The battle for oil and water

The International Energy Agency’s World Energy Outlook 2006, widely viewed as the most reliable predictor of long-term energy, has reported that unless the world’s population changes its ways dramatically, global demand for energy will grow by 53% by 2030. Scott Payton writes

Within the next 20 years, supply of oil, the largest single fuel in the global energy mix, is set to fall. Fatih Birol, lead author of the World Energy Outlook, is concerned. ‘What worries me is that energy and geopolitics are becoming more and more intertwined,’ he says.

Meanwhile, demand for another crucial resource, water, is set to rise even faster. Indeed, it will double by 2050, according to the International Water Management Institute. Although there is theoretically enough water on the planet to meet this demand, inadequate infrastructures mean that 2.5 billion people already suffer from water scarcity.

What is more, water sources, like oil fields, do not fit neatly inside national borders – they often traverse them. And that means that water, like oil, is becoming increasingly intertwined with geopolitics. Should we be worried?

Oil pressures

Global demand for energy is not only growing, it is also shifting its centre of gravity. More than 70% of the growth in energy demand between now and 2030 will come from developing countries, with China alone accounting for 30%, according to the International Energy Agency.

As an example of China’s meteoric rise as an energy consumer, car ownership in the country, a primary driver of oil demand, is growing at 34% a year. And in a country with a population of 1.3 billion, that is a lot of cars and a lot of oil. Indeed, China’s oil needs will soon equate to the entire oil supply coming from Saudi Arabia and Kuwait, according to International Energy Agency projections.

So what are the implications of this? Birol, who is chief economist at the agency, says that soaring and shifting energy demands present three major challenges for the planet.

The first is energy security. ‘Five-and-a-half billion people are going to rely on just six countries for their oil and gas,’ he says. What is more, these countries – Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates and Russia – are concentrated in a politically and socio-economically unstable part of the world, and their ability to adapt their oil and gas exploration and production infrastructures to meet demand is uncertain. ‘The problem is not necessarily the lack of remaining oil reserves,’ says Chris Skrebowski, editor of the Energy Institute’s UK Petroleum Review. ‘The problem is the lack of equipment and expertise to extract it fast enough to satisfy demand.’

The second challenge presented by rising energy demands is their implications for climate change. Carbon emissions are increasing substantially. ‘You cannot separate energy security from this issue, and political leaders must take substantial action in the next 10 years to address it,’ says Birol.

Finally, the world must continue to cope with the consequences of a gap between those with access to energy and those without. ‘Today, there are 1.6 billion people without access to electricity. By 2030, there will still be 1.4 billion people in this situation. This will breed instability,’ says Birol.

So what can be done about these challenges? The International Energy Agency has made three recommendations to the leaders of the G8 countries.

The first is to improve energy efficiency, particularly in the oil-guzzling transport sector. Fossil fuels will remain the dominant source of energy until at least 2030, even with the most optimistic uptake of alternative energy technologies, says Birol. So making conventional vehicles more fuel-efficient is crucial for dampening oil demand. ‘The US, in particular, can make significant improvement here,’ says Birol.

The second recommendation is investment in nuclear power. Like renewable technologies, nuclear power does not generate carbon emissions, so it helps to tackle climate change as well as address dwindling oil and gas supplies. ‘There are still sensitivities to nuclear power as an energy option in some parts of the world but many countries are starting to adopt it,’ says Birol.

The final recommendation for G8 countries is to invest heavily in renewable energy sources, including wind, solar and, in particular, biofuels. In the International Energy Agency’s best-case scenario, renewable technologies could generate 10% of total energy by 2030, up from around 2% today. Biofuels will make up the majority of this 10%.

However, while investment in biofuels might help to alleviate the problem of oil scarcity, it will also make another vital resource, water, more scarce.

Water wars?

Unlike oil, water recycles itself. There is still just as much of it on the planet as there has always been. Yet as the world population grows – and it is doing so at a rate of more than 211,000 per day, according to the CIA’s World Factbook 2007 – there is less water available per person.

What is more, when people become richer – as millions in China are – they tend to eat more meat. And beef, for example, needs around 10 times more water to produce than cereal crops.

Then there are biofuels. Like any other crop, oil seed, which biofuels are made from, requires water to grow – water that is therefore no longer available to drink or to irrigate food crops. ‘Biofuels are not an answer – they are a problem,’ says Paul van Hofwegen, programme director of the World Water Council.

So what should political leaders do about these increasing demands on the global water supply? ‘The first thing they should do is start to talk about water,’ says van Hofwegen. He believes that the G8 leaders have not yet recognised the socio-economic risks that water scarcity presents. ‘They talk about energy. They talk about climate change. But they don’t talk about water. Without water there is no economic activity, no life, no nothing,’ he says.

So could water scarcity lead to conflict between countries? ‘Some people talk about water wars. Personally, I do not believe that they will happen,’ says van Hofwegen. ‘People know that wars lead to the destruction of water sources.’

The recent history of water management in the Middle East provides reason to be optimistic that van Hofwegen is right. Water has always been scarce in the region, and many major water sources, such as the Jordan and Nile rivers, straddle national boundaries. Anders Jägerskog of the Stockholm International Water Institute is a world-leading expert on these trans-boundary water sources. His studies of the Middle East show that even during times of military and political conflict, countries in the region have maintained a level of co-operation over their shared water supplies. ‘Israel and Palestine, for example, have co-ordinated water use during the two latest intifadas,’ he says.

According to Jägerskog, the world must address the problem of water scarcity by moving from a supply-driven approach to water management to a focus on managing demand. The Middle East, for example, has demonstrated the benefits of virtual water – the practice of managing demand for water by importing foods grown in areas where water is plentiful. This frees up domestic water supplies for uses other than agriculture. ‘If you import one kilo of wheat, you virtually import 1,000 litres of water,’ says Jägerskog. This, he adds, has been the key to ensuring that while they may fight over other things, Middle Eastern states have not fought over water.

In the years ahead, the world will depend on innovative resource management techniques like these to ensure that competition for oil, water and other scarce resources remains peaceful, and that the global socio-economic environment remains stable. Skrebowski, for one, is upbeat about our prospects for success. ‘I am optimistic that humanity is smart, clever and able enough to work through this,’ he says.

Scott Payton is a writer and editor specialising in climate change and globalisation.