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Solutions to the water energy nexus – the main topic of last week’s World Water Week conference in Stockholm – remain elusive. The basic idea is simple enough: water is energy intensive, and energy is water intensive, so addressing both in an integrated way should lead to innovative, more efficient solutions.
As an example, California, the drought-stricken US state, uses around a fifth of its electricity for water-related processes. But even as businesses and utilities aim to use each resource more efficiently, the solutions continue to be siloed and resource-specific.
It does not help that the economics of supply for water and energy are profoundly different. The latter is typically a cash-positive business, where energy prices are high, reflecting significant opportunity costs that are responsive to market dynamics. The former is a much more capital-intensive business, akin to traditional infrastructure such as roads and airports. Capital expenditures drive the economics in water services, and prices – often heavily regulated – are rarely designed to fully recover the cost of delivery.
Under these conditions, it is difficult to see how an integrated solution could emerge that is significantly different to what each sector by itself would pursue. This was obvious at the conference, where the voice of power companies and energy producers was largely absent.
But the week also showed that the integration of these issues is happening outside the energy and water sectors. In fact, the water energy nexus has been brought to the forefront of discussion largely by user companies.
Some companies in the automotive industry, for example, are examining ways to manage their inputs consumption amid more limited natural resources. Manufacturing cars takes a significant amount of energy and water (for cooling production equipment). Volkswagen’s Think Blue factory programme aims to reduce energy and water consumption throughout its vehicle production process. Volkswagen is taking inventory of its energy sources, and moving toward more sustainable options, such as solar and geothermal. Additionally, the company has found options to reduce water consumption used to cool vehicle production equipment, but is also finding ways to improve water efficiency upstream in its manufacturing process where more than 90% of the water consumption occurs.
The same can be said for environmental conservation strategies often pursued by companies which rely on local communities for energy and water and wish to lessen their regional footprint. In these instances, the solutions are integrated by virtue of their focus on location. Coca-Cola for example, has just announced it will be joining the Latin American Water Funds Partnership to promote water security in Latin America and the Caribbean.
The vision is to replenish 6.9m cubic metres of water used in productive processes - which are themselves energy intensive processes - and to strengthen water security by investing $7.4m in conservation actions at the watershed level. This replenishment will reduce Coca-Cola’s impact on local water supplies by freeing up water for other uses, including energy production.
Integrated strategies to address water and energy challenges can remedy difficult negotiations with local entities. By looking at the needs of all stakeholders in the region – utilities, businesses, communities and environmental – plans can be created that address current and future needs, without sacrificing the environmental health of the region.
Additionally, integrated strategies that are comprehensive in scope often require adopting longer-term outlooks to match underlying changes such as those brought by climate change. In turn, this encourages governments and utilities to look at supply patterns over longer timescales and base their planning on those trends.
The energy water nexus theme discussed at World Water Week underscores the fact that the potential exists for taking on a new, holistic approach to managing limited natural resources. Companies, governments and utilities alike realise that these water and energy problems are connected. It’s time to shift the focus to finding more efficient, integrated solutions to these challenges.
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