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A Report on the Deliberations of

Energy, Water, and Innovation:

A Critical Nexus for Sustainable

Economic GrowthA workshop convened at the

Woodrow Wilson International Center for Scholars, Washington, D.C.,

September 7-8, 2011

UNITED STATES AND

EUROPEAN UNION SUMMIT ON

Science, Technology, Innovation, and Sustainable Economic Growth

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A Report on the Deliberations ofEnergy, Water, and Innovation:

A Critical Nexus for Sustainable Economic Growth

A WORKSHOP CONVENED at the Woodrow Wilson International Center for Scholars,

Washington, D.C., September 7-8, 2011

WORKSHOP COORDINATORSHoward H. Baker Jr. Center for Public Policy

Woodrow Wilson International Center for ScholarsOak Ridge National Laboratory

WORKSHOP SPONSORSU.S. National Science Foundation and

U.S. Department of Energy,in collaboration with the European Commission

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TABLE OF CONTENTSForward ...............................................................................................................................4

1 Introduction ..................................................................................................................6

2 Executive Summary ...............................................................................................8

3 Energy, Water, and Innovation: The Need to Make the Links ............................................................................15

3.1 Growing Population, Increasing Consumption Stress Global Energy, Water Resources ...............................................................15

3.2 Water: A Constraint to U.S. Energy, Climate Policy Objectives? ................ 16

3.3 China’s Push for Green Power May Undervalue Threats to Water Resources ....................................................................................21

4 Energy, Water, Innovation, and Geopolitics.......................................24

4.1 Fracking and Electric Cars Converge, Precipitate Geopolitical Impacts............................................................................24

5 Energy, Water, Infrastructure, and Vulnerability ...........................27

5.1 Climate and Its Influence: Modeling the Future ................................................27

5.2 Energy Issues in Canada ......................................................................................... 30

5.3 Future Water Demand: Addressing the “Known Unknowns” .....................32

6 Water Policy Recommendations ................................................................33

References ......................................................................................................................34

7 Workshop Participants ......................................................................................35

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FOREWORD: Jane Harman Director, President, and CEO of the Woodrow Wilson

International Center for Scholars

In my old congressional district in California,

there was a family, the Fortunatos, who turned

their home into what they called a “net-zero”

dwelling. That meant that they produced as

much energy as they used. Can you imagine

what the world might look like for our

grandchildren if every person and company did

that? The Fortunatos represented sustainable

development—the goal of meeting the needs of

the present without compromising the needs of

the future—at its finest.

With more than 200 billion people living in poverty and the world’s population

growing by 200,000 individuals each day, the costs of not thinking about

sustainable development are high. My interest in these matters goes back to

my time in Congress, when I supported funding for research into renewable and

viable energy sources and fought efforts to weaken water treatment standards

and roll back water pollution control regulations. I also worked to protect our

most vulnerable ecosystems while simultaneously encouraging the use of

sustainable energy sources like biofuels and solar and wind power. (At my own

home in Venice, California, solar panels have been generating the energy I need

for hot water for the past 11 years.)

I came to the Woodrow Wilson International Center for Scholars, the living

memorial to our 28th president, because of the ideal platform it provides to

debate these and other pressing issues in a non-partisan environment—free

from spin. At the Center, we focus on the specific resource and environmental

barriers, or “choke points,” that challenge growth across the globe. We are also

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actively involved in exploring how innovation in the United States and around the

world can respond to everything from water shortages to natural disasters.

It was a great pleasure for the Wilson Center to collaborate with the Howard

H. Baker Jr. Center for Public Policy, the Oak Ridge National Laboratory, and

the European Commission on a two-year summit called “Science, Technology,

Innovation, and Sustainable Economic Growth.” The goal of our workshops was to

spark dialogue between the United States and the European Union on these issues,

and this report provides a summary of the presentations and the discussions that

ensued. In keeping with the Wilson Center’s mission to fuse scholarship and policy,

this publication also includes a series of recommendations for policymakers on how

to draw on innovation to provide sustainable sources of water and energy.

The Wilson Center hosted the Summit’s opening plenary meeting in September

2010, and, in September 2011, hosted the workshop “Energy, Water, and

Innovation.” The Wilson Center also welcomed a distinguished group of specialists

for the Summit’s concluding meeting in September 2012. Thanks go to the National

Science Foundation and the Department of Energy. Without their support, this

Summit would not have been possible.

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The Howard H. Baker Jr. Center for Public Policy, the Woodrow Wilson

International Center for Scholars, and the Oak Ridge National Laboratory

coordinated a two-year summit to inspire dialogue between the United States

and the European Union on “Science, Technology, Innovation, and Sustainable

Economic Growth.” The Summit was sponsored by the National Science

Foundation and the Department of Energy, in collaboration with the European

Commission.

The purpose of the U.S.-E.U. was to enhance understanding of the ways in which

science, technology, and innovation affect sustainable economic growth; to

identify impediments to the flow of science from the “bench” to applications;

and to explore policy options that might enhance the impact of science and

engineering on economic activity and societal needs.

The Summit began with a plenary meeting in September 2010, held at the

Woodrow Wilson Center in Washington, D.C. The Summit brought together

academic leaders, policymakers, scientists, and economists to discuss the

impacts of investments in science and technology on the American and European

economies.

Information on the initial meeting is available here: http://www.wilsoncenter.org/

event/the-us-european-summit-science-technology-innovation-and-sustainable-

economic-growth.

INTRODUCTION

1.

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The Summit also included a series of workshops focused on related issues. The

first such workshop convened in March 2011 at the Howard Baker Center on the

University of Tennessee campus. The workshop focused on science, technology,

and the energy challenge, and it engaged an interdisciplinary group of 14

participants from academia, industry, and nonprofit research organizations. The

two-day workshop was followed by a one-day meeting in Chicago to review

the workshop draft report and develop final recommendations.

A second workshop, “Cooperation and Conflict on Access to Energy Resources:

The Energy Security Issue,” convened in Paris in May 2011.

A third workshop, “Energy, Water, and Innovation: A Critical Nexus for

Sustainable Economic Growth,” convened in September 2011 at the Woodrow

Wilson Center in Washington, D.C.

This report presents a summary of the presentations, deliberations, and

recommendations from the September 2011 “Energy, Water, and Innovation”

workshop.

A fourth workshop, “Post Carbon Transitions, Visions and Challenges,”

convened in Brussels in November 2011.

The Summit concluded with a plenary meeting at the Wilson Center in

September 2012.

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Energy and water sit at the intersection of many critical economic, political, and social issues. The energy challenges are myriad, complex, and ever evolving, as are those associated with water. The complex and interwoven connections between energy and water issues require analysis and policy approaches that explicitly recognize these connections. Single-sector approaches that treat energy and water in isolation are bound to miss key threats and opportunities to advance sustainable economic development.

This workshop, “Energy, Water, and Innovation,” was a collaboration among the Woodrow Wilson International Center for Scholars, the Howard H. Baker Jr. Center for Public Policy, the Oak Ridge National Laboratory, and the European Commission, with support from the National Science Foundation and the Department of Energy. It provided an opportunity for 10 experts from a range of disciplines to share insights on the dimensions of the energy, water, and innovation nexus, with the objective of identifying needed policies and areas for further research.

