oversight

Energy-Water Nexus: Coordinated Federal Approach Needed to Better Manage Energy and Water Tradeoffs

Published by the Government Accountability Office on 2012-09-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States Government Accountability Office

GAO              Report to the Ranking Member,
                 Committee on Science, Space, and
                 Technology, House of Representatives


September 2012
                 ENERGY-WATER
                 NEXUS
                 Coordinated Federal
                 Approach Needed to
                 Better Manage Energy
                 and Water Tradeoffs




GAO-12-880
                                               September 2012

                                               ENERGY-WATER NEXUS
                                               Coordinated Federal Approach Needed to Better
                                               Manage Energy and Water Tradeoffs
Highlights of GAO-12-880, a report to the
Ranking Member, Committee on Science,
Space, and Technology, House of
Representatives



Why GAO Did This Study                         What GAO Found
Water and energy are inextricably              As GAO’s past work has shown, and other studies and specialists have
linked and mutually dependent, with            confirmed, there are a number of key energy-water nexus issues that Congress
each affecting the other’s availability.       and federal agencies need to consider when developing and implementing
Since 2009, GAO has issued five                national policies for energy and water resources. Specifically:
reports on the interdependencies
between energy and water. These                •   Location greatly influences the extent to which energy and water affect one
reports have shown that a                          another. For example, as GAO reported in November 2009, the impact of
considerable amount of water is used               increased biofuel production on water resources will depend on where the
to cool thermoelectric power plants,               feedstock is grown and whether or not irrigation is required. Consequently, it
grow feedstocks and produce biofuels,              is important for Congress and federal agencies to consider the effects that
and extract oil and natural gas. Some              national energy production and water use policies can have at the local level.
of these sources of energy may also            •   Although technologies and approaches exist to reduce the impact of energy
negatively affect water quality. In                development on water resources and reduce the energy needed to move,
addition, developing oil and gas                   use, and treat water, their widespread adoption is inhibited by barriers such
resources can produce wastewater—                  as economic feasibility and regulatory challenges. In implementing energy
known as “produced water”—that must
                                                   and water policies, Congress and federal agencies will also need to be
be managed or treated. Conversely,
                                                   cognizant of the barriers when deciding whether to promote the adoption of
significant amounts of energy are
needed to extract, transport, treat, and
                                                   these technologies and approaches.
use water in urban areas.                      •   Making effective policy choices will continue to be challenging without more
                                                   comprehensive data and research. GAO’s past work has identified the need
GAO was asked to identify key energy-              for more data and research related to the energy-water nexus, for example,
water nexus issues that Congress and               to better understand hydrological processes, including aquifer recharge rates
federal agencies need to consider                  and groundwater movement. In the absence of such data and research,
when developing and implementing                   developing and implementing effective policies could continue to be a
national policies for energy and water             challenge for Congress and federal agencies.
resources. To conduct this work, GAO
systematically reviewed its five reports
                                               •   Improved energy and water planning will require better coordination among
to identify key nexus issues. GAO also             federal agencies and other stakeholders. GAO’s work has demonstrated that
used a content analysis of related                 energy and water planning are generally “stove-piped,” with decisions about
literature and interviews with                     one resource made without considering impacts to the other resource.
specialists to validate these themes.              Improved planning will require federal agencies to work with one another and
                                                   other stakeholders, such as state and local agencies, academia, industry,
What GAO Recommends                                and environmental groups. Congress and some agencies have taken steps
GAO is recommending that DOE take
                                                   to improve coordination, but these actions are incomplete or in their early
the actions necessary to establish a               stages. For example, in the Energy Policy Act of 2005, Congress directed the
program to address the energy-water                Department of Energy (DOE) to establish a federal program to address the
nexus, with involvement from other                 energy-water nexus, but DOE has not done so.
federal agencies, as described in the          •   Uncertainties affecting energy and water resources cannot be ignored
Energy Policy Act of 2005. DOE                     because they could significantly affect the future supply and demand of both
agreed with the recommendation and                 resources. For example, specialists GAO talked to and literature GAO
stated that it will work with other                reviewed identified climate change, population growth, and demographic
federal agencies and experts to                    shifts as significant uncertainties expected to exacerbate the challenges
implement it.                                      associated with managing both the supply and demand of water and energy.
                                                   These uncertainties must, therefore, be accounted for when developing
                                                   national policies that affect both of these resources.

