Live from Ceres Conference: The Water-Energy Nexus

Live from Ceres Conference: The Water-Energy Nexus

The connection between water and energy was discussed during a morning workshop at today’s Ceres Conference in San Francisco.  Moderated by Jon Jensen, executive director of the Park Foundation, the panel brought together three outspoken voices from non-profit, industry, and investment organizations: Jason Morrison, program director, Globalization at the Pacific Institute; Peter Williams, CTO of Big Green Innovations at IBM; and Kenneth Sylvester, assistant comptroller for Pension Policy in the New York City Comptroller's Office.  Each party had a unique perspective.

Morrison (who I also covered when he spoke at the State of Green Business Conference) started off the discussion by outlining the problem and a four step solution plan. The water problem is that 900 million people lack access to clean water, and this number is growing; demand for water is increasing; and more and more parties want to have a say in how water is managed, so water is fast becoming a socio-political and economic issue.

“We are coming from a water abundant era, and companies don’t see water as a risk to business.  Especially as it is relatively cheap,” Morrison explained.  He advises that companies account for water risk in three categories: physical, regulatory, and reputational, as outlined in a paper Ceres and Pacific Institute produced.

More importantly, water, energy and climate are all interconnected, but policy makers and the general public does not get it yet.  Climate change will increase the demand for water.  For example, drought causes increased need for irrigated agriculture.  A few factoids Morrison shared were simply shocking:

1) Running hot water from your kitchen faucet for 5 minutes uses the same amount of energy as running a 60 watt light bulb for 14 hours. 

2) In California, the single largest energy user is the state water project which moves and treats water from north to south - 20 percent of California electricity is used in this way.

But people fail to connect energy and water.  As such, Morrison advised companies of the following strategy to mitigate water risks:

1) Measure your water footprint, so you can identify hotspots and prioritize issues

2) Assess your risk

3) Formulate integrated responses to your water risks and footprint

4) Disclose your water performance, risk, and your undertakings to manage that risk

In other words, measure, manage, and communicate your water footprint and risks.  Later on in the panel, Morrison built on this, encouraging that we all need to think more holistically and more collaboratively about the challenges at hand.  We can’t think only of our company on its own, but we must broaden that to include the communities we operate in and the bigger picture.   One bright spot is that “scarcity makes creativity flow.”

Peter Williams brought the industry perspective.  “IBM is a semi-conductor manufacturer… We use 3.5 to 4 million gallons per day.  Half of that is ultrapure water.  We purify it using reverse osmosis filtration, which is an energy intensive process,” Williams revealed.  But even just knowing this indicates that IBM is on the forefront of water responsibility, and Williams acknowledged that risks around the water-energy-climate nexus are considerable.  He also summarized the connection nicely: “You can’t generate power without water, and you can’t move water without power.”   He noted that despite IBM being a technology company, many of the most impactful changes we can make are extremely basic and practical changes, involving nothing new.

Sylvester, the third panelist a self-proclaimed non-expert in water, was an investor concerned with water issues.  “I lead NYC pension funds.  We have come to realize significance of these non-financial factors.   Institutional investors are looking at scarcity of water and sustainability issues.  Companies across industries are exposed to the risk of water scarcity.” 

Jensen summarized the panel’s takeaways:  Water and energy are inextricably linked – we must reduce water consumption to reduce energy consumption and vice versa.  And water represents a new business arena.  It is becoming more and more of an imperative to manage the risks associated with water within our investments.