Water and energy are critical resources that are reciprocally linked. Likewise, as described in this report, meeting energy sector needs depends upon the local availability of water, often in large quantities, for mineral fuel production, hydropower, and thermoelectric power plant cooling. This interdependence is often described as the water-energy nexus. The U.S. energy sector's use of water is significant in terms of water withdrawals and water consumption. Thermoelectric cooling water represented 38% of freshwater withdrawn nationally in 2010 and almost 6% of water consumed nationally. Fuel Production: Water is either an essential input or is difficult and costly to substitute; degraded water is often a waste byproduct. Embedded Water: U.S. unconventional oil and natural gas production has expanded quickly due to the combined use of hydraulic fracturing and horizontal drilling techniques for well development. This expansion has sparked interest in the quantities of water and other inputs "embedded" in energy resources. Much of the growth in water demand for unconventional fuel production is concentrated in regions with already intense competition over water (e.g., tight gas and other unconventional production in Colorado, Eagle Ford shale gas and oil in south Texas), preexisting water concerns (e.g., groundwater decline in North Dakota before Bakken oil development), or abundant but ecologically sensitive surface water resources (e.g., Marcellus shale region in Pennsylvania and New York). U.S. energy-related wastewaters are primarily from conventional oil and natural gas and coal bed methane (CBM). Electric Grid and Generation

Water availability issues, such as regional drought, low flow, or intense competition for water, can curtail hydroelectric and thermoelectric generation. While identifying broad resiliency, the western U.S. assessment revealed two regions whose electric generation was at greater risk:
The Pacific Northwest was shown to be vulnerable because of its heavy reliance on hydroelectric generation. Thermoelectric Cooling Represents Difficult Tradeoffs

More than 80% of U.S. electricity is generated at thermoelectric facilities that depend on cooling water; these facilities withdrew 117 billion gallons of freshwater and 44 billion gallons of saline water daily in 2010, representing 45% of total water withdrawals. However, future withdrawals associated with electric generation may grow slightly, remain steady, or decline depending on a number of factors, including reduced generation from facilities using once-through cooling (industry actions resulting from proposed federal cooling water intake regulations) or shifts in how electricity is generated (e.g., less from coal and more from certain natural gas technologies and wind). Policy Response Options and Considerations

Policy makers at the federal, state, and local levels are deciding whether to respond to the growing water needs of the energy sector, and if so, which policy levers to use. In the United States, private entities make many of the energy sector's water decisions. Often federal entities lack authority over water use, and states have most of the water allocation authority. Instead of direct influence on water use, the public sector influences private water decisions through other routes (e.g., tax incentives, loan guarantees, permits, regulations, planning, and education). Energy choices represent complex tradeoffs; water use and wastewater byproducts are two of many factors to consider. For many policy makers, concerns other than water—low-cost reliable energy, energy independence and security, climate change mitigation, public health, and job creation—are more significant drivers of their positions on energy policies.
Water and energy are critical resources that are reciprocally linked; this interdependence is often described as the water-energy nexus. Meeting energy-sector water needs, which are often large, depends upon the local availability of water for fuel production, hydropower generation, and thermoelectric power plant cooling. The U.S. energy sector's use of water is significant in terms of water withdrawals and water consumption. Thermoelectric cooling represented 38% of freshwater withdrawn nationally and 45% of all water (fresh and saline) withdrawn in 2010, and the broader energy sector's water use (including biofuels) represented around 14% of water consumed nationally. Energy-related water consumption is anticipated to continue to increase in coming decades as the result of more domestic biofuel and unconventional onshore oil and natural gas production. Policy makers at the federal, state, and local levels are faced with deciding whether to respond to the growing water needs of the energy sector, and if so, which policy levers to use (e.g., tax incentives, loan guarantees, permits, regulations, planning, or education). Many U.S. energy sector water decisions are made by private entities, and state entities have the majority of the authority over water use and allocation policies and decisions.
For fuel production, water is either an essential input or is difficult and costly to substitute, and degraded water is often a waste byproduct that creates management and disposal challenges. U.S. unconventional oil and natural gas production has expanded quickly since 2008, and U.S. natural gas and coal exports may rise. This has sparked interest in the quantities of water and other inputs "embedded" in these resources, as well as the wastes produced (e.g., wastewaters from oil and natural gas extraction) and how they are reused or disposed (e.g., concerns over induced seismicity from injection of oil and natural gas wastewaters). Much of the growth in water demand for unconventional fuel production is concentrated in regions with already intense competition over water (e.g., tight gas and other unconventional production in Colorado, Eagle Ford shale gas and oil in south Texas), preexisting water concerns (e.g., groundwater decline in North Dakota before Bakken oil development), or regions with abundant, but ecologically sensitive surface water resources (e.g., Marcellus shale region in Pennsylvania and New York).
Conventional hydropower accounts for approximately 8% of total U.S. net electricity generation, and more than 80% of U.S. electricity is generated at thermoelectric facilities that depend on cooling water. Water availability issues, such as regional drought, low flow, or intense competition for water, can curtail hydroelectric and thermoelectric generation. An assessment of the drought vulnerability of electricity in the western United States found broad resiliency, while also identifying the Pacific Northwest and the Texas grid at higher risk. Future withdrawals associated with electric generation may grow slightly, remain steady, or decline depending on a number of factors. These include reduced generation from facilities using once-through cooling because of compliance with proposed federal cooling water intake regulations or shifts in how electricity is generated (e.g., less from coal and more from certain natural gas technologies and wind).
Energy choices represent complex tradeoffs; water use and wastewater byproducts are two of many factors to consider when making energy choices. For many policy makers, concerns other than water—low-cost reliable energy, energy independence and security, climate change mitigation, public health, and job creation—are more significant drivers of their positions on energy policies.