The workshop focused on three basic questions:1. What are the key issues affecting energy and water links?

2. What are the counter-intuitive or underappreciated dimensions of energy and water links?

3. What are the key research, policy, and/or development questions in the areas of energy, water, and innovation?

The workshop commenced on September 8, 2011. Each session included presentations and a question-and-answer exchange among all participants. Discussants addressed a wide range of topics, including, among others, water-energy issues specific to individual countries; the impacts of population growth, increased consumption in developing countries, and climate change on water and energy; and the impacts of shale gas production and hydraulic fracturing (fracking) on water as an input to energy.

2.EXECUTIVE SUMMARY

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A set of policy recommendations and a list of participants appear at the end of this report.

The following section presents summaries of the presentations. The full presentations appear in sections 3-5.

Growing Population, Increasing Consumption Threaten Global Energy, Water ResourcesAccording to the United Nations, the world’s population is expected to top 9 billion by 2050. Growing populations and rising levels of consumption translate into rising demand for fossil fuel resources, making them sought after but politically constrained. Development of next-generation and alternative energy infrastructure will take decades. Joining the long-time concern over energy security will be a transatlantic focus on the security of land, water, food, and other raw materials.

The growing economic power of countries like China, Brazil, and India has provided increased wealth and improved quality of life for millions of people. This growth, in turn, is increasing global demands for limited resources.

Governments on both sides of the Atlantic recognize the need for deeper understanding of these dynamics. For example, the European Union has pledged to invest 80 billion Euros in its next Framework Programme for research and innovation (2014-2020) targeting secure and energy-efficiency resources, climate change, and innovative and secure societies.

Water: A Constraint to U.S. Energy, Climate Policy Objectives?Roughly 80 percent of surface water withdrawals in the United States goes to thermal-electric power generation and agriculture, with the former using the larger share. Most of the water used for thermo-electric cooling is returned to the environment. Energy-related water use is expected to increase by 30 percent in the next 30 years.

The U.S. regions with projected highest population growth by 2020 are also those regions that face limited water resources (e.g., California, Arizona, New Mexico, Texas, and Florida).

Climate change will also affect water availability and use. In what may be a preview of the kinds of challenges climate change will present, the severe 2007 droughts in the southeastern United States nearly shut down one-quarter of all nuclear reactors. Water is needed for the cooling process at these

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plants. The 2010 European heat wave also reduced nuclear power generation when the cooling water became too warm to use in some nuclear power plants.

With higher temperatures comes increased evaporation. Power plants themselves may use more water because of higher rates of evaporation. Higher temperatures also mean increased demand for cooling.

Is water a constraint to achieving policy objectives associated with energy and climate change? Too little research has systematically addressed this question. Some energy policies aim to increase use of plug-in cars, with the assumption that the cars would be plugged in at night and used during the day. Increased night-time operation of power plants would increase the need for thermal cooling by roughly 50 percent. Plants equipped to capture and sequester carbon would require even more water for cooling.

Further, there is an inherent tradeoff between the energy security and the water use associated with vehicles powered by petroleum and those powered by alternative fuels. To travel 100 miles, a gasoline-powered vehicle depletes 7 to 14 gallons of water, a plug-in hybrid vehicle depletes 24 gallons, and an ethanol-powered vehicle depletes 130 or more gallons of water.

The U.S. ethanol program has also increased the amount of farmland devoted to corn production and reduced the amount used for wheat and soybean production. Because corn requires more fertilizer than other crops, increased corn production is increasing the amount of nutrients that flow from farm fields into the Gulf of Mexico, triggering algal blooms. The ethanol production process is also highly water intensive. It takes approximately 140 gallons of water to produce 1 gallon of corn ethanol.

It takes 2 to 5 barrels of water to produce one barrel of oil from shale oil reserves in the arid West, yet parts of the Colorado River are among the nation’s driest river basins. And biomass production requires as much water as coal production. Coal production consumes twice as much water as natural-gas production. Meanwhile, some of the least-cost power options—pulverized coal and natural gas—are also those with the highest greenhouse-gas emissions. But carbon capture and storage increases water use for natural gas by 80 percent and for pulverized coal by 100 percent.

The U.S. Environmental Protection Agency (EPA) is working on regulations under 316(b) of the Clean Water Act, which requires assessment of loss of marine life as a result of power plant cooling intake structures located along the coasts. These regulations do not, however, address the increased water use associated with these structures.

Development of water-sparing energy systems that also reduce emissions would conserve water resources while also achieving climate goals.

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Currently, some modelers in the United States are exploring development of a model that would evaluate energy in the context of water and climate, but unfortunately the model does not allow for feedback that would help guide policy decisions.

China’s Push for Green Power May Undervalue Threats to Water ResourcesAlthough China is a laboratory for clean energy, its actions aren’t lessening impacts on water resources. China’s South-North Water Transfer Project (SNWTP) will drain 36 billion cubic meters of water from the Yangtze River Basin each year and transfer it to the north. The Chinese government believes the project is necessary because of water scarcity in the north and west.

Between 2000 and 2009, China’s freshwater reserves dropped by 13 percent in part because of changing climate patterns.

China is the world’s number-one energy producer and the number-one consumer of coal. In the past decade, China has doubled its coal use, and demand for coal is projected to grow by 30 percent by 2020. Most of China’s new reserves of coal are in Xinjiang, Inner Mongolia, Shanxi, and Ningxia—provinces that are too dry to develop coal production.

Installed renewable energy in China has already reached 15 percent and will soon reach 20 percent. China currently produces 40 percent of the world’s solar panels and plans for an increase in solar-energy use in its cities.

Dams in Southwest and Southeast China will increase generation of hydro-electric power from 150GW to 400GW by 2020. But coal will continue to dominate China’s energy production and will provide 70 percent of nation’s overall energy supply.

Some 40 percent of China’s rivers are graded IV-V, safe for industrial use and irrigation only, or V+, unsafe for any use. One of the biggest obstacles for the SNWTP is the huge cost of cleaning up transferred water drawn from the polluted Yangtze River.

China’s water resources are a source of conflict among potential users—a situation similar to that in the United States—so it’s difficult for the Chinese government to manage water effectively. Pressed by increasing need for clean water, Beijing is investing in processes that reuse gray water for flushing and landscaping.

The Chinese government has articulated goals to control CO2 emissions, and it

has embraced the science of climate change. However, China’s vast bureaucracy

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and decentralized political system complicate efforts to address climate.

Fracking and Electric Cars Converge, Precipitate Geopolitical ImpactsHydraulic fracturing (fracking), the process of harvesting natural gas from shale, took off in the beginning of the 21st century in the United States. Efforts to capture shale gas have increased around the world, and this new, abundant energy source has had a considerable geopolitical impact.

One of the biggest problems associated with fracking for shale gas in the United States is that the process may pollute aquifers. The federal government should establish standards and guidelines that limit or eliminate actual harmful environmental impacts associated with fracking.

