Water Resources a Growing Challenge for Energy: New CERA / World Economic Forum Analysis

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Water is increasingly moving from an operational issue to one of strategic significance, according to Thirsty Energy: Water and Energy in the 21^st Century, a new report by the World Economic Forum and Cambridge Energy Research Associates (CERA), an IHS company (NYSE: IHS). The report warns, “Energy’s share of water is likely to be squeezed in the future in many parts of the world.”

“a reduction in greenhouse gas emissions in Brazil can offset increasing emissions in China, but the abundance of fresh water in the Brazilian Amazon is not helpful for areas of northern China where water is scarce.”

Part of an ongoing collaboration between CERA and the World Economic Forum, Thirsty Energy offers a broad perspective on water’s role in energy production, the energy used in water provision, and the new risks and opportunities inherent in the “ancient relationship” between energy and water. The report illustrates water-related challenges and potential solutions with perspectives from distinguished leaders in energy, water provision, engineering, and academia, concluding that local solutions must be found to optimize the use of both of these resources around the world. “Water availability and water stress are local issues, and the possible impact of water scarcity on the energy industry is similarly local,” according to the report.

“Understanding how to best optimize the use of water and energy in a carbon-constrained environment is becoming critical for both business leaders and policymakers,” said CERA Chairman and IHS Executive Vice President Daniel Yergin. “Energy companies will increasingly be called upon to be partners in managing the world’s water resources, along with agriculture and other large users.”

World Economic Forum’s Senior Director and Head of Energy Industry, Christoph Frei, said: “The importance of bringing water into the energy equation now cannot be underestimated as we are heading for a more water-scarce future. Optimizing future energy choices is becoming a ‘trilemma’ as water implications need to be considered alongside energy security and climate change impacts.”

The report states: “When discussing how various parts of the economy use water, distinguishing between the volume of water withdrawn and the volume consumed is very important.” “Water withdrawn” is the total volume removed from a water source. Often a portion of this volume is returned to the source, particularly when water is used for cooling, as in power plants. “Water consumed” is the volume not returned to the source. Both measures are important. “Consumption is a better measure of an activity’s impact on water resources,” but availability of water for withdrawal is often vital for facility operations, even if the water is not consumed.

Agriculture is the world’s largest water user, representing 70 percent of fresh water withdrawn worldwide. The energy sector uses only about 8 percent of world freshwater withdrawals, but this number can be as high as 40 percent in developed countries. By comparison, water consumption for energy in the United States is about 5 percent, compared to 85 percent for agriculture.

Transporting water over long distances is generally not economically feasible; therefore water resource optimization must take place on a local level. For this reason water resources management is very different from greenhouse gas management. The report illustrates that “a reduction in greenhouse gas emissions in Brazil can offset increasing emissions in China, but the abundance of fresh water in the Brazilian Amazon is not helpful for areas of northern China where water is scarce.”

“The industry’s goal must be to use water resources wisely while taking into account climate change and energy security concerns,” said Yergin, Pulitzer Prize-winning author of the newly revised The Prize: The Epic Quest for Oil, Money and Power. “Finding solutions that optimize along all three parameters will be a significant concern for the energy industry for decades to come.”

For a copy of the CERA / World Economic Forum report, Thirsty Energy: Water and Energy in the 21^st Century, visit http://www2.cera.com/docs/WEF_Fall2008_CERA.pdf.

About CERA (www.cera.com)

Cambridge Energy Research Associates (CERA), an IHS company, is a leading advisor to energy companies, consumers, financial institutions, technology providers and governments. CERA (www.cera.com) delivers strategic knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. CERA is based in Cambridge, MA, and has offices in Bangkok, Beijing, Calgary, Dubai, Johannesburg, Mexico City, Moscow, Mumbai, Oslo, Paris, Rio de Janeiro, San Francisco, Tokyo and Washington, DC.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is a leading global source of critical information and insight, dedicated to providing the most complete and trusted data and expertise. IHS product and service solutions span four areas of information that encompass the most important concerns facing global business today: Energy, Product Lifecycle, Security and Environment. It serves customers ranging from governments and multinational companies to smaller companies and technical professionals in more than 180 countries. IHS is celebrating its 50^th anniversary in 2009 and employs approximately 3,800 people in 20 countries.