ or ‘sustainable’ and what it not. Asked if he considers coal-seam Gas exploration as ethical, he responds, ‘The jury is still out on whether or not CSG operations can be conducted in a manner which doesn’t have long-term negative environmental impacts. I think all ethical investors should be keeping their eye on this issue.’