Water and energy are inextricably linked. Water is fundamental to nearly all energy processes, while energy is required to treat, transport and extract water. Despite their interdependency and critical role in our lives and sustainable development, countries and governments worldwide continue to struggle to integrate energy and water into planning and investment decisions.
Two thirds of California is experiencing an extreme drought and nearly 99% of its territory is considered abnormally dry. This is worrying power operators throughout the state as they strive to meet demand, allocate water to urban areas and to other competing uses, such as agriculture. Globally, in 2013 alone, water shortages shut down thermal power plants in India, decreased energy production in power plants in the United States and threatened hydropower generation in many countries, including Sri Lanka, China and Brazil.
Countries and governments worldwide continue to struggle to integrate energy and water into planning and investment decisions.
In 2012, the International Energy Agency (IEA) dedicated a chapter in its World Energy Outlook to water and energy, recognizing the importance of this resource to the energy sector. Many companies already recognize the magnitude of water and energy challenges: The CDP’s Global Water Report 2013 found that over 80% of energy companies and more than 70% of power utility companies indicate that water is a substantive risk to business operations. Almost 60% of energy companies and over 60% of power utility companies indicate that they have already experienced water-related business impacts in the past five years. While these recognitions are important, action on the ground in many countries to address these issues has been slow to materialize.
Part of the challenge for the energy sector is the competing demand for water – mainly for food production and urban uses. This demand will only grow as the world’s population edges upward towards 9 billion expected by 2050. This increase will require a 50% increase in agricultural production and a 15% increase in already-strained water withdrawals. With two-thirds of the world’s population – or 5 billion people – expected to live in urban areas by 2030, cities in developing countries will be under tremendous pressure to meet rapidly increasing demand for food, energy, and water services. Yet today, some 780 million people lack access to improved water and 2.5 billion, more than one-third of the world’s people, do not have basic sanitation; 1.3 billion people lack access to electricity. These problems are expected only to be exacerbated as climate change, population growth, and increasing demand further complicate resource management.
The energy-water challenge is too large for any country or organization to tackle alone. Therefore, the World Bank launched its Thirsty Energy initiative at the 2014 World Future Energy Summit in Abu Dhabi to assist developing countries in incorporating water constraints into their energy development plans.
Thirsty Energy is working to support governments in preparing for an uncertain energy-water future by: (1) identifying synergies and quantifying tradeoffs between energy development plans and water use; (2) piloting cross-sectoral planning to ensure sustainability of energy and water investments; and (3) designing assessment tools and management frameworks to help governments coordinate decision-making.
With the energy sector as the primary entry point and primary client, Thirsty Energy’s demand-driven work has already begun in South Africa, and dialogue has been initiated in China, Morocco, and Brazil. The World Bank is ready to assist client countries which seek to find and identify appropriate integrated approaches in order to anticipate water constraints in energy investments, and prevent risks to energy projects and their long-term energy planning.
Thirsty Energy 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 are partners of the initiative as members of the PSRG. The World Bank hopes that together with these partners, and others who come on board, the efforts of Thirsty Energy can be magnified and both energy and water resources will be better managed for a more sustainable future.