NAJIB SAAB Thirsty Energy or Hungry Water?

The World Bank chose “Thirsty Energy” as title for its report on the energy-water nexus. If we were to produce such a report for the Arab region, the title could better be “Hungry Water”- as production of water eats the bulk of Arab energy.

In no other part of the world is the link between energy and water as critical as it is in the Arab region. While it is one of the driest areas on earth, the Arab region holds the bulk of the world’s oil reserves. The energy sector plays a major role in meeting water and food needs in Arab countries, mainly through seawater desalination, in a region which hosts 50% of the world’s desalination capacity. Water is also heavily needed to generate energy, in all its types; from fossil fuels to solar PV and Concentrated Solar Power (CSP) to nuclear energy.

Climate change will only worsen the water situation, according to a report produced by the Arab Forum for Environment and Development (AFED) on Impact of Climate Change on Arab Countries. By the end of the 21st century, Arab countries are predicted to experience an alarming 25% decrease in precipitation and 25% increase in evaporation rates.

Desalination, water distribution, and pumping groundwater consume 50% of total energy in some Arab countries. Irrigation efficiency is among the world’s lowest, while per capita domestic water consumption in some of the most water-scarce Arab countries is among the world’s highest. Half of the wastewater produced is discharged without treatment, while only 20% of the treated water is reused.

A 2013 AFED report on Sustainable Energy concluded that Arab energy is not managed better than water. Although energy intensity and per capita carbon emissions are among the highest in the world, over 50 million Arab people are without access to modern energy services. Growth in energy consumption, at 8%, has been twice the growth in GDP, at 4%. Average energy efficiency in the region stands at less than 50%. A combination of water and energy efficiency measures can save up to half of the energy currently used, while maintaining the same production levels.

Experience has shown that free water and energy are wasted resources. Artificially low prices and heavy subsidies are at the root of inefficiency, overuse, excessive pollution and environmental degradation in the Arab region. For example, the average price charged for water in the Arab region is about 35% of the cost of production, and in the case of desalinated water it is only 10%. Unrestrained energy and water subsidies, reaching 95% in many cases, are the main obstacle to achieving real results in this regard. This practice only promotes waste, and does not help to ease the burden on the poor, as over 90% of the uncontrolled subsidies go to the rich. It is futile to deplete strategic reserves of fossil groundwater, to grow fodder in the desert supporting the production of dairy products for export, while desalinating water to irrigate urban gardens.

Proper management of water and energy supplies requires the introduction of pricing schemes which meet the goals of local acceptability, economic efficiency, cost recovery and equity.

A recent Chatham House report estimated that if consumption levels of water and electricity in the oil exporting GCC countries continue to rise at the same rates, demand would double by 2024. This means more groundwater depletion and growing use of energy for desalination. If no remedial measures are taken, most of the fuel produced will consequently have to be used locally, thus depriving these countries of major export revenues.

Various schemes currently being planned and executed will likely further strain water resources. Some countries (UAE, Jordan) are pursuing nuclear energy, requiring water resources. Other countries, such as Qatar, have ambitious plans to meet food security by cultivating thousands of hectares mainly with desalinated seawater.

This brings us to the root of the problem, which is resource management. A report on Ecological Footprint produced by AFED has found that demand for life supporting goods and services in the Arab countries is twice as much as the potential renewable resources their ecosystems can provide. This imbalance is a threat to future growth opportunities and quality of life.

Pursuing national development strategies is naturally a main priority for Arab countries, but economic growth must take into account ecological limits and the capacity of nature to sustainably support life. Growth targets should respect the regenerative limits of nature.

Given the relative low efficiency with which resources are turned into final products, Arab countries must improve their resource productivity by prioritizing energy and water efficiency. Decision makers will need to look beyond GDP as the sole measure of performance, and seek to complement traditional economic analysis with data on resource consumption and availability.

The good news is that serious work has started to stand up to the challenge. Arab ministers of electricity have adopted a comprehensive energy efficiency framework. Abu Dhabi’s water strategy was the latest plan to be announced in the region to manage water resources. Saudi Arabia has embarked on an aggressive energy efficiency program. Renewable energy is rapidly expanding: Saudi Arabia plans to meet 33% of its local energy needs from renewables by 2032. Abu Dhabi has built Shams-1, a CSP plant with 100 megawatt capacity.
Renewable energy projects worth $11 billion are underway in Morocco, with the aim to build9 gigawatts capacity.

Ultimately, wide-spread reforms in the energy and water sectors require serious institutional and policy measures. Overconsumption
cannot be checked, efficiency measures cannot be adequately implemented, and renewable energy cannot spread out if current subsidy regimes are not phased out. Private sector participation in the energy and water sectors requires that policy makers establish the appropriate enablers, including well-defined policies and sound regulatory frameworks.

Arab countries, both oil exporters and importers, are well endowed with renewable sources of energy, primarily solar. For now, these are underutilized. Together with enhanced energy efficiency and cleaner technologies, these renewable sources can help diversify and power a more sustainable future.