View GAO-12-880. For more information,
contact Anu K. Mittal at (202) 512-6100 or
mittala@gao.gov or Frank Rusco at (202) 512-
3841 or ruscof@gao.gov.
                                                                                       United States Government Accountability Office
Contents


Letter                                                                                                    1
               Background                                                                                4
               Key Issues to Consider When Developing and Implementing
                 National Policies for Energy and Water Resources                                        10
               Conclusions                                                                               27
               Recommendation for Executive Action                                                       27
               Agency Comments and Our Evaluation                                                        28

Appendix I     Objectives, Scope, and Methodology                                                        30



Appendix II    Comments from the Department of Energy                                                    32



Appendix III   GAO Contacts and Staff Acknowledgments                                                    34



Figures
               Figure 1: Diagram of a Boiler Loop in a Power Plant                                       5
               Figure 2: Biofuels Life Cycle                                                             6
               Figure 3: Key Stages of the Urban Water Life Cycle                                        9

               Abbreviations

               DOE          Department of Energy
               EIA          Energy Information Administration
               EPA          Environmental Protection Agency
               Interior     Department of the Interior
               RD&D         research, development, and demonstration
               USDA         U.S. Department of Agriculture
               USGS         U.S. Geological Survey



               This is a work of the U.S. government and is not subject to copyright protection in the
               United States. The published product may be reproduced and distributed in its entirety
               without further permission from GAO. However, because this work may contain
               copyrighted images or other material, permission from the copyright holder may be
               necessary if you wish to reproduce this material separately.




               Page i                                                    GAO-12-880 Energy-Water Nexus
United States Government Accountability Office
Washington, DC 20548




                                   September 13, 2012

                                   The Honorable Eddie Bernice Johnson
                                   Ranking Member
                                   Committee on Science, Space, and Technology
                                   House of Representatives

                                   Dear Ms. Johnson:

                                   Water and energy are inextricably linked and mutually dependent, with
                                   each affecting the other’s availability. Water is needed for energy
                                   development and generation, and energy is required to supply, use, and
                                   treat drinking water and wastewater. Water and energy are also essential
                                   to our health, quality of life, and economic growth, and consequently the
                                   demand for both of these resources continues to rise. Water is
                                   increasingly in demand to meet the needs of the public, farms, and
                                   industries, and for recreation and wildlife; and while freshwater flows
                                   abundantly in many of our nation’s lakes, rivers, and streams, it is a
                                   dwindling resource in many parts of the country. Similarly, energy is
                                   increasingly in demand to support manufacturing and transportation,
                                   among other things. As the demand for water increases, the demand for
                                   energy is similarly expected to grow. While the growth rate in energy
                                   consumption in the United States has slowed over time, overall
                                   consumption continues to rise, with estimates from the Department of
                                   Energy’s (DOE) Energy Information Administration (EIA) showing an
                                   expected growth of 10 percent between 2010 and 2035. To help meet this
                                   increased energy demand, domestic energy production is rising, along
                                   with its associated water usage. According to the Congressional
                                   Research Service, the energy sector has been the fastest growing water
                                   consumer in the United States in recent years and is projected to account
                                   for 85 percent of the growth in domestic water consumption between




                                   Page 1                                         GAO-12-880 Energy-Water Nexus
2005 and 2030. 1 This increase in water use associated with energy
development is being driven, in part, by rising energy demand, increased
development of domestic energy, and shifts to more water-intense energy
sources and technologies.

