China’s waterscape is changing. Water risks in China, be they physical, economic or regulatory, have great social-economic impacts and are well recognized, especially those in China’s water-energy nexus. Today, 93 percent of power generation in China is water-reliant. In short, no water = no power and vice versa as we require power to clean, transport, and distribute water.
With 85 percent of China’s electricity consumption, industry faces a double whammy—direct exposure to water scarcity and pollution, and indirect exposure through its use of water-reliant power. There are serious implications for business and investors.
Water also increasingly is interlinked with climate issues and divergent trends in water use and resources indicate a thirstier future. Against this backdrop, China is still hungry for thirsty power with plans to grow its economy as its population continues to urbanize. Indeed, China’s per capita power generation installed capacity is still far below that of the G20 average. By 2020, China could add up to 2TW of installed capacity—that is more than the current total installed capacity of the U.S., U.K., France, Germany, Russia, and Japan combined.
Can China manage this magnitude of power expansion with limited water resources?
To facilitate understanding of these challenges brought on by China’s changing waterscape, this report highlights key issues within China’s water energy nexus and summarizes the multiple strategies that will have to be adopted simultaneously across a broad spectrum of sectors into a broad three-prong approach:
- Balancing power mix by considering trade-offs among water, energy, and climate;
- Controlling water use in the agriculture, coal mining, and coal-related sectors to ensure food and energy security; and
- Curbing energy demand as saving power means saving water.