In Europe, similar discussions are taking place. Some Member States are skeptical about the exploitation of shale gas (e.g., Bulgaria and France), while others are more inclined to favor it (e.g., Poland and the United Kingdom).

China’s shale gas deposits are located in the relatively arid West and Southwest. Shale gas production requires significant amounts of water, which may make it impractical in these dry regions.

Running parallel to the development of shale gas is the ongoing development of advanced batteries for electric cars. If electric cars are developed along the timeline indicated by market research, by the 2030s more than half of the cars in China will be electric vehicles.

If China develops its shale gas industry, by 2030, China’s fleet of electric cars will be charged by power produced from gas, not coal, which will increase water use.

Climate and Its Influence: Modeling the FutureHow governments and societies adapt to climate change impacts remains highly uncertain. Given that uncertainty, it is imperative to consider a wide range of possible future adaptation scenarios.

In such scenario analysis, one can focus on four major dimensions of the future world: equity (growth and poverty vs. inclusive development), carbon dependence (high vs. low), environmental conditions (the environment is valued and protected vs. the environment is under stress), and globalization (a homogenous global community vs. heterogeneous countries). In one scenario, countries converge to create a more homogeneous world, growth and poverty co-exist, the environment is stressed, and societies are carbon dependent. This scenario differs substantially from a world in which countries

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are heterogeneous, growth is inclusive of all major sectors (vs. a few individual sectors), consumption behaviors are aligned with environmental preservation, and there is high carbon dependence.

Models used as policymaking inputs provide information about future climates, but often, these models’ predictions vary widely. Reliance on any one model in shaping policy is risky.

One potential solution is to look for robustness in the many possible scenarios instead of optimizing the one most-likely scenario. As an example, consider Greece’s plans to build a dam in the Pyli Basin. Determining the optimal volume of the dam (i.e., that which yields the highest net present value) depends on the climate model and the discount rate utilized. For any given discount rate, the climate model employed yields widely varying results. Rather than optimize the dam’s dimension, another approach is to calculate the potential error of using the wrong model instead of the right one and then, from there, employing the model that minimizes the potential error.

A recent European study analyzed the economic impact of climate change and storm surge risk for Copenhagen. Water levels that rise 1.5m above the current mean level will cause damages of approximately 2.5 billion Euros. Simulations show the degree to which different sectors (e.g., agriculture, electricity, construction, etc.) would be affected by such sea-level rise, in terms of job loss, change in value-added, and direct capital losses.

Energy Issues in CanadaThe energy debate really became a household topic as the proposed Keystone XL (KXL) Pipeline grabbed headlines over the past year. The KXL project had received approval from the U.S. Environmental Protection Agency, and during the fall of 2011, hearings were held across the United States to see if KXL was in the national interest. KXL subsequently became a political football, and President Obama eventually rejected the proposed project in December 2011.

Proponents of KXL argued that pipelines are the safest way to transport petroleum and petroleum products, that pipelines already crisscrossed the continent, and that construction of KXL would create jobs in recession-weary America. Nevertheless, opponents noted that the pipeline would cross the Ogallala Aquifer in Nebraska and argued that an already carbon-intensive energy source became even more so in Canada because of the large amount of energy needed for extraction and conversion to fuel.

Those and other arguments rallied the “off oil” crowd to increase protests against KXL, which became a symbol of protest against our use of oil and a symbol of environmental intransigence among conservatives.

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The KXL Pipeline may yet be developed, if only because constraining supply will not reduce demand for cheap energy. The larger question for North Americans is how much energy is used and where it comes from. Canada will continue to produce oil, and industry has been steadily reducing the amount of energy needed to produce a barrel of oil. Canada has also worked to reduce the amount of water necessary for oil production and to reduce the toxicity of water, post-production.

Increased production of tight gas and shale gas through hydraulic fracturing has been under investigation because of the amount of water used in its production and the potential pollution of groundwater due to faulty production methods.

The energy debate reflects contradictory goals. On the one hand, there is an effort to become less dependent on fossil fuels; on the other, few people are willing to pay higher prices for unsubsidized “clean” energy, particularly during a recession. These countervailing impulses will continue to come into conflict around the issues of energy and economic development.

Future Water Demand: Addressing the “Known Unknowns”Future estimates of water demand are notoriously inaccurate. There is too much uncertainty associated with these measurements, and these “known unknowns” need to be addressed. If, for example, the goal is to produce 20 percent of U.S. energy from renewable sources, we need to think about the pressure this will place on water demand.

The scale of environmental change is not registering with the larger public. The energy and mining sectors are introducing enormous amounts of carbon into the ecosystem, yet these negative practices remain under-appreciated, in part because these two sectors wield enormous political and economic power.

The potential for economic growth is deeply embedded in the green movement, particularly in terms of renewable sources of energy. But as these green energy sources gain market share, what happens to those regions around the world that are dependent on the oil economy, including Texas and Alberta? Are they capable of adapting?

To date, there is a poor record of sustainable water management by markets and states, and yet there is little clarity on what form the correct regulatory framework should take. Clear evidence indicates that climate change will increase stress on water resources. In response, we should explore adaptation measures beyond reuse and recycling.

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Growing Population, Increasing Affluence Threaten Global Energy, Water ResourcesBy Aires Soares, Head of Science, Technology, and Education, E.U. Delegation to the United States

The world’s population is expected to top 9 billion by 2050. Growing populations and rising levels of consumption translate into rising demand for fossil fuel resources, making them sought after but politically constrained. The United States and Europe are highly dependent on energy imports. As people become wealthier, they use more energy and water. Although technology has advanced, energy efficiency gains largely have been offset by the increase in energy consumption.

The major problem is that it has taken the industrialized world more than a century to develop the basic infrastructure necessary to deliver natural resources to the point of use. This suggests that development of next-generation and alternative energy infrastructure will take decades. Joining the long-time concern over energy security will be a transatlantic focus on the security of land, water, food, and other raw materials.

Consider, for instance, that a recent workshop between the United States and Japan focused on future production of rare-earth materials. These materials are vital for new energy technologies, and China is exporting fewer amounts of them.

The growing economic power of countries like China and India has provided increased wealth and improved quality of life for millions of people. Other nations, including Brazil and South Africa, are on a similar path. This newfound prosperity has an indirect effect: the increased exploitation of new—and limited—resources. The catching-up process of today’s emerging countries is similar to that experienced by Japan following World War II but on a much larger scale and with ever diminishing global resources.

These realities prompt several key questions. How will the growing pressure on natural resources be resolved in the next 40 years? Will the rules of the Western

3.ENERGY,WATER, AND INNOVATION:

THE NEED TO MAKE THE LINKS

3.1

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market prevail, or will state-owned companies control strategic resources in other parts of the world?

Europe is pushing for global precautionary governance, which should facilitate sustainable worldwide consumption of resources. This paradigm has been discussed in the context of climate-change negotiations and was presented at a recent conference in Brussels focused on mapping the future of the U.S.-E.U. strategic partnership. In 2010 at the Wilson Center, the European Commission presented its flagship initiatives on the innovation union and a resource-efficient Europe. These initiatives indicate what Europe needs to do in the future in terms of research and innovation to achieve resource efficiency.

