Global power generation could be severely affected by predicted 40% global water shortfall in 2030
Wellington, New Zealand: A 2016 research paper in the Journal Nature predicts a 40% shortfall of available water across the globe by 2030 with effects not just for drinking, food production, hygiene and public health, but also for 98% of global electric power generation.
Presented at the Asia-Pacific Energy Leaders' Summit in New Zealand the early findings of a new report, 'The road to resilience – managing the risks of the energy-water-food nexus' from the World Energy Council is calling for immediate action in order to secure resilient energy infrastructure. Supported by a task force of over 140 experts from across the world, the report makes five recommendations:
* Improve understanding of the water footprint of energy technologies in order to mitigate the risks of stranded assets
* Account for the price of water, particularly in areas of water stress
* Consider a wider range of financial and insurance instruments to hedge short term risks such as adverse weather incidents and associated electricity price volatility
* Give investors the confidence to invest by providing them a full risk assessment that includes different climate and hydrological scenarios in financial analyses
* Provide a reliable and transparent regulatory and legal framework that takes into account water issues and competing stakeholders' interest.
Christoph Frei, Secretary General World Energy Council said: "The energy-water-food nexus poses a systemic risk which could impact the robustness of the energy supply and demand over many years to come. Power plants across the world could be affected by changes in precipitation patterns, which are combining with increasing competition between water users to adversely affect the resilience of energy services.
"Clear co-ordination and integrated planning needs to take place now, or we will start to see the effects of water scarcity on energy supplies in the very near future. Assuming a water price during project planning is one way to trigger the right signals.
"If we are to counter the problems of water access, then cross-border co-operation is vital. We should be taking full advantage of the 261 international trans-boundary basins that cover 45% of the earth's land surface. Energy resilience can only be achieved by moving from individual to joint efforts."
Christoph Frei added: "An important issue to tackle is the lack of knowledge about water issues and limited modelling tools, making long term energy infrastructure investment decisions difficult to make.
"To promote infrastructure resilience, policymakers and investors need to create a framework which provides the incentives for adapted infrastructure design and needed financing mechanisms."
'The road to resilience – managing the risks of the energy-water-food nexus' will inform our support for the work of the Asia Pacific Economic Cooperation (APEC) Energy Working Group. The report is the second in a series of reports that assesses the financing of resilient energy infrastructure and identifies the investment and systemic changes required to combat new emerging risks including extreme weather, the energy-water-food nexus and cyber risks.
The reports are prepared with project partners Swiss Re Corporate Solutions and Marsh & McLennan Companies with insights from the European Bank for Reconstruction and Development and will build to provide a detailed report ahead of the 23rd World Energy Congress to be held in Istanbul, Turkey in October 2016.
The full report is here
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About the World Energy Council 'The road to resilience – managing the risks of the energy-water-food nexus':
The 'road to resilience - managing the risks of the energy-water-food nexus', is the second risk dimension investigated as part of the "Financing Resilient Energy Infrastructure" initiative. The first report in the series, 'The road to resilience - managing and financing extreme weather risk', recommended moving towards a more systemic understanding of resilience, in order to best manage extreme weather risks. This report takes a deep-dive approach to investigate the systemic risks of the energy-water-food nexus, and examines the integrated coordination that is needed for financing resilience. The report methodology is based on contributions from experts in 92 countries. Case studies have been submitted from the energy, insurance, financial, and academic communities to highlight the impact, obstacles and solutions that countries have taken to manage the impacts of the energy-water-food nexus. The case study contributions and final financial considerations of the nexus will be published in the final Financing Resilient Energy Infrastructure report later in 2016.
About the World Energy Council:
Founded in 1923, the World Energy Council is the only truly global and inclusive forum for thought-leadership and tangible engagement committed to our sustainable energy future. Our network of over 90 national committees represents over 3000 member organisations including governments, industry and expert institutions. Our mission is to promote the sustainable supply and use of energy for the greatest benefit of all. The World Energy Congress is the world's premier energy gathering. Visit www.worldenergy.org for more information or follow us on LinkedIn and Twitter @WECouncil.
About Marsh & McLennan Companies:
MARSH & McLENNAN COMPANIES (NYSE: MMC) is a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. Marsh is a leader in insurance broking and risk management; Guy Carpenter is a leader in providing risk and reinsurance intermediary services; Mercer is a leader in talent, health, retirement and investment consulting; and Oliver Wyman is a leader in management consulting. With annual revenue of $13 billion and approximately 60,000 colleagues worldwide, Marsh & McLennan Companies provides analysis, advice and transactional capabilities to clients in more than 130 countries. The Company is committed to being a responsible corporate citizen and making a positive impact in the communities in which it operates. Visit www.mmc.com for more information and follow us on LinkedIn and Twitter @MMC_Global.
About Swiss Re Corporate Solutions:
Swiss Re Corporate Solutions offers innovative, high-quality insurance capacity to mid-sized and large multinational corporations across the globe. Our offerings range from standard risk transfer covers and multi-line programmes, to highly customised solutions tailored to the needs of our clients. Swiss Re Corporate Solutions serves customers from over 50 offices worldwide and is backed by the financial strength of the Swiss Re Group. For more information about Swiss Re Corporate Solutions, please visit www.swissre.com/corporatesolutions or follow us on Twitter @SwissRe_CS.