ABSTRACT
Water is a fundamental input to the electric power sector. Shortage of water represents a major risk to power production worldwide, while, by consuming water, the power sector impacts significantly upon the aquatic environment. These issues of the interaction between water and energy are particularly significant in China, where a large proportion of energy production is currently from coal-fired power plants which are located on inland waterways in water-scarce parts of the country. The challenge facing China in managing water resources in its coal power sector is further complicated by its mismatched water and coal endowments, as well as future uncertainties brought by climate change. Coal power production is imposing increasing pressures on water-deficient regions, while at the same time electricity consumption throughout the country is exposed to water shortage risks, forcing thermoelectric plants on inland waterways to either shut down or curtail production. The north China grid stands out as having the largest proportion of its electricity-generating capacity facing water shortage risks, particularly in April. China needs to take urgent actions to improve water management in its power sector given that newly constructed coal power plants could lock in their impacts on water resources for the next 30 to 40 years. Reforms of several aspects of policy can reduce coal power plants’ impacts and reliance on water resources. The transition away from coal to renewable energy for climate change mitigation could offer such co-benefits. Water resource sustainability should be integrated into energy planning, which requires overcoming several institutional barriers. In particular, local protectionism created by the hierarchical and fragmented political system needs to be eliminated. Environmental and resource sustainability should be prioritized in evaluating political performance, alongside social and economic benefits. China’s ongoing transition to a more balanced growth model, with a series of institutional reforms aiming to enhance its environmental performance, offers opportunities to address the emergent water challenges in its power sector.