Both initiatives seek to spark economic opportunity, improve productivity, drive down cost, and boost competitiveness. The difficulty is devising a practical method for implementing these measures. The European Union has pledged to invest a total of 80 billion Euros in its next Framework Programme for research and innovation (2014-2020) targeting energy-efficiency resources, climate change, and innovative and secure societies.

Globalization and international cooperation in research are no longer subjects of debate but a daily reality.

Water: A Constraint to U.S. Energy, Climate Policy Objectives?By Paul Faeth, Senior Fellow, CNA

People talk a lot about water wars, but in fact, there is little evidence of water wars. However, there is considerable evidence of a wide range

of internal conflicts surrounding water, and these conflicts may well escalate because of the effects of climate change.

Water withdrawal (i.e., water taken out and returned to the source with very small losses) in the United States mainly exploits surface waters, with a relatively smaller share coming from groundwater. [See figure 1.] The majority of withdrawn surface water is used for energy production. Indeed, roughly 80 percent goes to thermal-electric power generation and agriculture,

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Figure 1: Estimated U.S. Freshwater Withdrawals in 2000.

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with the former using the larger share. As a result, this water evaporates. Furthermore, considerable amounts of energy are expended in pumping water and treating sewage. In the United States, for instance, about 13 percent of all energy is used to treat and move water (in California the energy used for these purposes is 20 percent).

The link between water and energy production is demonstrated by an analysis conducted by the Electric Power Research Institute (EPRI), which predicts nonagricultural water consumption to 2035, disaggregated by domestic use, industrial use, and energy use.

As figure 2 illustrates, energy-related water use is expected to increase by 30 percent in the next 30 years. With no adjustments, this means we should expect to see larger water use for thermoelectric cooling and other energy uses.

Future projections also identify potential geographic areas of concern regarding increased water usage, often as a result of population growth. It is particularly troublesome that the U.S. regions with projected highest population growth by 2020 are also those regions that face limited water resources (e.g., California, Arizona, New Mexico, Texas, and Florida). Population growth and its associated increase in water usage are but one concern. Others arise from weather-related events.

Consider, for instance, that in 2007, the severity of droughts in the southeastern United States nearly shut down one-quarter of all nuclear reactors. Water is needed for the cooling process at these plants. A similar scenario occurred in France at about the same time, when 50 percent of power had to be cut off because rivers and streams were not providing adequate cooling for the nuclear towers. Meanwhile, a prolonged drought in Texas prompted brownouts and rolling blackouts.

These events raise important issues in terms of climate change and its impact on water use. With higher temperatures comes increased evaporation, which will lower the level of water in the system. Power plants themselves may use more water because of higher rates of evaporation. Higher temperatures also mean increased demand for cooling.

Figure 2: Non-agricultural water consumption.Source: Goldstein, B. and M. Hightower, “Partnerships for Energy-Water Research,” http://www2.bren.ucsb.edu/~keller/energy-water/6-1%20Mike%20Hightower%20-%20Bob%20Goldstein.pdf

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This leads to one of the more underappreciated concerns of the water-energy nexus: Is water a constraint to achieving policy objectives associated with energy and climate change? Little research has addressed this question. Indeed, not one energy model in the United States includes water as a feedback or a restraint to the production process.

In particular, consider water withdrawals for thermoelectric cooling.In the bright red areas on the map [see figure 3], more than 75 percent of water in the watersheds is used for cooling. These are also areas that sustain a large amount of coal-fired electricity generation. Currently, few water bodies in the Southeast are impaired by thermal water use, but energy policy seems aimed at increased use of plug-in cars, with the assumption that the cars would be plugged in at night and used during the day. However, increased night-time operation of power plants would increase the need for thermal cooling by roughly 50 percent. Plants equipped to capture and sequester carbon would require even more water for cooling. In the red areas on the map, where 75 percent of the watershed is already used for thermal cooling, the increased use of plug-in vehicles will double or even triple the demand for water.

Further, there is an inherent tradeoff between the energy security and the water use associated with vehicles powered by petroleum and those powered by alternative fuels. For example, to travel 100 miles, a gasoline-powered vehicle depletes 7 to 14 gallons of water, a plug-in hybrid vehicle depletes 24 gallons, and an ethanol-powered vehicle depletes 130 or more gallons.1 Yet, $50 billion dollars in the form of tax cuts and subsidies are planned for domestic ethanol production between 2011 and 2015. The U.S. ethanol program has also increased the amount of farmland devoted to corn production and reduced the amount used for wheat and soybean production, which has increased global prices for each of the latter products. It has been suggested that worldwide production of biofuel is the main reason for the increase in global food prices.2 Further, there is also a connection between ethanol production and the dead zone in the Gulf of Mexico. Nutrients

Figure 3: Water Use for Thermoelectric Cooling.Source: Jenicek, E. et al., “Army installations water sustainability assessment: An evaluation of vulnerability to water supply. Technical Report,“ ERDC/CERL TR-09-38, (2009).

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flowing into the Gulf from the Mississippi River cause excessive amounts of algal blooms. Owing to algae’s brief lifespan, there is a sudden increased mass of decomposing blooms that take up oxygen, which threatens other living organisms.

These and related events will continue to occur as more and more farmland is devoted to corn production, because corn requires more fertilizer than other crops. Ethanol production from corn is also highly water intensive. It takes approximately 140 gallons of water to produce 1 gallon of corn ethanol. One potential solution would involve harvesting the algae and processing it into fuel. Sufficient amounts of algae exist to power a large stock of vehicles.

It takes 2 to 5 barrels of water to produce one barrel of oil from shale oil reserves in Colorado, Utah, and Wyoming, yet parts of the Colorado River are among the nation’s driest river basins. Currently, oil companies are buying up water rights in those areas, yet it is still unclear whether there is production potential because of the overall lack of water. One recent study projected that, by 2017-2019, the Hoover Dam would have only a 50-50 chance of producing electricity and that by 2024 there would be a 50-50 chance that low water levels would prevent any water from spilling over the dam.3

The Energy Information Administration (EIA) projects that, in the future, wind and biomass will provide a significant amount of the electricity produced in the United States. While wind power requires little water beyond that needed occasionally to wash the turbine blades, biomass production requires as much water as coal production. Apart from nuclear power production, coal production consumes the most water and twice that of natural-gas production. Data from a variety of sources and comparison of the price of electricity, the greenhouse gas emissions, and the water use of varying types of clean-power options illustrate that some of the least-cost power options—pulverized coal and natural gas—are also those with the highest greenhouse gas emissions. The analysis also shows that natural gas and pulverized coal, paired with carbon capture and storage, may reduce emissions but would result in higher electricity cost and would require the largest withdraws of water. Consider, for instance, that carbon capture and storage increase water use for natural gas by 80 percent and for pulverized coal by 100 percent.

Clearly, when policymakers draft regulations, they should seriously consider water as a constraint. In the Southwest, for example, policies for clean energy are in place and expected to succeed, yet the models backing these policies do not provide for the possible development of water-sparing energy production systems. Further, the U.S. Environmental Protection Agency is working on regulations under 316(b) of the Clean Water Act, which, among other provisions, requires assessment of loss of marine life as a result of power plant cooling intake structures located along the coasts. These regulations do not, however, address

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the increased water consumption associated with these structures.

