Energy, food and water for all
A huge challenge for the 21st century
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Our growing global population needs access to power, food and water to survive and thrive. But changing weather patterns call for a new approach to resilient energy infrastructure.
According to a recent Nature Climate Change magazine article, the world faces a 40% shortfall in available water by 2030. The shortfall will not only impact drinking water supplies, food production, hygiene and public health, it will affect 98% of our global electric power generation as well. How to deal with this scenario is the focus of a new study "World Energy Perspective: The road to resilience − financing resilient energy infrastructure" conducted jointly by Swiss Re Corporate Solutions, The World Energy Council and Marsh & McLennan Companies.
Study urges immediate resilient energy action
Shared at the World Energy Council's Asia-Pacific Energy Leaders' Summit in New Zealand in March 2016, the early findings of the new study – "The road to resilience – managing the risks of the energy-water-food nexus" – urge immediate action to secure resilient energy infrastructure.
Over 140 experts from across the world worked together on the report. It makes five concrete recommendations:
- Improve understanding of the water footprint of energy technologies in order to mitigate the risks of stranded assets
- Account for water scarcity, 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 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.
Huge investment needed going forward
Preparing global energy infrastructure for a water stressed world will require huge investments. Renewable energy in concert with water-efficient energy production technologies (e.g. dry-cooling) will play a core role as they reduce the energy sector's requirements for water.
Insurance also has a key role to play and we are seeing a marked increase in industry efforts to support a wide range of resilient energy infrastructure projects. Pioneering transactions have secured insurance protection against adverse weather for clients from the wind, solar and hydroelectric industries. The transactions guarantee stable returns, making the projects economically viable for private investors.
"If regulators, project developers and the financial and private sectors work together, we can build the energy infrastructure needed for a water stressed world," says Jürg Trüb, Head of Environmental and Commodity Markets at Swiss Re Corporate Solutions. "The sooner we start, the more resilient we will be."
Visit World Energy Council's website for more information.