The "Water-Food-Energy Nexus"

A summary of annual risk forecasts in a Linked-In group led me to a very interesting presentation on global risks from the World Economic Forum, the body that puts on the annual movers-and-shakers shindig at Davos, Switzerland. Among the risks they highlighted are those associated with what they termed the "water-energy-food nexus". The food vs. fuel concerns I explored in Friday's posting make up just one subset of this much larger and more complex set of interactions. These can be further expanded--and complicated--by incorporating the relationships between this triad and climate change. Although the WEF identified a number of steps that could be taken to address this poorly-appreciated challenge, it requires a leap of faith to imagine we could tackle this issue as systematically as it seems to merit, in light of our track record on other big but comparatively simpler challenges such as energy security and the ongoing deficit and debt problems of the developed world.

The extra complexities resulting from adding water to the already thorny food-fuel relationship are nicely illustrated by a systems chart in the WEF's analysis. It shows food security, water security and energy security linked by a series of sometimes reciprocal inputs, and influenced by other factors such as population and energy growth and environmental pressures, along with two overarching risks of global governance failures and economic disparity. All of this leads toward geopolitical conflict. It's a sobering assessment, even without including the missing arrow flowing back from food security to energy security. Biofuel produced from food crops makes up an increasingly important source of global liquid fuel supplies, so the "food intensity of energy production" deserves inclusion with these other factors, too.

This isn't the first time that I've seen a diagram portraying these interactions. I can't help wondering whether the WEF viewpoint was influenced by some scenario work that I encountered through my involvement with Global Business Network in the 1990s and early 2000s. I was fascinated by Gerald Harris's description of the triangle connecting water, food and energy, which has become much more apparent in the years since I first saw it. Although at the time the traditional energy industry understood its relationship with water pretty well, the water intensity of corn ethanol wasn't yet an issue, because US ethanol production was under 2 billion gallons a year, less than a sixth of its current level. And while some oil and gas wells have been hydraulically fractured for decades, the mass application of this technique to unlocking shale gas resources was still in its early days and hadn't percolated into the public's consciousness. Yet while the use of (and impact on) water in energy has become a much higher profile issue, metrics for comparing the water intensity of energy produced from different sources are still evolving. And we've barely begun to think about how for example water, which requires energy to capture and distribute, is used in producing energy, affecting the availability of water for growing food, some of which is then turned into energy. You can start similarly convoluted chains with food or energy, too.

We've typically looked at issues such as those in the examples above in terms of simple, binary decisions, rather than complex tradeoffs calling for integrated resource planning among all affected parties, at both the regional and local level, and markets that account for as many of the real costs and relevant externalities as possible. Yet without taking anything away from the work of the groups that the WEF mentions are looking at these problems in Indochina, Jordan, and elsewhere, we simply don't have the kind of governance in place to do this globally. If the UN can't come to grips with climate change and nuclear proliferation, then the future of the "water-food-energy nexus" seems far likelier to play out either in isolation or as a series of one-off efforts among highly motivated (desperate?) parties. And with last year's favorite governance body, the G20, heading into what some are calling a "G-Zero" world, it's not clear who else could take up this mantle. In the absence of some improbably comprehensive global approach to managing these interdependencies, it's up to those working in the affected industries to ensure that these factors are at least reflected in the planning and analysis of major projects and investments.

Atlantic Convergence on Nuclear

One of the most interesting energy developments of the last 12 months, at least from a big-picture perspective, is the convergence of the US and EU on two big energy issues: energy security and climate change. That was certainly reflected in the discussions at last week's World Economic Forum, the annual meeting of the great and the good in Davos, Switzerland. And as the New York Times reported, nuclear power is increasingly getting another look for its contribution on both fronts, on both sides of the Atlantic. In particular, it is hard to imagine making a meaningful dent in the climate change problem if both nuclear and renewable energy lose market share to fossil fuels over the next 25 years, as status-quo projections suggest. But that is exactly what will happen, at least for nuclear power, if the developed world doesn't begin planning and building the next generation of reactors, shortly.

Nuclear power remains the largest-scale energy technology at our disposal that emits essentially no greenhouse gas emissions, even after factoring in those associated with their construction. Despite that, I'm skeptical that nuclear can offer a comprehensive solution to our energy needs in a climate-constrained world, because of the time, cost and political obstacles standing in the way of building the thousands of reactors that would require. But with global energy consumption on a path to grow by 50% in 20 years, the cost of having nuclear power go backwards seems even higher. Because of the long hiatus in nuclear plant construction outside of Japan, France and China, most of the nuclear plants in the US and Europe will reach the end of their operating lives during the same decades-long timeframe that we will be trying to decarbonize our energy sources. How many of these plants will be replaced or refurbished, particularly if Germany follows through on its plan to decommission its remaining nukes by 2022?

Although nuclear power currently contributes only about 6% of the world's total energy supply, about the same as hydroelectric dams, it accounts for 16% of electricity generation (19% in the US) and competes directly as base-load supply with coal, which fuels 40% of the world's electricity and produces a comparable share of all energy-related CO2 emissions. While critics of nuclear power point to the potential of energy efficiency to make nuclear irrelevant, we should ask whether that efficiency were better deployed to reduce emissions from our most carbon-intensive energy sources, rather than one of the least.

No one can ignore the significant challenges associated with continued use of nuclear power. Aside from high capital costs, these include waste management and the risks of terrorism and proliferation. Nuclear fuel supply presents its own challenges, and I've been tardy in following up the leads in this area provided by a reader. But wouldn't it be ironic if the countries best equipped to deal with all of these issues ceded the strategic use of this technology to other countries for which they are most problematic? That's the path we're on, unless the growing trans-Atlantic alignment on energy security and climate shifts our priorities.