Since 2009, we have issued five reports on the interdependencies that
exist between energy and water. 2 These reports have shown that a
considerable amount of water is used to cool thermoelectric power
plants, 3 grow feedstocks and convert them into biofuels, and extract oil
and natural gas from geologic formations. Oil shale development would
also require a great deal of water if commercial production of this energy
source becomes economically feasible in the future. 4 Some of these



1
 Water consumption refers to the portion of the water withdrawn that is no longer available
to be returned to a water source, such as when it has evaporated. Energy production
(which includes biofuel production), together with thermoelectric power, are the second
largest consumer of water in the United States, accounting for approximately 11 percent of
water consumption in 2005. Irrigation was the largest consumer, at approximately 74
percent. (Elcock, D., “Future U.S. Water Consumption: The Role of Energy Production,”
Journal of the American Water Resources Association, vol. 46, no. 3 (2010): 447-460.).
However, according to the U.S. Geological Survey, in terms of water withdrawal,
thermoelectric power was the largest source of water withdrawals (49 percent) in 2005,
followed by irrigation at 31 percent. Water withdrawal refers to water removed from the
ground or diverted from a surface water source, such as an ocean, river, or lake.
2
 GAO, Energy-Water Nexus: Improvements to Federal Water Use Data Would Increase
Understanding of Trends in Power Plant Water Use, GAO-10-23 (Washington, D.C.: Oct.
16, 2009); GAO, Energy-Water Nexus: Many Uncertainties Remain about National and
Regional Effects of Increased Biofuel Production on Water Resources, GAO-10-116
(Washington, D.C.: Nov. 30, 2009); GAO, Energy-Water Nexus: Amount of Energy
Needed to Supply, Use, and Treat Water Is Location-Specific and Can Be Reduced by
Certain Technologies and Approaches, GAO-11-225 (Washington, D.C.: Mar. 23, 2011);
GAO, Energy-Water Nexus: A Better and Coordinated Understanding of Water Resources
Could Help Mitigate the Impacts of Potential Oil Shale Development, GAO-11-35
(Washington, D.C.: Oct. 29, 2010); and GAO, Energy-Water Nexus: Information on the
Quantity, Quality, and Management of Water Produced during Oil and Gas Production,
GAO-12-156 (Washington, D.C.: Jan. 9, 2012).
3
 Thermoelectric power plants use a fuel source—for example, coal, natural gas, nuclear
material such as uranium, or the sun—to boil water to produce steam. The steam turns a
turbine connected to a generator to produce electricity.
4
 Production of oil shale requires the heating of rock containing solid organic matter to
between 650 and 1000 degrees Fahrenheit and injecting water into the formation to
stimulate the oil to flow. To date, there has been no commercial production of oil shale
resources, in part, because the energy requirements to heat the rock and the water
needed to stimulate the flow of oil make the process too costly to compete with other
sources of oil.




Page 2                                                     GAO-12-880 Energy-Water Nexus
sources of energy—for example, biofuels, which require the use of large
amounts of fertilizers and pesticides to grow the feedstock—may also
negatively affect water quality. In addition, development of oil and gas
resources can produce large volumes of wastewater—known as
“produced water”—that must be disposed of or treated to allow for its
reuse. Conversely, significant amounts of energy are needed to extract,
transport, treat, and use water in urban areas, additionally contributing to
energy demand. Two of these reports contained recommendations, which
the agencies generally agreed with and are currently in the process of
implementing.

In light of the challenges we have identified in increasing the development
of various domestic energy sources while ensuring they do not have
detrimental impacts on water availability and quality in the future, you
asked us to provide an overview of the analysis from our five energy-
water nexus reports and highlight areas that Congress and federal
agencies should focus on in setting and implementing water and energy
policy. Based on a review of our recent work in this area as well as a
review of published literature and interviews with specialists, this report
examines key issues for Congress and federal agencies to consider when
developing and implementing national policies for energy and water
resources.

