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The Huge Impact of Water on the Future of Energy

Posted by Administrator on 8/18/14 10:30 AM

Water_Impact.jpgThe implications of freshwater shortages on the energy industry can’t be understated. Fuel extraction is water intensive, especially for mining and fracking extraction - for fracked natural gas, about a gallon of water is required to extract one mmbtu. Electric generation from fossil fuels also requires large amounts of water. The average kWh produced from coal-fired electric generation uses a gallon of water, and while natural gas averages less water use, nuclear uses significantly more, while some renewables require no water at all.

Freshwater is an undervalued commodity. In nearly every region the price of water is the cost of water access rights, treatment costs, and transportation costs. It is a limited, but vital, commodity that effectively has no price.

Prolonged drought (California is in the midst of an epic drought – it is one of 11 western states (Texas, Colorado, Oklahoma, New Mexico, Nevada, Utah, Arkansas, Hawaii, Idaho, and Kansas are the others) that the U.S. government declared to be “primary natural disaster areas” due to drought) and overuse have depleted freshwater reserves at the same time that demand is rising rapidly. The resulting imbalance has some projections of demand for freshwater exceeding supply by as much as 40% by 2030. Water starved regions must to look to ways to both reduce overall use and to prioritize different uses. Ideas like regional exchanges where water could be priced (with adjustments for preferred uses) and sold are gaining mainstream support.

Initially, reduction in use will focus on eliminating waste and high-use-low-value activities (like watering a lawn), but as the limitations become more acute some uses will simply cease to be provided for, or the cost of use will increase, forcing a rebalancing of the ways water gets used and priced. This change will limit access to some forms of energy in certain markets and will raise prices for fossil fuel based energy around the globe, creating yet more opportunity for new energy technologies to compete in the changing energy world.

You can read more here.

Topics: Power Generation, Energy Finance

Sullivan

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The Environment & Energy Insights blog analyzes developments in the law, as well as provides updates and perspectives on trends and polices.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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