COAL seam gas remains important to Australia's future energy needs and economic development, COAG Reform Council chairman John Brumby said.
The former Victorian premier was speaking after the reform council released its first assessment report on the Coal Seam Gas and Large Coal Mining Developments National Partnership Agreement on Tuesday.
While conceding CSG mining was a "contentious issue", Mr Brumby pointed to figures showing CSG production had increased from 2-11% of Australia's total gas production in the five years to 2010-11.
"Coal seam gas is an important source of natural gas that has the potential to strengthen Australia's long-term energy security and to further expand energy exports to meet growing global demand for energy," Mr Brumby said.
"This agreement aims to improve the community's confidence in decisions on coal seam gas and large coal mining development by informing those decisions with substantially improved science and independent expert advice."
The reform council report examined whether participating states had completed their actions under the NPA.
It found that of the four states to have signed up to the NPA, NSW was the only one not to have met its milestones.
The state is yet to publish a protocol on how it intends to refer CSG and coal developments to the committee set up to assess environmental risks and provide advice.
Victoria and Queensland were the only states to devise and publish a protocol by the September 30 deadline.
South Australia's protocol commenced in September but was not publicly available until October.
NSW Premier Barry O'Farrell released a regional land use policy in September aimed at dealing with the mounting concerns over CSG expansion in the state.
He claimed the policy would act as a "gateway" to the Independent Expert Scientific Committee, which was established by the Federal Government under the NPA.
Mr Brumby said confusion remained about how this would work.
"It remains unclear how NSW will decide which projects to refer to the IESC for advice outside of land it has identified as 'strategic agricultural land'," Mr Brumby wrote to Prime Minister Julia Gillard in a letter accompanying the report.
The Federal Government has already distributed $20 million to state governments to implement the agreed reforms, with another $30 million available for completing the milestones in this agreement.
Independents Tony Windsor and Rob Oakeshott made the formation of the IESC a part of their agreement to help Labor form government in 2010.
Environment Minister Tony Burke revealed the make-up of the IESC in November.
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