By Diego Rodriguez
Senior Economist, Water Unit, The World Bank Group for Cornerstone
With global population projected to reach 9.6 billion by 2050, and about 70% of this number living in cities, energy demand will double during the same period. This presents challenges on many fronts, but few are more pressing than those involving water. Nearly half the world’s people are expected to be living in areas of water stress by 2030, as climate change and mounting water withdrawals, some of which are made to produce energy, deepen existing water scarcity. Water scarcity, in turn, poses risks to energy generation.
These trends coincide with other realities that need to be addressed: 780 million people without access to improved water, 2.5 billion without basic sanitation,1 and 1.2 billion without access to electricity.2
The energy sector—which uses large quantities of water—is a critical actor in this story. Water availability and the quality of water resources are becoming less reliable, adversely affecting energy production around the world. The World Bank Group, in seeking to end extreme poverty by 2030, is helping countries achieve universal access to modern energy and water services. It sees integrated water and energy planning and management as a vital tool to address these challenges.
Water scarcity can threaten the long-term viability of energy projects. Water shortages have temporarily shut down or reduced energy production at power plants in many countries, including the U.S., Sri Lanka, China, and Brazil. In the U.S., several companies that extract natural gas and oil using hydraulic fracturing have faced higher water costs, or were denied water permits during droughts.3
Demand for energy is, by far, the largest source of greenhouse gas emissions that cause climate change. Most of this is CO2 from consumption of fossil fuels, which account for over 80% of global energy consumed. But the energy sector also faces risks, many of them climate-related, of increased water temperatures, sea level rise, more frequent and widespread droughts and floods, and diminished water quality and quantity, among others. These changes, placed in a context of increased demand for energy, will be felt most acutely in developing countries, where governments are struggling to scale up infrastructure and institutional capacity to meet these challenges.
Worldwide, the energy sector’s demand for water will grow, as will that of other sectors. For example, a 50% increase in agricultural production is expected to cause a 6% rise in already-strained water withdrawals. Hence, we must ensure that energy development and expansion plans consider the water needs of competing sectors such as agriculture, urban areas, industry, and the environment.
Even where water supplies are abundant, efficient use of water is a good idea. Amid scarcity, it is an even better idea. Energy companies and utilities face the challenge of making their water usage practices and processes reflect the cost of supplying water to sites, as well as wastewater treatment. Efficient water use in their operations is an important goal; strategies to achieve it will vary depending on the processes and technologies involved.
Determining energy-water tradeoffs is a complex matter. Energy development requires varying quantities of water, depending on the type of energy resource involved. Also, defining specific water uses by the energy sector is challenging, as not all water uses are the same. Energy-sector water uses are usually broken down into three categories: water withdrawal, water consumption, and discharge. Withdrawal is defined as the amount of water taken from a water source, such as a river, ocean, or aquifer. Consumption is the volume of water lost from the total water withdrawn. Discharge is the amount of water returned to the water source, usually in a different state.
While upstream energy resource extraction and development might not withdraw large volumes of water at the national level, it can have a dramatic impact on water supply near drilling or mine sites. Water discharges from power plants and upstream energy development can also impact water quality if not regulated properly. The vast differences in water demand in the energy sector impose an important challenge when analyzing and quantifying potential water constraints.
Energy companies recognize the scope of the water and energy challenges they face, and the difficulty in balancing these tradeoffs. In 2013, a global survey by the Carbon Disclosure Project’s Global Water Report found that 82% of responding energy companies and 73% of power utility companies saw water as a substantive risk to business operations. Further,59% of energy companies and 67% of power utility companies reported having experienced water-related business impacts in the previous five years.4 These findings underline the importance of combining planning and production processes for energy and water. Energy planners in developing countries need to factor in water constraints and risks of extreme weather, while water planners need to account for energy demand, and the water needs of energy generation plants.
The World Bank Group is working with developing countries to integrate water constraints into the energy sector. To address the competing energy-water challenges in a systematic way, the World Bank Group recently launched a Thirsty Energy initiative that seeks to prepare countries for an uncertain future by:
- Identifying synergies and quantifying tradeoffs between energy development plans and water use
- Formulating cross-sectoral planning to ensure sustainability of energy and water investments
- Designing assessment tools and management frameworks to help governments coordinate decision-making
Initial work on this in the energy sector has started in South Africa. Dialogue has been initiated in China, Morocco, and Brazil, where demand for integrated approaches to solve these challenges is increasing as climate change impacts mount. The initiative has also established a Private Sector Reference Group (PSRG) to share experience, to provide technical and policy advice, and to scale up outreach efforts. Abengoa, Alstom, Veolia, and EDF have already joined the reference group.
With these partners, Thirsty Energy seeks to tackle the water-energy challenge by promoting integrated water and energy planning to assess constraints and synergies between the two resources and avoid inefficiencies. This includes improving operations and regulations to encourage water recycling and reduce water use and impacts in water quality. It also includes technology development and adoption, such as cooling systems that require no water, or use of alternative water sources.
Technical solutions can help address these challenges. But they must be complemented by institutional reform and policy guidance, sound planning, and smart investments. Sectoral planning and resource management are often distinct activities, with each narrowly focused. Successful planning requires government agencies and stakeholders to participate in coordinated decision-making that engages stakeholders and diverse partners.
Integrated resource planning of energy and water issues depends on an open and participatory decision-making process, and coordination of the many institutions that govern water resources. It promotes new institutional roles and processes, while strengthening existing planning and analytical tools. It also encourages consensus building and alternative dispute resolution over conflict and litigation.
Water constraints on the energy sector can be overcome, but all stakeholders, public and private, must work together to develop innovative tools. Water has to be one of the important factors for assessing the viability of projects. A failure to anticipate water constraints in energy project investments can increase their risks and costs. It can also affect competing sectors, with severe social and environmental consequences. Integrated planning that enables innovative policy and technological approaches is an essential tool to address and overcome these challenges.
The content included in Cornerstone is based on the opinion of the authors, and does not necessarily reflect the views of the World Coal Association or its members.
- World Health Organization (WHO). (2012). WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation. New York: UNICEF.
- World Bank. (2013). SE4ALL Global Tracking Framework, www.worldbank.org/en/topic/energy/publication/Global-Tracking-Framework-Report
- U.S. Department of Energy. (2013, July). U.S. energy sector vulnerabilities to climate change and extreme weather, energy.gov/sites/prod/files/2013/07/f2/20130716-Energy%20Sector%20Vulnerabilities%20Report.pdf
- Carbon Disclosure Project (CDP). (2013). Global Water Report 2013: Moving beyond business as usual; A need for a step change in water risk management, www.cdp.net/CDPResults/CDP-Global-Water-Report-2013.pdf.