To conduct this work, we systematically reviewed our five prior reports on
the energy-water nexus and identified key issues that affect the
development and implementation of national policies for energy and water
resources. To validate these themes, we conducted a content analysis of
key literature that examines this nexus, including peer-reviewed scientific
periodicals, government-sponsored research and studies, and reports
from nongovernmental research organizations. We also included in the
content analysis interviews with a wide range of specialists whom we
identified as having expertise related to the energy-water nexus in the
United States. We selected these specialists using an iterative process,
soliciting additional names from each person we interviewed. From
among those identified, we conducted structured interviews with
specialists who could provide a broad range of perspectives on the
energy-water nexus, as well as specialists whom we identified during our
systematic review of studies who have analyzed (1) the energy-water
nexus in general or (2) particular segments (i.e., water use by
thermoelectric power plants) of the nexus. These specialists represented
a variety of organizations, including federal officials; university
researchers; water and energy industry representatives from groups such
as the American Water Works Association and the Electric Power


Page 3                                           GAO-12-880 Energy-Water Nexus
             Research Institute; and nongovernmental organizations, such as the
             Pacific Institute. 5 Representatives from federal agencies included officials,
             scientists, and researchers from DOE’s national laboratories and EIA, the
             U.S. Department of Agriculture (USDA), the Department of the Interior’s
             (Interior) U.S. Geological Survey (USGS), and the Environmental
             Protection Agency (EPA). We also reviewed federal laws and regulations
             as applicable. To conduct the content analysis of key literature and
             information gathered through interviews with specialists, we reviewed
             each study and interview and coded statements within them based on
             themes we developed from the GAO reports. For the purposes of
             reporting the results of our analysis, we used the following categories to
             quantify the literature and responses of specialists: “some” refers to at
             least two studies or specialists, “several” refers to at least five studies or
             specialists, and “many” refers to eight or more studies or specialists.
             Appendix I discusses our scope and methodology in more detail.

             We conducted this performance audit from March 2012 to September
             2012, in accordance with generally accepted government auditing
             standards. Those standards require that we plan and perform the audit to
             obtain sufficient, appropriate evidence to provide a reasonable basis for
             our findings and conclusions based on our audit objectives. We believe
             that the evidence obtained provides a reasonable basis for our findings
             and conclusions based on our audit objectives.


             As our series of reports on the energy-water nexus has shown, many
Background   aspects of energy development and delivery, including resource
             extraction, refining and processing, generation, storage, and
             transportation, can affect water resources. Conversely, supplying water in
             an urban setting requires energy to extract, treat, and supply water to
             consumers. Specifically, our prior work related to the energy-water nexus
             focused on the following five areas:

             •   Thermoelectric power plants. In 2007, around three-fourths of the
                 United States’ electricity-generating capacity consisted of
                 thermoelectric power plants, which rely heavily on water for cooling,



             5
              The Pacific Institute conducts interdisciplinary research and partners with stakeholders to
             produce solutions that advance environmental protection, economic development, and
             social equity in California, nationally, and internationally.




             Page 4                                                     GAO-12-880 Energy-Water Nexus
                                             as discussed in our October 2009 report. 6 Thermoelectric power
                                             plants use a fuel source—including coal; natural gas; nuclear material,
                                             such as uranium; or the sun—to boil water to produce steam, which is
                                             used to turn a turbine connected to a generator that makes electricity.
                                             As shown in figure 1, the water used to make steam (boiler water)
                                             generally circulates in a closed loop. That is, the steam from the boiler
                                             water is cooled and converted back to liquid water—referred to as
                                             condensing—in a device called a condenser and, finally, moved back
                                             to the heat source to again make steam. In typical thermoelectric
                                             plants, the water used to cool and condense the steam––known as
                                             cooling water––flows from a separate source. Power plants can use
                                             various types of water for cooling—such as freshwater or saline
                                             water—and different water sources, including surface water;
                                             groundwater; and alternative water sources, such as reclaimed water
                                             from industrial uses.


