Coal accounts for approximately 52% of U.S. electricity generation and each kWh requires 25 gallons of water.
The world still has significant coal reserves remaining, but the implications of an increasing reliance on this CO2-intensive energy source have obvious implications for fighting climate change. Coal accounts for approximately 52% of U.S. electricity generation and each kWh requires 25 gallons of water. In the absence of regulations, wastewater from power stations can significantly impact the cost, quality and availability of local water. Even in well-regulated markets an increase in coal-fired stations is likely to mean an upsurge in the use of wastewater treatment chemicals.
Proponents of new coal-fired capacity often cite Carbon Capture and Storage (CCS) as the answer to concerns over coal’s greenhouse gas (GHG) emissions. The U.S. Department of Energy has created seven Regional Carbon Sequestration Partnerships to help develop knowledge and infrastructure; many see the technology as a silver bullet for the challenge of climate change. Despite the fact the technology is unproven and the myriad of legal issues surrounding its use, there are indications the technology does not come without additional environmental costs—such as the increased need for water. A study by the National Energy Technology Laboratory in the U.S. suggests that a
CCS-enabled power station may require up to twice the water consumption of a conventional thermal power plant.
Finally, the water sector itself is a major user of energy; both in transportation of resources and the purification of supplies—an estimated 20% of California’s total energy use is water-related. In general, rising standards for water quality require more energy in processing. A popular suggested solution to water scarcity is desalination; however this, too, is currently an energy-intensive process. The combination of a greater demand for water, increasing standards for drinking water quality and demand for sanitation will mean that water utilities across the globe will become more significant energy users thereby perpetuating a vicious cycle. More and cleaner water needed, increasing energy demand, more power stations using more water creating greater water demand and more water stress
The individual interrelationships identified above may be obvious to technologists or to those in specific industries (such as power generation), but the wider linkages between them are not widely or fully understood. Many companies will face major strategic risks as a result. For utilities and the oil and gas industry, the lifetime of many energy assets is often significant (30-40 years or more in the case of a coal-fired power station or refinery) and investment decisions being made today concern assets that will face very different strategic challenges during their operational life. Even businesses that are used to making decisions on such assets have been struggling with the uncertainties of climate change and the implications of evolving GHG regulations.
In many locations, the impact of water shortages is not decades away—the U.N. estimates that 50 million people will be displaced by water shortages in the next 10 years. This means addressing water issues is just as important as addressing climate change during the 21st century. Understanding where the risks are, and the opportunities, will place companies in a more competitive position in which to lead and succeed in a carbon- and water-constrained economy. The tools and the know-how do exist for companies to assess and manage these risks and opportunities—but only the enlightened few are yet using them. Many companies remain oblivious to the risks to their supply chain or their markets. Such companies should be doing more both to protect and enhance their own performance and competitiveness, as well as the needs and interests of key stakeholders.
DAVID HAMPTON is a London-based director at LECG (a global expert services firm) and a leading expert on carbon and climate change.
CONTACTS: LECG; Regional Carbon Sequestration Partnerships; U.N. World Water Development Report