Whether or not you subscribe to the manmade global warming and ‘peak oil’ arguments, it is clear to almost everyone in the industrial world that ‘business as usual’ is not sustainable indefinitely. Fossil fuels are becoming harder and more costly to extract. The nuclear option is being taken off the table in many countries. Wind and solar electric generation are still not base load solutions (and may never be). And many world regions are already suffering some degree of water stress.
The World Business Council for Sustainable Development’s (WBSD) Vision 2050 Project explores ways in which the approximately nine billion people projected to be living on the planet in 2050 can live well by living within the limits of the planet: living in such a way that an acceptable standard can be sustained within the available resources and without further harm to biodiversity, climate and other ecological systems. Vision 2050 is not a project undertaken by a bunch of ‘tree huggers’, but by the CEOs of 29 global companies, largely in industries like utilities, oil & gas, chemicals, consumer packaged goods and mining & metals.
According to the project’s report, “All types of ingenuity will be needed over the next 40 years. Although distinct, the interconnectedness of issues such as water, food and energy relationships must be considered in an integrated and holistic way, with tradeoffs that must be understood and addressed.”
Global energy supply insufficient for future demands
While it is likely that per capita consumption of energy will go down somewhat in developed economies, this will not be the case in emerging economies. This is particularly true in China, India, and Brazil where more energy will be required to sustain industrial development.
According to Gerald Schotman, chief technology officer of Royal Dutch Shell, by 2050 global energy demand will double and could even triple from its 2000 level if emerging economies follow historical development patterns. According to Schotman, even if renewable energy sources continue to grow at a promising rate (potentially supplying as much as 25% of the world’s energy by 2050), and future technological advances enable oil and gas to be extracted from increasingly remote and difficult locations, a large gap is likely to remain between demand and supply: a gap as big as the total output of the energy industry in 2000.
Exxon-Mobil’s forward-looking report, The Outlook for Energy: A View to 2040, predicts that global energy demand will be about 30% higher in 2040 compared to 2010. According to the report, while energy demand in OECD countries will remain essentially flat, non-OECD demand will grow by close to 60%.
Significant shortfall looms for fresh water
According to a report on water challenges prepared by United Nations Environment Programme Finance Initiative (UNEP FI) in conjunction with the Stockholm International Water Institute (SIWI), water scarcity currently affects many regions of the world. “Without a significant reversal of economic and social trends, it will become more acute over time. Although water is considered a renewable resource, in many parts of the world, water resources have become so depleted or contaminated that they are unable to meet ever increasing demands. The challenges are more acutely felt in developing countries.”
According to the report, this has become a major factor impeding both economic development and business operations. The challenges associated with water scarcity are emerging as a strategically important risk for global businesses and their financial backers. Furthermore, rapid globalisation within the business supply chain only increases this risk. Thus, according to the report, the business case for addressing water challenges in a strategic manner only gets stronger.
Energy and water closely intertwined
At the macro level, it is clear that energy and water are closely intertwined. It takes a lot of water to explore, produce and refine fossil fuels and even more to generate electricity from these fossil fuels. In fact, by some estimates, power generation accounts for approximately 40% of all water withdrawals in the US.
On the other side of the coin, due to the large, energy-intensive pumps involved and the energy intensive nature of many of the treatment processes currently in use; it takes significant electricity to withdraw, treat, and transport freshwater, wastewater, and increasingly, both saltwater and reused water. According to one EPRI report, approximately 4% of the electricity generated in the US is used to pump and treat water.
To reduce current and future business risks and help ensure business continuity, it is important for hydrocarbon processing plants to monitor, measure and manage their energy and water consumption independently; as well as fully understand the often interactive relationships between the two. If organisations have not already started to do so, ARC Advisory Group recommends that they start putting in place and implementing initiatives on both the strategic and tactical levels to use both energy and water more efficiently and effectively.
It is also important to address the cultural and educational issues so that all employees understand that it is in their own best interests, as well as the best interest of the company and the community at large, to minimise energy and water consumption and related emissions.
For more information contact Paul Miller, ARC Advisory Group, +1 781 471 1126, pmiller@arcweb.com, www.arcweb.com
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