A 2016 research paper in the Journal Nature predicts a 40% shortfall of available water across the globe by 2030 with effects not just for drinking, food production, hygiene and public health, but also for 98% of global electric power generation.
Presented at the Asia-Pacific Energy Leaders’ Summit in New Zealand the early findings of a new report, ‘The road to resilience – managing the risks of the energy-water-food nexus’ from the World Energy Council is calling for immediate action in order to secure resilient energy infrastructure. Supported by a task force of over 140 experts from across the world, the report makes five recommendations:
- Improve understanding of the water footprint of energy technologies in order to mitigate the risks of stranded assets
- Account for the price of water, particularly in areas of water stress
- Consider a wider range of financial and insurance instruments to hedge short term risks such as adverse weather incidents and associated electricity price volatility
- Give investors the confidence to invest by providing them a full risk assessment that includes different climate and hydrological scenarios in financial analyses
- Provide a reliable and transparent regulatory and legal framework that takes into account water issues and competing stakeholders’ interest.
Christoph Frei, Secretary General World Energy Council said: “The energy-water-food nexus poses a systemic risk which could impact the robustness of the energy supply and demand over many years to come. Power plants across the world could be affected by changes in precipitation patterns, which are combining with increasing competition between water users to adversely affect the resilience of energy services.
“Clear co-ordination and integrated planning needs to take place now, or we will start to see the effects of water scarcity on energy supplies in the very near future. Assuming a water price during project planning is one way to trigger the right signals.
“If we are to counter the problems of water access, then cross-border co-operation is vital. We should be taking full advantage of the 261 international trans-boundary basins that cover 45% of the earth’s land surface. Energy resilience can only be achieved by moving from individual to joint efforts.”
Christoph Frei added: “An important issue to tackle is the lack of knowledge about water issues and limited modelling tools, making long term energy infrastructure investment decisions difficult to make.
“To promote infrastructure resilience, policymakers and investors need to create a framework which provides the incentives for adapted infrastructure design and needed financing mechanisms.”
‘The road to resilience – managing the risks of the energy-water-food nexus’ will inform our support for the work of the Asia Pacific Economic Cooperation (APEC) Energy Working Group. The report is the second in a series of reports that assesses the financing of resilient energy infrastructure and identifies the investment and systemic changes required to combat new emerging risks including extreme weather, the energy-water-food nexus and cyber risks.
The reports are prepared with project partners Swiss Re Corporate Solutions and Marsh & McLennan Companies with insights from the European Bank for Reconstruction and Development and will build to provide a detailed report ahead of the 23rd World Energy Congress to be held in Istanbul, Turkey in October 2016.