Some research suggests that climate change could increase stress on water resources. From a political standpoint, roughly 80 percent of the states where water stresses are expected to be extreme or high [see figure 4] voted Republican. Currently, while it may be difficult to have a reasoned discussion on climate change in these areas, there is considerable interest in issues associated with energy and water use. Indeed, if the conversation addressed how to produce energy while sparing water, nuclear would be off the table, but other technologies that both reduce emissions and use less water likely would be viewed favorably. For that reason, discussions over various energy systems should address water use among the other benefits and liabilities of these systems. Selection of water-sparing energy systems that also reduce emissions would conserve water resources while also achieving climate goals.

One of the challenges is that there is little federal coordination of water policy in the United States. Instead, water resources are often managed, particularly with regard to water quality, by municipalities. Thus these resources are often managed independent of concerns over power systems.

Currently, some modelers in the United States are exploring development of a model that would evaluate energy in the context of water and climate, but unfortunately the model does not allow for feedback that would help guide policy decisions. It does not determine, for example, that a location that lacks sufficient water to produce energy from coal should make the transition to natural gas.

To date, the European Union has yet to adequately address the water-energy connection. For example, some models predict that 80 percent of Europe’s carbon emissions will have to be reduced by capture and sequestration, but they fail to consider the fact that these measures will double the demand for water.

Figure 4: Water Supply Sustainability Index. Source:

NRDC, 2010

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China’s Push for Green Power May Undervalue Threats to Water ResourcesBy Jennifer Turner, Director, China Environment Forum, Woodrow Wilson Center

The situation in China is even more challenging than that in the United States in terms of the energy-water nexus. In China, clean energy tends to be the focus. In fact, the Chinese Communist Party is ranked the number one green-energy company in the world. In its most recent 5-Year Plan, the Chinese government is pushing for development of wind and solar energy sources.

Although China is a laboratory for clean energy, its actions are not lessening impacts on water resources. Indeed, the fragile state of water in China threatens the nation’s ability to continue on its current path of growth.

The Energy Foundation (http://www.ef.org/home.cfm), a partnership of major donors interested in solving the world’s energy problems, has supported work on the water-energy nexus problem in China. Through Choke Point: China, three teams of Circle of Blue journalists were sent to 10 Chinese provinces and asked to assess how energy development affects water resources. Circle of Blue is an international network of journalists, scientists, and communications experts that reports on the global freshwater crisis.

Among other destinations, the journalists were sent to the South-North Water Transfer Project (SNWTP), one of the world’s largest water transfer infrastructure projects. SNWTP, with a price tag of $62 billion, seeks to draw water from rivers in South China and divert it to the country’s arid north.

SNWTP, an entire re-plumbing of China, will drain 36 billion cubic meters of water from the Yangtze River Basin each year and transfer it to the north. (That’s not unlike draining the Missouri River and piping it to Montana). The Chinese government believes the project is necessary because of water scarcity in the North and West, where projections show that water consumption will increase by nearly 1 percent annually and reach 670 billion cubic meters in 2020. SNWTP infrastructure ultimately will comprise three main water lines—eastern, western, and central—but only the eastern line is currently operational [see figure 5 on next page].

As China’s water use has increased, total water resources have declined. Consider, for instance, that between 2000 and 2009, China’s freshwater reserves dropped by 13 percent, in part because of changing climate patterns. Droughts in 2000, 2007, 2009-2011 wreaked havoc on water resources in South China.

To help understand the context and sweeping impacts of SNWTP, it is important

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to note that China is the world’s number-one energy producer and the number-one consumer of coal, with most of the coal reserves in North China. Coal production is highly water intensive. In the past decade, China has doubled its coal use, and demand for coal is projected to grow by 30 percent to 1 billion metric tons by 2020. However, most of China’s new reserves of coal are in Xinjiang, Inner Mongolia, Shanxi, and Ningxia—provinces supplied by the Yangtze River and too dry to develop coal production.

In per-capita terms, China’s energy use is one-quarter that of the United States, but it is fast approaching the per-capita energy use of the European Union. On a brighter note, China has decreased its energy intensity over the past 5 years and has launched a significant public-information campaign in support of energy efficiency. Installed renewable energy in China has already reached 15 percent and will soon reach 20 percent. The green revolution is pushing development of water-saving energy technologies like wind and solar. China currently produces 40 percent of the world’s solar panels, and China’s current 12th 5-Year Plan calls for an increase in solar-energy use in its cities.

Protests in China since 2005 have held back large-scale investments in hydropower, but the plan is to move forward and create dams in Southwest and Southeast China. The addition of these dams will increase generation of hydro-electric power from 150GW to 400GW by 2020. Unfortunately, coal will continue to dominate China’s energy production, providing 70 percent of the nation’s overall energy supply, and exploiting coal reserves in North China requires water.

Pollution remains an underappreciated issue associated with the water-energy nexus in China. Some 40 percent of China’s rivers are graded IV-V, safe for industrial use and irrigation only, or V+, unsafe for any use. Roughly 10 percent of rice produced in China is contaminated with cadmium. People are getting sick from consumption of the contaminated rice, and protest against water pollution is growing in China. One of the biggest obstacles for the SNWTP is the huge cost of cleaning up transferred water drawn from the polluted Yangtze River.

Fortunately, China is recognizing its weaknesses with regard to water, energy, and the environment. For instance, the world’s largest and most efficient coal liquefaction plant is located in Ordos, in Inner Mongolia, where coal is abundant

Figure 5: China’s South-North Water Transfer Project

(SNWTP).

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but water is scarce. At the plant, coal producers are recycling water that is not consumed by the liquefaction process. Initially, China’s National Development Reform Commission planned to construct 23 of these plants to decrease China’s dependence on foreign oil. However, since the water footprint is so large for these facilities and because these plants are one of the largest point sources of CO

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emissions, the commission decided to limit construction to only two smaller plants. Interestingly, no water assessments could be conducted because the region where these plants are located is arid and does not have enough water to test.

On the energy side, China is making significant strides to improve efficiencies. China’s water resources are the source of many conflicts among potential users—a situation similar to that in the United States—so it is difficult for the Chinese government to manage water effectively. In 1998, owing to a drought and excessive withdrawals, the Yellow River in North China did not reach the ocean for 200 days. In response, the government was empowered to impose strict water allocations, limiting the water access of each of the nine provinces through which the river flows.

Pressed by increasing need for clean water, Beijing is investing in water-recycling processes (e.g., those that use gray water for flushing and landscaping). Newer components of the 12th 5-Year Plan seek to develop regulations targeting water conservation and use of nitrogen fertilizer and policies that encourage water recycling. Despite these and other efforts to promote water conservation in China, further reforms are needed to ensure effective enforcement of laws and regulations.

A recent study for Probe International (www.probeinternational.org/) reported that if all of the reservoir capacity for all of China’s planned dams was actually built, no water would make it to the ocean.

