SYDNEY (Reuters) - Gas extraction via fracking could only resume in Australia’s Northern Territory district after a study on the controversial practice is completed in two to three years, according to the recommendations of an independent group released on Tuesday.

The Australian government sees fracking as a way to help ease the country’s chronic energy shortage, which has led to some of the highest electricity costs in the developed world. But environmentalists and some scientists are opposed to it, urging local and national officials to consider installing more renewable energy capacity.

The Northern Territory - a 1.4 million sq km (540,000 sq miles) expanse extending to the northern tip of the continent - has had a moratorium on fracking since September 2016 to study the environmental, social and economic risks of the source of cheap gas.

Draft recommendations handed down by the independent Scientific Inquiry into Hydraulic Fracturing has advised that a two- to three-year study should be undertaken to gather regional data before any fracking production licenses were granted, though it said exploration can start beforehand.

“Gas companies stand ready to invest billions of dollars in new projects in the Territory if the industry is allowed to resume exploration activity,” said Matthew Doman, director of Australian Petroleum Production and Exploration Association, which represents the country’s oil and gas exploration industry.

A final report is due in March.

The study’s 120 recommendations include a warning that reinjection of waste water into aquifers, a source of freshwater, must not be permitted until investigations can determine whether risks can be managed to acceptable levels.

“The draft report identifies a shopping list of reforms needed to try and reduce fracking industry risks,” said Melissa Bury from the Frack-free Fannie Bay community group.

“It would likely put a strain on our economy and under resourced regulators that would far outweigh any potential economic benefits,” she said.

Fracking is banned in Australia’s Victoria state, but is permitted elsewhere in the country.

Gas has become a hot political issue as soaring domestic prices are hurting households and threatening jobs at manufacturers like food, building materials and chemical producers, as well as driving up electricity prices.

To deal with the crisis, the government passed a law earlier this year allowing it to limit gas exports to boost local supply in any year that it deems there will be a shortfall.