Energy & Water - Will the Twain Ever Meet?

It is increasingly apparent that there is a dysfunction between energy policy and water policy, when viewed from a global perspective.

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Mark Lane addresses the water-energy nexus head on, including the controversial topic of shale gas extraction and the staggering quantities of water consumed for this activity. With energy and water dependent on each other, should one Government Ministry be responsible for both industries?Mark Lane

It is increasingly apparent that there is a dysfunction between energy policy and water policy, when viewed from a global perspective. Major national and international initiatives in the energy space appear to be undertaken without due regard to their macro implications for water. In the United States, President Bush's biofuels initiative (part of the 2006 Advanced Energy Initiative) was undertaken without proper consideration of the global water and food implications that the initiative would impose. Today we are all living with the consequences of this as highlighted by Donald Mitchell, lead economist at the World Bank's Development Prospects Group.

Extensive increases in the production of biofuels in the United States were supported by subsidies, mandates and tariffs on imports. These policies were implemented to encourage the production of biofuels without due regard to the impact that such policies would have on those living below the poverty line. Mitchell asserts a common theme that "without these policies, biofuels production would have been lower and food commodity price increases would have been smaller".

Another illustration of the lack of joined up thinking between energy and water lies in the field of shale gas. The initiatives in various countries such as the United States, Poland, France and the UK on shale gas recovery are already raising questions of water quality and availability.

Useful links:

Article in The Economic Times on Asia's water crisis:

http://bit.ly/p8NnUi

World Nuclear Association information on nuclear power in China:

http://bit.ly/rpzdqE

Pacific Institute's the World Water report on China and water:

http://bit.ly/mYJ6zQ

A staggering three to six million gallons of water are required to fracture a single shale gas well; which begs the question as to where this water supply will come from? Five million gallons of water is the equivalent to the amount of water consumed by New York City in approximately seven minutes. This alarming comparison does not take into consideration that the water used in hydro-fracking shale gas deposits can only be reused for additional fracturing operations or other industrial uses and not reused for human consumption, as the water consumed in New York could be.

In India, the Ministry of Power is currently launching the development of nine Ultra Mega Power Plants (UMPPs) as part of its Eleventh Plan, covering the period of 2007 to 2012. UMPPs are large scale power plants each having a capacity of at least 4,000 MW and also have scope for future expansion. Water is critical to the ability to run any power station and yet India is currently projected by the Asian Development Bank to have a 50% water deficit by 2030.

In China, 78 nuclear power stations are to be constructed and operational by 2019. Additionally, the National Energy Administration has recently confirmed that it will accelerate the construction of approximately 45 large coal-fired power stations in China, which have a generating capacity of 180 million kilowatts. Yet, in 2008/2009 three hundred million people in China lacked access to safe drinking water. The water scarcity problem in China is most likely being exacerbated by climate change. For example, in April 2011, precipitation was 50% less than the average level of previous years.

Currently in the UK, the water industry is responsible for 1% of the country's carbon emissions. This may be surprising on first impression, but on reflection perhaps not, as water is a very heavy substance to transport. In the UK the first stirrings of an impetus to reduce the carbon footprint of the English water utilities through technological innovation are visible. But to what extent does this take account of the UK's energy policy?

There is much to be said for integrating power policy and water policy more closely so that in United States, India, China and the UK to name but four countries, a holistic integrated approach is taken for both energy and water – with one Government Ministry alone covering both resources. After all, it is clear that energy and water are mutually dependent upon each other.

Author's note:Mark Lane is the head of Pinsent Masons LLP water group. For more information, please email: mark.lane@pinsentmasons.com

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