The Chinese government has articulated goals to control CO2 emissions and

address global climate change. It’s worth noting that China’s central government has embraced the science of climate change, and the issue is not politically stigmatized in China as it is in the United States. However, China’s vast bureaucracy complicates efforts to address climate. And while China’s government is not particularly noted for its ability to plan for the long term, it has proven quite agile in responding to crises and tends to react very quickly. Consider, for instance, that, over the past two years, droughts in South China have reduced electricity production by the region’s dams to 30 to 50 percent of capacity. In response, China is building coal-fired power plants proximate to new hydro-electric dams to meet power demand in times of drought.

Further, while China is intently focused on addressing energy issues, it has not adequately addressed the energy-water nexus, particularly in terms of cross-collaboration among all governmental levels and sectors. In that regard, China and the United States face similar challenges.

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Fracking and Electric Cars Converge, Precipitate Geopolitical ImpactsBy Steve LeVine, Bernard L. Schwartz Fellow, New America Foundation

When we peer into the future, with an eye for water issues, two intertwined trends emerge: hydraulic fracturing (fracking) for shale gas

and electric vehicles.

In the 1990s, George P. Mitchell pioneered a technique for harvesting natural gas from shale. At the beginning of the 21st century, Devon Energy embraced Mitchell’s technology, and it took off with the use of horizontal drilling. This coincided with another trend occurring in the United States: the nation was seen as being “gas-poor,” and, as a consequence, construction of liquefied natural gas (LNG) import facilities increased along the East Coast and the Gulf of Mexico. The arrival of this abundant and protected supply of shale gas obviated the need for LNG facilities.

Companies that planned to ship LNG out of Qatar (primarily Exxon) were not going to simply abandon their projects, and they identified other markets for the LNG, including Europe. This created a spot market that, for the first time in European history, undercut Russia, one of the largest and most dominant players in European natural gas market.

Efforts to capture shale gas have increased around the world, and this new, abundant energy source has had a considerable geopolitical impact. The United States has viewed this geopolitical impact favorably. Consecutive U.S. administrations have made it a policy point to help Europe reduce its reliance on natural gas from Russia. In fact, it is likely that development of shale gas might meet Europe’s entire projected demand for natural gas.

Running parallel to the development of shale gas is the ongoing development of advanced batteries and, in particular, technologies that would lead to breakthroughs in batteries for electric cars. If electric cars are developed along the timeline indicated by market research, by the 2030s more than half of the cars in

4.ENERGY, WATER, INNOVATION, AND GEOPOLITICS

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China will be electric vehicles.

China is the world’s largest new car market, and its population’s affluence is increasing, which will create significant market demand for electric vehicles. If China develops its shale gas industry, the country will likely shift from coal to natural gas to fire its power plants. As a result, China’s fleet of electric cars on the road in the 2030s will be charged by gas, not coal, which will increase water use. China’s development of shale gas will also reduce oil demand from 105-130 million barrels per day to 90 million barrels per day. Incidentally, China’s projected demand for natural gas under current circumstances does not take into account the development of shale gas or increased use of electric cars. Today, China consumes 120 billion cubic meters (BCM) annually, and the accepted projection is 320-350 BCM by either 2020 or, more likely, 2030.

The Arab Spring, one of the more significant geopolitical events to occur in recent years, illustrates how an unexpected shift in politics can utterly overturn perceptions of and projections about the Middle East. The nations that have not changed are the monarchies—Qatar, Kuwait, and Saudi Arabia—which are able to thwart uprisings and revolutions by paying out significant amounts of money to their citizenry. Saudi Arabia, for instance, pays out a $130-billion benefits package to its population as a guard against unrest. To maintain this level of outlay to its population, Saudi Arabia must maintain the cost of oil at roughly $90 per barrel. If the price of oil falls below this level, the country faces potential unrest.

For these and other reasons, the impacts of shale gas and electric/hybrid vehicles, which may drive down the price of oil, may be felt most acutely in the Middle East and may well result in a shift in power. Clearly, shale gas, electric cars, and the development of advanced batteries are more than just interesting technological developments. Rather, they represent organic developments that can have significant impact on geopolitics over the next 30 to 40 years.

About three years ago, the Center of American Progress (CAP) (www.americanprogress.org/) launched an initiative to identify and exploit the potential symbiosis between oil and natural gas companies. CAP’s goal was to find ways to nurture partnerships between these two key players in the energy field to enable the cap-and-trade system to work. CAP advised proponents of the green initiative and high-level CEOs that production of natural gas would dramatically increase and that the stakeholders needed to plan accordingly for the market over the next 30 to 40 years.

CAP proposed an approach to ensure that natural gas companies could price their product comparably to that of coal, provided cap-and-trade—and the resultant lower emissions—occurred. Although the plan would have been good for shareholders, the stakeholders rejected the plan, because most of the CEOs of the fracking companies do not accept climate change science.

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One of the biggest problems associated with fracking in the United States is the belief that the process is toxic and pollutes aquifers. Drilling companies will bear the burden of this misperception. In response, the federal government should establish standards and guidelines that seek to limit or even eliminate actual harmful environmental impacts associated with fracking. In this regard, the United States can learn much from its northern neighbor. Canada is currently exploring shale-gas production methods that conserve water or use seawater, rather than freshwater, in fracking operations.

Public concerns over the negative impacts of fracking may, in fact, be overblown. Earlier this year, one of the first definitive studies on the impacts of fracking, conducted by Duke University, determined that 60 Pennsylvania water wells proximate to fracking wells showed levels of natural gas that exceeded governmental recommendations. But the study concluded that shale gas did not enter the water wells from deep underground. Rather, it infiltrated through leaks in the casing on the vertical sections of the fracking wells—a problem that might easily be remedied through improvements in the casing materials.

To date, Europe has kept pace with the United States in developing shale gas. But in China, shale gas deposits are located in the relatively arid West and Southwest. Shale gas production requires significant amounts of water, which may make it impractical in these dry regions. These realities position the United States as a first mover in this emerging energy field. As the United States becomes more familiar with the process of shale-gas extraction—and methods for reducing or eliminating the related environmental impacts—it can share that knowledge with other nations intent on developing shale gas industries.

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5.ENERGY, WATER, INNOVATION, AND GEOPOLITICS

Climate and Its Influence: Modeling the FutureBy Stéphane Hallegatte, Lead Climate Change Specialist, CNRS-CIRED

In terms of the energy-water nexus, there are three critical research issues. First, there is need for a long-term perspective in water, energy, and climate change policy that accounts for changes in population, changing demographics, and technology advancement. Second, we need to develop flexible policy at minimum cost that deals with infrastructure and the uncertainty of future conditions. Finally, one needs to account for natural disasters and realize that there are inter-sectoral reactions.

AUGUR: Europe and the World in 2030 (www.augurproject.eu/) is an international research project of the Seventh Framework Programme of the European Union that seeks to assess the implications of a variety of patterns that may occur in 2030 in political, economic, social, environmental, and technological realms. Among other themes, the project considers the impact of global warming on agriculture.

