“The two most important natural resources are water and energy.”
“In most cases, each is required to procure the other. First, we use water directly through hydroelectric power generation at major dams, indirectly as a coolant for thermoelectric power plants, and as an input for the production of biofuels.”
“By sector, the two largest consumers of water in the United States are agriculture and electrical power plants. If we count only fresh water, fully 81% of U.S. use is for crop irrigation.”
“For American corn production, an average of 2,100 gallons of irrigation water is required per bushel which yields 2.7 gallons of corn-based ethanol. This means that 206 gallons of water is needed per gallon of gasoline substitute, ethanol, before refining.”
“Several studies suggest that up to two-thirds of the global population could experience water scarcity by 2050. The shortages will be driven by the agricultural sector, which is currently responsible for up to 90% of global fresh-water consumption.
“Water shortages could become much more acute if there is widespread adoption of energy-production technologies that require water as a significant input, such as biofuels.”
“If large quantities of water are diverted to energy production because the market dictates this as society’s priority, there would be a significant loss of food production and a decline in human welfare.”
According to data from the Institute, the water requirements for energy production are substantial. Conventional petroleum extraction requires 10-40 liters of water per megawatt hour of energy, oil refining can demand 80-150 liters of water, and enhanced oil recovery can require a staggering 7600 liters of water per megawatt hour.
Coal integrated gasification, closed loop nuclear cooling processes and natural gas combined cycle plants can require upwards of 20,000 liters of water per megawatt hour. The production of ethanol from irrigated corn can demand between 2 and 8 million liters of water!
Energy and water resources are tightly integrated. It is impossible to have one without the other. Water and energy demand is rising, yet reserves are dwindling, resulting in resource stress and an exciting opportunity set for investors.