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Water stress poses risk to Chinese coal industry

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World Coal,

Water poses a variety of business risks for the energy industry, and could play an influential role in shaping the future energy supply mix, according to Wood Mackenzie's latest research report: “Troubled waters ahead? Rising water risks on the global energy industry".

The report uses the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas, which documents where and how water risks are emerging worldwide. One of the major regions of concern highlighted in the report is China’s future coal mining and coal-fired power industries, which are rapidly expanding operations in the water-stressed north and western provinces.

China’s coal industry: high and dry

Over 70% of China’s coal-fired power generation capacity is already located in areas of medium to extremely high baseline water stress, according to the WRI. Exacerbating the water challenge, coal production in these water-stressed areas is expected to increase 50% by 2030 while power output is expected to more than double.

"With the vast majority of China's water resources in the south, and the vast majority of new coal production coming on-stream in the north, the country is likely to face significant water constraints and conflicting water interests between population and industry," said Paul Reig, associate with WRI’s Aqueduct project.

"Consequently, coal mining and power companies are likely to face future cost pressures in responding to government aspirations to minimise water use – be that from addressing regulatory changes, accessing water supplies and/or mitigating potential operational disruptions," added Tara Schmidt, manager of Wood Mackenzie's Global Trends Service.

A technological response

In response to the challenge, Chinese coal companies are starting to mitigate their exposure by investing in water recycling and more water-efficient technologies – as well as working with other water users in search of collective solutions. For instance, some power companies are installing air-cooling systems that could reduce overall water use by up to two-thirds of overall, while some coal producers are investing in wastewater recycling.

Adapted from press release by

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