Figure 1: Diagram of a Boiler Loop in a Power Plant




                                         6
                                          GAO-10-23.




                                         Page 5                                           GAO-12-880 Energy-Water Nexus
•   Biofuels. In recent years, the federal government has increasingly
    encouraged the use of biofuels and other alternatives to petroleum in
    response to concerns over the nation’s dependence on imported oil,
    climate change, and other issues. 7 As we reported in November
    2009, 8 water supply and quality can be affected by many stages of the
    biofuel life cycle, as can similar practices devoted to food production
    (see fig. 2). To cultivate feedstocks, crops can be either rainfed, with
    all needed water provided by natural precipitation and soil moisture, or
    irrigated, with at least some portion of these water requirements met
    through water applied from surface or groundwater sources. Water is
    also used in the fermentation, distillation, and cooling processes of
    converting the feedstock into biofuel.


Figure 2: Biofuels Life Cycle




7
 The Energy Policy Act of 2005 created a Renewable Fuel Standard that generally
required gasoline and diesel in the United States to contain renewable fuels, such as
ethanol and biodiesel. Pub. L. No. 109-58 § 1501 (2005). The Energy Independence and
Security Act of 2007 expanded the Renewable Fuel Standard. Pub. L. No. 110-140 § 201
(2007).
8
GAO-10-116.




Page 6                                                 GAO-12-880 Energy-Water Nexus
•     Oil shale. As we reported in October 2010, 9 it may become
      economically feasible to develop the vast amounts of oil generated
      from U.S. oil shale—a sedimentary rock containing solid organic
      material that converts into a type of crude oil when heated—and, if it
      does, this source could help satisfy the nation’s future oil demands.
      Current known processes for producing oil from oil shale deposits,
      however, are not economically feasible—the oil costs more to produce
      than it could be sold for. However, if oil prices were to rise high
      enough to make oil shale production cost effective, and if other
      challenges associated with developing this resource were resolved,
      we reported that producing oil from oil shale could require large
      amounts of water. As a result, while water is expected to be available
      for the initial development of an oil shale industry, the ultimate
      potential size of any industry might be limited by water availability,
      among other things. Furthermore, in the absence of effective
      mitigation measures, water resources could be affected by ground
      disturbances caused by the construction of roads and production
      facilities; the withdrawal of water from streams and aquifers for oil
      shale operations; underground mining and extraction; and the
      discharge of waters produced from or used in oil shale operations.
•     Produced water. The process of producing oil and gas yields several
      byproducts, including produced water that must be managed as part
      of the oil and gas operation’s waste stream. Produced water may
      contain a variety of contaminants, including naturally occurring
      radionuclides, salts, and chemicals injected into some wells to help
      extract the oil and gas. In January 2012, 10 we reported that most
      produced water is reinjected into wells designed for this purpose
      because it requires little or no treatment and is often the least costly
      option, 11 but some produced water is deemed to be clean enough
      without extensive treatment to be used for other purposes, such as
      agricultural or livestock operations. However, if produced water is not
      appropriately managed or treated, contaminants in the water may
      present human health and environmental risks.
•     Energy for water supply. Providing drinking water and wastewater
      services to an urban environment involves extracting, moving, and



9
GAO-11-35.
10
    GAO-12-156.
11
  According to federal estimates, more than 90 percent of all produced water is managed
through underground injection.




Page 7                                                  GAO-12-880 Energy-Water Nexus
     treating water. As we described in our March 2011 report, 12 energy
     plays a crucial role throughout this life cycle. Energy is needed to
     extract raw water from the source—such as lakes, rivers, and
     underground aquifers—and convey it to the facility where it is treated
     and distributed as drinking water to customers. Furthermore, energy is
     needed to circulate, pressurize, and heat water for use inside
     households and businesses and for outdoor water-related uses by
     customers, such as for watering lawns. Finally, energy is required to
     convey wastewater to treatment facilities, treat the wastewater, and
     discharge the treated effluent into a receiving body of water. (See fig.
     3 for the key stages in the water life cycle.)




