The World Economic Forum's Energy Community last week launched the "Thirsty Energy - Water and Energy in the 21st Century" report.

The report explores the risks and opportunities inherent in the ancient relationship between energy and water, which has taken on a new urgency as competition for finite freshwater resources rises.

Produced in partnership with Cambridge Energy Research Associates (CERA), the report includes perspectives from prominent experts and decision-makers.

Water is critical to energy production, yet the water/energy nexus is often overlooked.

"The importance of bringing water into the energy equation now cannot be underestimated as we are heading for a more water-scarce future,'' said Christoph Frei, senior director and head of energy industry at the World Economic Forum.

"Optimizing future energy choices is becoming a 'trilemma' as water implications need to be considered alongside energy security and climate change impacts," he added.

"Water is increasingly moving from an operational issue to one of strategic significance," said Daniel Yergin, CERA chairman and IHS executive vice-president.

"Understanding how to best optimize the use of water and energy in a carbon-constrained environment is becoming critical for both business leaders and policy-makers. The industry's goal must be to use water resources wisely while taking into account climate change and energy security concerns. Finding solutions that optimize along all three parameters will be a challenge for energy companies for decades to come."

Although water covers nearly three-quarters of the earth's surface, only 3 percent is available for human use.

Agriculture is the primary user of freshwater, representing 70 percent of freshwater withdrawn worldwide.

A second, fundamental use of water is industrial, including producing energy for economic development.

Today, the energy sector uses about 8 percent of all freshwater withdrawn worldwide and as much as 40 percent of freshwater withdrawn in developed countries.

Energy is also a key input to the water value chain, used to power water movement and treatment.

Distinguishing between the volume of water withdrawn and the volume consumed is very important when discussing how various parts of the economy use water.

"Water withdrawn" is the total volume removed from a water source; often, the bulk of this volume is returned to the source, particularly when water is used for cooling, as in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.

Water withdrawal amounts matter from a risk perspective as energy production relies on water availability for smooth operations.

The report concludes that pressure on freshwater resources will translate into the need to use water much more efficiently throughout the energy value chain.

More efficiency

Although water worries are global - especially with climate change - water solutions are local as transporting water over long distances is not economically feasible.

Translating global water worries into local solutions requires a better understanding of the complex relationship between water and energy.

Despite the fact that different energy technologies consume different amounts of water, no energy technology is inherently good or bad from a water perspective; it all depends on the local context.

Nevertheless, water issues will impact future energy choices.

Energy companies will increasingly be called upon to be partners in managing the world's water resources.

(The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.)

(Shanghai Daily February 23, 2009)