Eine redigierte (gekürzte & weniger kritische) Fassung dieses Beitrags ist am 29.11.2012 in China Daily (Print & Online) erschienen. Hier der Link zur digitalen Version auf der China-Daily-Website: bit.ly/V7qcDg
China’s economic development plans are ambitious, but the country may run out of water to power such growth. Asit Biswas and Julian Kirchherr propose an integrated water policy which takes into account the water-energy-growth nexus to tackle the country’s water shortages.
China’s ambitions increasingly outpace its capabilities: By 2020 the country aims to double its 2010 per-capita-income and GDP for both urban and rural citizens. China’s economic track record has been impressive: the country now nurtures a middle class of more than 300 million people. It has experienced the world’s most rapid economic growth over the past 30 years. China may not be able to maintain this record unless it addresses one of its core policy challenges: water, both in terms of quantity and quality.
Economic growth is no rocket science: Abundant supply of cheap energy has been a precondition to power a country’s industrialization. With no affordable energy at hand, energy-intensive businesses are driven out of the market and many factories are unable to produce at competitive prices. This link between economic growth and energy – the energy-growth-nexus – is widely acknowledged. However, most analysts and policy-makers today ignore what an energy industry is powered by: Abundant and sustainable supply of water.
Indeed, China’s economy runs on water. All energy generated needs water at certain phases of production. China’s industry today is the second largest consumer of water with an annual consumption of 139 billion cubic meters, only outpaced by agriculture. And industry’s water consumption is projected to almost double by 2030 to 265 million cubic meters.
Producers of energy in China are the largest industrial users of water demanding approximately 42 million cubic meters per year. As installed energy capacities projected to double by 2020, energy producer’s share of water will continue to rise. This growing demand will not be matched by water availability – the 2030 Water Resources Group, a consortium led by McKinsey & Company, projects that – if the country carries on with business as usual – China’s water demand will outstrip supply by 199 billion cubic meters. China is running out of water. The country’s growth may soon be curbed by a lack of water, unless immediate countermeasures are taken.
What exacerbates this shortage: Not only energy production needs water, but also water production (and the transport or treatment of water) needs energy. The Third World Centre for Water Management estimates that the water sector consumes as much as 25 percent of electricity generated globally. China’s water sector is not yet among the country’s most energy-intensive industries, but with new hubs of growth now located in the water-scare west and an increasing demand for the treatment of wastewater the energy-intensity of its water sector will most certainly rise. Already today 52% of the country’s economic output is produced in water scare regions.
Unfortunately, China does not have much water to begin with: China holds almost 20 percent of the world’s population, but only 7 percent of its freshwater reserves. Water is one of China’s scarcest resources. Hence, ensuring the efficient use of the water at hand is an imperative for the sustainable development of the country’s economy. However, China is extremely inefficient in its water use. Even worse: China is a global leader in water pollution.
China is the largest producer and consumer of coal in the world which satisfies more than 70 percent of the country’s energy needs. The nation produced as much as 3.8 billion tons of coal in 2011 – almost half of the world’s total coal supply. Coal is a cheap source of energy at first sight. However, its external costs, particularly the air and water pollution caused by coal mines, are devastating. According to Greenpeace, for each ton of coal produced, 2.5 tons of water is polluted. Wastewater from washing coal accounts for 25 percent of all wastewater in China. They contain large amounts of chemicals and heavy metals which are almost impossible to recycle. With such effects the true costs of coal are likely to be as high as RMB 1.7 trillion, equal to approximately 7 percent of the China’s GDP.
Water in China is becoming increasingly scarce and polluted. What can the country do to combat these problems? As a first step to tackle water pollution, China needs to rapidly reduce its reliance on coal. A more ecological alternative could be shale gas. According to the US Energy Information Administration China holds the world’s largest shale gas reserves with as much as 1.275 trillion cubic feet stored in the country’s geology. The country wants its shale gas production output to reach 6.5 billion cubic meters by 2015.
Indeed, natural gas emits, compared to coal, 45 percent less CO2 per unit of energy produced. However hydraulic fracturing, the technique by which shale gas is exploited, requires approximately 4.5 million gallons of water per well. This consumption equals the consumption of water by a 1,000 megawatt coal-fired power plant in just 10 hours. In addition, fracturing poses the risk of contaminating surface of groundwater. Not surprisingly, France banned hydraulic fracturing in 2011 because of such risks. The exploitation of shale gas may not lead to cleaner water in China.
If China took the water-energy-growth nexus into account, it would most certainly seek a more balanced energy mix and not solely focus on the exploitation of shale gas. Its planned rapid exploitation of shale gas may reduce the country’s CO2 footprint, but will exacerbate its water shortages.
Admittedly, Chinese policy-makers are taking water seriously. Howe water is still isolated from its energy and growth policies: In its current Five-Year-Plan the nation aims to reduce its water intensity by 30 percent. It also set new anti-pollution targets, particularly for agriculture. Aggressive investments in water infrastructure, e. g. to combat pipe leakages, and the accelerated construction of wastewater treatment plants are now being undertaken. However, the effects of and interlinkages with energy and growth policies are not being considered.
A coordinated approach to water must be adopted. Such an approach would, for instance, gradually price in the external costs of shale gas or coal. It would also price water privately consumed according to the true costs of water services. In Beijing, despite water shortages, water per cubic meter today costs as little as USD 0.58. As a comparison, water in Tokyo is priced at USD 2.24, and in Copenhagen at USD 8.
Sadly, there is no sign yet that Chinese policy-makers have recognized that water has to be managed cross-sectorally. In their latest plans it is assumed that “water is the source of life, production and ecology”, but there is no coordinated policy approach to manage water, energy and economic development holistically. Without such an approach, China will not be able to fuel its economic growth indefinitely and will inevitably run out of water.