12
 GAO-11-225.




Page 8                                           GAO-12-880 Energy-Water Nexus
Figure 3: Key Stages of the Urban Water Life Cycle




                                         Page 9      GAO-12-880 Energy-Water Nexus
                           Our past energy-water nexus work has identified a number of key issues
Key Issues to              for Congress and federal agencies to consider when developing and
Consider When              implementing national policies for energy and water resources. These
                           include (1) the varying local impacts of federal energy and water policy
Developing and             choices, (2) the mitigation of barriers to using innovative technologies and
Implementing               approaches, (3) the challenge of making effective policy choices in the
National Policies for      absence of more comprehensive data and research, (4) the importance of
                           coordination among governmental and nongovernmental stakeholders in
Energy and Water           order to improve planning, and (5) the attention to the uncertainties that
Resources                  affect energy and water resources when setting and implementing federal
                           policies for these resources. The importance of these issues was also
                           emphasized by the literature that we reviewed and the specialists we
                           spoke with.


Federal Energy and Water   Our past work, as well as the literature that we reviewed and the
Policy Choices Can Have    specialists we spoke with, emphasized that the amount and quality of
Varying Local Impacts      surface and groundwater used to produce energy resources, as well as
                           the amount and quality of water produced during oil and gas extraction,
                           varies considerably across different locations, and this variation greatly
                           influences how energy and water affect one another. Consequently, we
                           believe that it will be important for Congress and federal agencies to
                           consider the effects that national policies related to energy production and
                           water use can potentially have at the local level. For example:

                           •     As we reported in November 2009 on biofuels, 13 the impact of
                                 increased biofuel production on water resources will depend on where
                                 the feedstock is grown and whether or not irrigation is required.
                                 Specifically, some of the largest increases in corn acres for biofuel
                                 production are projected to occur in the Northern Plains, which relies
                                 on irrigation and is already water-constrained. Furthermore, parts of
                                 the region draw heavily from the Ogallala Aquifer, where water
                                 withdrawals for agriculture and other uses are already greater than
                                 the natural recharge rate from precipitation. As a result, developing
                                 national policies that encourage additional biofuel production could
                                 have a greater impact on local water resources in certain areas than
                                 in others.
                           •     Similarly, because both water and energy permitting and regulations
                                 vary by state, the extent to which these two resources will affect each


                           13
                               GAO-10-116.




                           Page 10                                           GAO-12-880 Energy-Water Nexus
      other depends on the state in which the development of these
      resources occurs. For example, as we reported in October 2009 on
      thermoelectric power plants, 14 some states, such as Arizona and
      Georgia, require thermoelectric power plant developers to obtain
      water use permits, while Alabama does not require such permits. As a
      result, the further expansion of the thermoelectric power industry in
      certain states can be more challenging than in others, in part,
      because of the need to meet state permitting and regulatory
      requirements for water use at those locations.
•     In our January 2012 report on produced water, 15 we identified
      significant variations in the amount of water produced by oil and gas
      wells on the basis of location-related differences, such as variation in
      local or regional geology. For example, wells in the Barnett Shale
      formation in Texas, which is generally known to be a “wetter”
      formation than the Marcellus Shale formation in the Northeast,
      typically produce 3 to 4 times more water than shale gas wells in the
      Marcellus. We noted that even within the same formation, produced
      water volumes and quality can vary greatly. The quality of produced
      water also varies considerably across different formations. Some
      produced water can be used for livestock or agricultural applications
      because the water is generally of high enough quality to not require
      extensive treatment, while other produced water may not be used in
      this way because it is of poor quality; for example, it may contain
      contaminants, such as naturally occurring radionuclides, salts, metals,
      oils, and production chemicals. Such water is typically re-injected into
      wells designed for this purpose largely because it is less costly to do
      so than to treat the water sufficiently to enable other uses. It will be
      important for federal regulators to be cognizant of these location-
      related variations in the quantity and quality of produced water and
      their related disposal and treatment implications when they develop
      national regulatory policies for oil and gas development.
•     As some of our energy-water nexus reports have documented, the
      energy needed to transport water is greatly influenced by location-
      specific factors like topography, distance, and the type and quality of
      the water source. For example, in our March 2011 report on energy
      for water supply, 16 we reported that because pumping water accounts



