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Walter Reinhardt, Australian National University, Australia ---- Three things for the water security community to know about the energy sector
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Three things the water security community should know about the energy sector
Presentation at Oxford Water Security, Risk and Society Conference April 16-18 2012, St Hugh’s College, Oxford Walter Reinhardt Fenner School of Environment and Society The Australian National University, Canberra * [email protected]
Walter Reinhardt, Karen Hussey and Nicole Carter
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Water is a critical input into energy production processes Historically, currently, and into the future
Watermill, Reading, UK Tarong Coal Powerstation, Australia
Solar thermal, planned Rio Mesa plant, USA
Starting premise: Water is used, consumed, and occasionally produced in conjunction with energy production
THE TRANSFORMATION IN THE ENERGY SECTOR
Feature 1:
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The transformation in the energy sector
• Rapid growth in energy development • Rapid change in energy sources • Rapid change in location of energy production
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Rapid growth in energy development
NB. 1990-2010 estimates courtesy of BP (2012) and IEA (2011). As published in Moriarty & Honnery (2012), the 2020 and 2030 high and low ranges represent the average of IEA (2010), EIA (2010), EC(2006), BP (2012), Shell (2008), IAEA (2009), IIASA (2007), WEC (2008) and Tellus Institute (2010) forecasts
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Rapid change in energy sources
Global primary energy sources. From: BP Energy Outlook 2030 (2012).
toe: tonnes of oil equivalent
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Rapid change in location of energy production
Source EIA 2011
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Water implications for energy sources
Source: CRS, 2011
~3.8 kL/MWh
~1.3 kL/MWh
Managing the water implications • The energy sector is changing how it uses, consumes and
produces water. Is the water sector ready?
– Laws, regulations and markets for managing water allocation between new and existing users
– Protocols and systems for monitoring and managing water use
– Capacity and knowledge of government and agencies
Take home message: Where and how energy is produced is changing rapidly with serious implications for water security
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GOVERNANCE AND (DIS)INCENTIVES FOR WATER EFFICIENCY IN THE ENERGY SECTOR
Feature 2:
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Governance and economic incentives
• Governance arrangements, including economic incentives, give little inducement for water efficiency in the energy sector, particularly with electricity supply:
• Ability to trade water: On-selling water savings is not possible under many water allocation regimes
• Economic gains from efficiency: Limited or negative incentive when additional energy costs outweigh the value of water savings
• Timing and location of demand: Peak energy demand in hottest, driest times or climes when water is most scarce
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Conflicting incentives
• Government policies and corporate incentives may directly conflict with water efficiency
• Regulatory burden: a panoply of government regulations already exist in the energy sector and fulfilling the regulatory obligations supersedes voluntary action on other fronts (such as water efficiency)
• Competing policy priorities: water quality, emissions mitigation and energy security priorities
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Aligned incentives
• Not all incentives conflict with water efficiency
• Business risk: if water insecurity can cause business disruption then efficiency may be perceived as a solution
Take home message: Existing governance arrangements do not promote water efficiency, but water security has become a business risk for the energy sector
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THE SIZE AND RESPONSIVENESS OF THE ENERGY SECTOR
Feature 3:
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Economic size in perspective: annual capital investment
Rubbery data courtesy of IEA 2011 World Energy Outlook, UNESCO Third World Water Development Report 2009, GWI 2009, BusinessWire 2012
$230bn
2012 Forecast global water and waste water capital expenditure (capex)
$310bn
Global water plus estimated annual costs of MDGs and climate change adaptation
$1,030bn
2012 Forecast global oil and gas capex
$1,500bn
IEA forecast average capex in primary energy 2011- 2035
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Responsiveness: Lessons from the climate change lobby
• The energy sector and governments have responded to pressure from climate change mitigation lobby
• What are the lessons for the water sector here? – Focused targets for transformation – Uniform treatment of goods – Well organised and coordinated action
Take home message: The energy sector is large, but not beyond influence
Three key features of the energy sector for the water security community
1. The transformation in the energy sector
2. The governance and (dis)incentives for water efficiency in the energy sector
3. The size and responsiveness of the energy sector
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Walter Reinhardt Fenner School of Environment and Society The Australian National University, Canberra * [email protected]
Three things the water security community should know about the energy sector
Oxford Water Security, Risk and Society Conference, April 2012
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References Transformation in energy: Moriarty, P, & Honnery, D, 2011, What is the global potential for renewable energy? Renewable and Sustainable Energy
Reviews, 16: 244-252 BP World Energy Outlook 2030 (2012) Energy Information Administration gas and oil shale maps http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/maps/maps.htm#field Carter, N, 2011, Energy’s water demands: Trends, Vulnerabilities, and Management, Congressional Research Service,
Washington DC Conflicting incentives: McKinsey cost curve, v2.0 The energy sector not beyond influence: IEA World Energy Outlook 2011 UNESCO WWDR 3 and 4 BusinessWire, 2012, Oil and Gas Capital Expenditure Outlook 2012 Global Water Intelligence, 2009, Global Capital Expenditure on Water and Waste Water
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