No Water, No Power: is there enough water to fuel China’s power expansion?
HSBC Global Research, 2012
China plans to add more than the total installed power capacity of the US, the UK and Australia by 2030. Already a water stressed country, it is evident that the planned coal power expansion in China could face serious water scarcity constraints. This report finds that nearly half of China’s GDP is earned in water-scarce provinces. Looking ahead, ambitious expansion plans for power capacity could face real water constraints and this is expected to drive an increased focus on water and energy efficiency in the power, industry and mining sectors. The report argues that water and power risks in China need to be considered by financiers, investors and companies as a core feature of capital expenditure plans. Project financiers should consider these resource shortages before funding assets; investors should examine the effects of potential water shortages on facilities located in water-scarce provinces; and companies should be more conscious of water quotas and pollution targets as they strive to make operations more efficient. Furthermore this report finds that water constraints will provide an additional driver for industrial energy efficiency, already a priority of the 12th Five-Year Plan. Without upfront action now, the risk of water shortages remains and future assets could be left stranded high and dry.