14
    GAO-10-23.
15
    GAO-12-156.
16
    GAO-11-225.




Page 11                                            GAO-12-880 Energy-Water Nexus
                                  for 80 to 90 percent of the energy used to supply drinking water in
                                  some systems, moving water over hills and long distances can
                                  increase the level of energy consumption significantly. Consequently,
                                  when developing national policies for energy and water, policymakers
                                  need to consider the potential energy costs that can be associated
                                  with the transport and distribution of water in various settings.
                            In addition, the literature we reviewed and several specialists we spoke
                            with stated that water is generally undervalued in the United States, and
                            its prices do not reflect the true cost of providing the resource, which can
                            result in its overuse. Some specialists also told us that the extent to which
                            water is undervalued varies by location, with water-scarce areas being
                            more likely to value their water resources. Furthermore, as one specialist
                            told us, the price customers are charged for the water they consume does
                            not reflect all of the costs required to extract, treat, and supply the water.
                            Therefore, consumers may be unaware of the true costs of water and
                            more likely to waste it, which in turn leads to unnecessary energy use to
                            produce more water.


Realizing the Benefits of   Our past work, supported by other literature we reviewed and specialists
Innovative Technologies     we spoke with, has identified a variety of technologies and approaches
and Approaches Also         that can reduce the impact of energy development on water resources, as
                            well as the energy use associated with water supply, use, and treatment.
Depends on Mitigating       However, we also identified a number of significant barriers that Congress
Barriers to Their Use       and federal agencies will need to be cognizant of when deciding whether
                            to promote and ensure the more widespread adoption of these
                            technologies and approaches, as the following examples illustrate:

                            •     As we reported in October 2009 on thermoelectric power plants, 17
                                  advanced cooling technologies, such as dry cooling that uses air
                                  rather than water for cooling, can reduce water use at thermoelectric
                                  power plants. However, these technologies may incur “energy
                                  penalties”––that is, the energy required to power the cooling systems
                                  may reduce the plant’s net energy production to a greater extent than
                                  traditional cooling systems, potentially leading to higher electricity
                                  prices. In addition, advanced cooling technologies can have capital
                                  costs that are up to 4 times as expensive as traditional cooling
                                  systems, and they may operate less efficiently in dry, arid locations,



                            17
                                GAO-10-23.




                            Page 12                                           GAO-12-880 Energy-Water Nexus
      among other concerns. As a result, policymakers seeking to
      encourage the adoption of these technologies by thermoelectric
      power plants with the goal of reducing water use will also have to
      consider ways to increase their economic feasibility and reduce their
      costs to plant operators and electricity consumers.
•     As we reported in our 2009 reports on thermoelectric power plants
      and on biofuels, 18 the use of alternative water sources, such as
      treated effluent or groundwater unsuitable for drinking or irrigation,
      can reduce dependence on freshwater at thermoelectric power plants
      and biofuel refineries but may present drawbacks, such as adverse
      effects on cooling equipment, the need for expensive treatment
      equipment, and regulatory challenges. For example, power plants
      must comply with a number of water quality and air regulations, and
      the presence of certain pollutants in alternative water sources can
      make compliance more challenging. Furthermore, the physical layout
      of power plants and biorefineries may need to be changed to
      accommodate the use of alternative water sources. Consequently, if
      the goal of national water and energy policy is to encourage the use of
      alternative water sources instead of freshwater sources for the
      production of energy, then it would also be important to focus on
      developing better information about the tradeoffs of using alternative
      water sources.
•     As we discussed in our 2009 report on biofuels, 19 agricultural
      conservation practices can reduce the potential effects of increased
      biofuel feedstock cultivation on water resources, but there are barriers
      to their widespread adoption. For example, conservation tillage
      practices—such as “no-till” systems or reduced tillage systems, where
      the previous year’s crop residues are left on the fields and new crops
      are planted directly into these residues—can help reduce soil erosion.
      Research conducted by USDA has shown a substantial reduction in
      cropland erosion since 1985, when incentives were put in place to
      encourage the adoption of conservation tillage practices. However,
      many farmers do not have the expertise or training to implement
      certain agricultural practices, and some practices may be less suited
      for some places. For example, farmers usually need a year or more of
      experience with reduced tillage before they can achieve the same
      crop yields they had with conventional tillage, and the amount of
      agricultural residue that can be removed varies by region and even by