In Uganda, for example, current temperature conditions support coffee production. Coffee represents the nation’s main agricultural export. A temperature increase of just 2 degrees Celsius would make nearly all of Uganda’s land unsuitable for coffee cultivation and harvest.

The potential economic consequences of this differ depending on whom you speak to. An optimistic economist might insist that Uganda would adapt and develop a comparative advantage in production of other agricultural goods that are tolerant of higher temperatures.

But whether or not this new agricultural industry develops depends on Uganda’s capital stocks, capital flows, and the country’s ability to create an entirely new sector. In general, climate change impacts—and the ability to adapt

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to them—will depend on how the world evolves in coming decades and how we are able to react to this evolution. Indeed, we should consider all possible future scenarios and evaluate climate-change impacts that would occur for each scenario.

A multitude of dimensions ought to be considered when assessing the impacts of climate change, but one can focus on four major dimensions of the future world: equity (growth and poverty vs. inclusive development), carbon dependence (high vs. low), environmental conditions (the environment is valued and protected vs. the environment is under stress), and globalization (a homogenous global community vs. heterogeneous countries). [See figure 6]. In the AUGUR project, four baseline scenarios represent outcomes if no climate policies are implemented [see figure 7].

SCENARIO GLOBALISATION EQUITY ENVIRONMENT CARBON DEPENDENCE

1. Consolidation convergent exclusive stressed high

2. Bipolar fragmented exclusive stressed low

3. Global development

convergent inclusive friendly low

4. Regionalisation fragmented inclusive friendly high

For example, scenario one (consolidation) occurs if countries converge to create a more homogeneous world, growth and poverty co-exist, the environment is stressed, and societies are carbon dependent. This scenario differs substantially from a world in which countries are heterogeneous, growth is inclusive of all major sectors (vs. a few individual sectors),

Figure 6: Building world narratives for climate change

impact, adaption, and vulnerability analyses.

Source: Hallegatte, S., Przyluski, V., and A. Vogt-Schilb,

“Building world narratives for climate change impact,

adaptation, and vulnerability analyses,” Nature Climate

Change, 1 (2011).

Figure 7: Four baseline scenarios. Source: AUGUR project final report.

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consumption behaviors are aligned with environmental preservation, and there is high carbon dependence (i.e., scenario four, regionalization). The CIRCE Integrated Project (www.circeproject.eu/), funded under the European Commission’s Sixth Framework Programme, highlights impacts of and possible adaptation to climate change in the Mediterranean region. Among its other research activities, CIRCE analyzes the role of uncertainty in the decision-making process, with a focus on minimizing the error associated with use of the “wrong” model. Many decisions have long-term consequences and are climate dependent, yet the future remains unknown.

Models used as inputs into policymaking provide information about future climates, but often, these models’ predictions vary widely. For example, the CNRM-CM3 model projects that Senegal will experience a 30-percent increase in precipitation, the CSIRO-Mk3.0 model predicts a 20-percent decrease in precipitation, and the GFDL-CM2.0 model puts the decrease in precipitation at 50 percent. Clearly, reliance on any one model in shaping policy, and assuming that the model is correct, can be risky.

One potential solution is to look for robustness in the many possible scenarios instead of optimizing the one most-likely scenario. As an example, consider Greece’s plans to build a dam in the Pyli Basin. Determining the optimal volume of the dam (i.e., that which yields the highest net present value) depends on the climate model that is used and the discount rate. For any given discount rate, the climate model employed yields widely varying results. For example, with a 3-percent discount rate, the CNRMCM3, NCARPCM1, and UKMOHADGEM1 models result in a -12, 2, and 0 change in the optimal dam volume, respectively. Rather than optimize the dam’s dimension, another approach is to calculate the potential error of using the wrong model instead of the right one and then, from there, employing the model that minimizes the potential error.

This methodology is also applicable to projects in European cities. Designing and building a structure that is able to cope with a specific climate change effect in Cordoba is no more expensive than building one for a specific climate change effect in Paris. However, an uncertain future climate means that building a structure that is capable of withstanding a range of climate effects is difficult and costly.

The European Project CONHAZ (http://conhaz.org/) assesses cost, prevention, and responses to natural hazards, and project WEATHER (www.weather-project.eu) analyzes the impacts of climate-change-induced extreme weather events on Europe’s transportation systems. One study analyzed the impact of climate change and storm surge risk for Copenhagen.4 By combining information on high sea level events in the last 122 years and GIS information on population, asset density, and elevation, the simulations show how different sectors are affected by natural disasters.

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For example, water levels that rise 1.5m above the current mean level will cause damages of approximately 2.5 billion Euros. Simulations show the degree to which different sectors (e.g., agriculture, electricity, construction, etc.) would be affected by such a sea-level rise, in terms of job loss, change in value-added, and direct capital losses. For example, in this scenario, the transportation sector would experience reductions in value-added (-1.5-percent change two years after the natural disaster) and a loss of jobs (500 jobs lost one year after the natural disaster). Combined, the transportation and telecommunications sectors would experience direct capital losses of approximately 1 billion Euros. So, although Copenhagen is very well protected against storm surges at the current mean sea level, upgrades will become necessary in the next decades as sea levels rise, and this is going to be quite costly.

Energy Issues in CanadaBy David Biette, Director, Canada Institute, Woodrow Wilson Center

Canada is among the top three OECD nations in terms of energy use per capita, using more per person than even the United

States. While Canada is blessed with abundant sources of clean hydroelectric power, it also has significant coal deposits and, more important, more petroleum reserves than all but two other countries. And like most other parts of the world, Canada’s energy use continues to increase.

For eight years, the Woodrow Wilson Center’s Canada Institute sponsored semi-annual cross-border forums on energy issues that looked at a wide variety of topics, including natural gas supply, oil sands, hydro production and the electricity grid, innovation and science, carbon standards, offsets, unconventional gas, and the Gulf oil spill. Participants in the forums included representatives from industry, government, regulatory agencies, nonprofit organizations, and academia. In many cases, these participants had never collaborated with or ever spoken to each other prior to their involvement in the forums.

The energy debate really became a household topic as the proposed Keystone XL (KXL) Pipeline grabbed headlines over the past year. Canada and its oil sands became news in the United States, raising questions about how we use energy and the kinds of energy we use. Canada had been increasing its exports of petroleum to the United States over the last decade to the point that Canada has become Americans’ largest foreign source of energy.

An ever-increasing proportion of Canadian imports includes bitumen, derived from oil sands, to feed the growing need for petroleum products in the United

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States. TransCanada, a Canadian pipeline company, has proposed building a second pipeline from the oil sands in Alberta to the U.S. Gulf Coast, a project that received approval from the U.S. Environmental Protection Agency. During the fall of 2011, hearings were held across the United States to see if KXL was in the national interest.

KXL subsequently became a political football between Republicans, who favored increased energy infrastructure development, and Democrats, who favored development of alternative sources of energy. President Obama eventually rejected the proposed project in December 2011, saying that the project could not proceed on the timetable presented by his political opponents. He added that he looked forward to having TransCanada submit a new proposal.

Proponents of KXL argued that pipelines are the safest way to transport petroleum and petroleum products (safer than ship, rail, or truck), that pipelines already crisscrossed the continent, and that construction of KXL would create jobs in recession-weary America. Nevertheless, opponents were outraged that a pipeline would cross the Ogallala Aquifer in Nebraska, particularly since there had been several pipeline leaks in the United States and Canada during the previous several years. Environmentalists argued that an already carbon-intensive energy source became even more so in Canada because of the large amount of energy needed for extraction and conversion to fuel. Well-known environmentalists proclaimed that if every last bit of the oil sands was developed, it would release so much carbon that it would be “game over” for the planet. That and other arguments rallied the “off oil” crowd to increase protests against KXL, which became a symbol of protest against our use of oil and a symbol of environmental intransigence among conservatives.

The KXL Pipeline may yet be developed, if only because constraining supply will not reduce demand for cheap energy. Canada has promised to sell its oil to Asia, if the United States does not buy it, but needs a way to get the product to Pacific ports. Americans once again dealt with increased prices of gasoline in early 2012 and will not be in a position to control the price of oil, whether or not the United States increases offshore drilling or if oil sands production is increased.

The larger question for North Americans is how much energy is used and where it comes from. Canada will continue to produce oil, and industry has been steadily reducing the amount of energy needed to produce a barrel of oil. Canada, the province of Alberta, and industry have also worked to reduce the amount of water necessary for production and to reduce the amount and toxicity of water, post-production.

Coal will continue to be an important source of energy in North America, even if its relative position decreases. Increased production of tight gas and shale gas through hydraulic fracturing has been under investigation because of

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the amount of water used in its production and the potential pollution to groundwater due to faulty production methods. Still, production of shale gas has increased so much that the price of gas is nearing historic lows.

The energy debates reflect contradictory goals. On the one hand, there is an effort to become less dependent on fossil fuels; on the other, few people are willing to pay higher prices for unsubsidized “clean” energy, particularly during a recession. These countervailing impulses will continue to come into conflict around the issues of energy and economic development.

Future Water Demand: Addressing the “Known Unknowns”By Stacy VanDeever, Associate Professor of Political Science, University of

New Hampshire

The multiplicity of water demands and forecast of future estimates of water demand are, much like energy demand, notoriously inaccurate. There is too much uncertainty associated with these measurements, and these “known unknowns” need to be addressed. Further, we can think of these issues in terms of life-cycle analyses or product chains, so that we understand the

steps from production to delivery of energy as well as the water demand and stresses resulting from materials, geography, and mining. The goal is to get a full illustration so that if, for example, the goal is to produce 20 percent of our energy from renewable sources, we need to think about the pressure this will place on water demand as well.

The scale of environmental change is not registering with the larger public. Persuasive analysis indicates that the energy and mining sectors are introducing enormous amounts of carbon into the ecosystem, and this reality needs to be reframed in a way that the public understands fully. Meanwhile, these two sectors continue to wield enormous political and economic power. The potential for economic growth is deeply embedded in the green movement, particularly in terms of renewable sources of energy. But as these green energy sources gain market share, what happens to those regions around the world that are dependent on the oil economy, including Texas and Alberta? Are they capable of adapting?

To date, there is a poor record of sustainable water management by markets and states, and yet there’s little clarity on what form the correct regulatory framework should take. Indeed, what would our social institutions look like with complete reuse/recycling of water? Clear evidence indicates that climate change will increase stress on water resources. In response, we should explore adaptation measures beyond reuse and recycling.

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The workshop “Energy, Water, and Innovation” convened an international panel of experts. Their presentations and the discussions they inspired led to development of a list of the policy recommendations, which follow.

• Water is emerging as a key constraint to achieving our energy and climate-change objectives. Water is often an underappreciated dimension of the extraction, production, and utilization of multiple energy sources. More efforts must be made to integrate research, investment, and policy responses into the water-energy nexus. The growing understanding of the many facets of the water-energy nexus should be the subject of joint E.U.-U.S. study.

• Increasing consumption, population growth, and climate change will have important implications for water supplies in the United States. In the United States, water is managed primarily at local and state levels of government, with a limited role for the federal government. As part of renewed efforts to study water futures nationally, organizations similar to the former U.S. Water Resources Council should be considered to insure coordinated responses and lesson sharing for future water challenges.

• Natural gas and hydraulic fracturing (fracking) are a major growth area for fuel type and extraction method, with significant economic, technological, energy, environmental, and geopolitical implications. Ongoing dialogue among the wide range of critical public and private stakeholders at multiple levels of government should engage in scientifically grounded dialogues that lead to the establishment of guidelines and standards. The scientific investigation of the environmental impacts of hydraulic fracturing should be a high priority for research support.

• The increased pressure on water resources from rising consumption, population growth, and climate change dictates more wide-ranging efforts to address water challenges beyond reuse and recycling, which are necessary but, by themselves, insufficient. More-inclusive approaches to climate adaptation, for example, offer opportunities to respond to the anticipated increase in water variability.

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• China’s rising demand for energy and growing scarcity of water will drive that nation’s demand in the direction of everything from African oil to Wyoming Coal. Chinese energy decisions will directly affect the United States and Europe. Countries supplying added energy resources to energy importing countries need to carefully calculate potential impacts on their own water supplies.

• The management of water has a long history of contestation and conflict. Increasing pressure on the resource will likely exacerbate those conflict dynamics. Institutional innovations to manage water peacefully must accompany technological, economic, and ecological advances in addressing water challenges.

1. Webber, M. “Energy versus Water: Solving Both Crises Together,” Scientific American, October (2008).

2. Mitchell, D. “A Note on Rising Food Prices,” Policy Research Working Paper No. 4682, The World Bank, (2008).

3. Barnett, T.P., and D.W. Pierce. “When will Lake Mead go dry?,” Water Resources Research, (2008).

4. S. Hallegatte et al., “Assessing Climate Change Impacts, Sea Level Rise and Storm Surge Risk in Port Cities: A Case Study on Copenhagen,” Climatic Change, 104 (2011).

REFERENCES

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7.WORKSHOPPARTICIPANTS

DAVID BIETTE, Director, Canada Institute, Woodrow Wilson Center

GEOFFREY DABELKO, Director, Environmental Change and Security Program, Woodrow Wilson Center

PAUL FAETH, Senior Fellow, CNA

STÉPHANE HALLEGATTE, Lead Climate Change Specialist, CNRS-CIRED

JAN KALICKI, Counselor for International Strategy, Chevron

STEVE LEVINE, Bernard L. Schwartz Fellow, New America Foundation

ROBERT SHELTON, Research Professor of Economics and Senior Fellow, Howard H. Baker Jr. Center for Public Policy,University of Tennessee

AIRES SOARES, Head of Science, Technology, and Education, E.U. Delegation

JENNIFER TURNER, Director, China Environment Forum, Woodrow Wilson Center

STACY VANDEEVER, Associate Professor of Political Science, University of New Hampshire

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A Report on the Deliberations ofEnergy, Water, and Innovation:A Critical Nexus for Sustainable

Economic GrowthA workshop convened at the Woodrow Wilson

International Center for Scholars, Washington, D.C., September 7-8, 2011