18
    GAO-10-23. GAO-10-116.
19
    GAO-10-116.




Page 13                                           GAO-12-880 Energy-Water Nexus
                                 farm. Consequently, a national policy encouraging additional biofuel
                                 production would benefit from continued education and outreach
                                 provided by the federal government to help farmers better understand
                                 the advantages of adopting such conservation practices.
                           •     More energy-efficient equipment could reduce the energy required to
                                 move and treat water, but the adoption of such technology may be
                                 hindered by the costs of retrofitting water treatment facilities and other
                                 obstacles, as we discussed in our March 2011 report on energy for
                                 water supply. 20 For example, the use of variable frequency drives at
                                 water treatment facilities, which allow operators to accommodate
                                 variations in water flows and run pumps at lower speeds, can reduce
                                 energy use by 5 to 50 percent or more. However, installing the drives
                                 can be cost prohibitive, and they are not necessarily well suited in all
                                 instances, such as when water flow is relatively constant. Therefore,
                                 federal policies to reduce energy consumption would also have to
                                 recognize the challenges faced by treatment facility operators in
                                 reducing energy consumption at their facilities and explore
                                 opportunities to assist them with this transition.
                           •     As we also reported in March 2011 on energy for water supply, 21
                                 water conservation is an approach to reducing the energy needed for
                                 the urban water lifecycle. Specifically, decreased customer water use
                                 could directly translate into energy savings, and water conservation
                                 also reduces the amount of energy used to convey, treat, and
                                 distribute water to customers. Similarly, energy conservation
                                 measures would also decrease water use. Therefore, when
                                 considering the development of additional energy and water
                                 conservation measures, policymakers may want to consider not only
                                 those that can be used by utilities but also those that can be used by
                                 consumers.

Making Effective Policy    Our past work, supported by other literature we reviewed and specialists
Choices Will Continue to   we spoke with, identified a dearth of key data and research related to
Be a Challenge in the      energy and water. We believe that developing and implementing effective
                           policies will continue to be a challenge for Congress and federal agencies
Absence of                 in the absence of such data and research. Support for this data
Comprehensive Data and     development will be essential to improved decisionmaking, as the
Research                   following examples demonstrate:


                           20
                               GAO-11-225.
                           21
                               GAO-11-225.




                           Page 14                                             GAO-12-880 Energy-Water Nexus
•     As a number of our energy-water nexus reports have found, data on
      the availability of freshwater and alternative water supplies are limited,
      and the lack of such data makes it challenging to fully assess the
      impact that particular energy policy choices will have on water
      resources. Several specialists we spoke with raised concerns that
      such data will be even harder to obtain in light of decreased funding
      for USGS’s monitoring efforts. Specifically, as we discussed in our
      October 2009 report on thermoelectric power plants, 22 some state
      regulators and water experts expressed concern about a reduction in
      the number of streamflow gauges, which they said may make
      evaluating trends in water availability and water planning more difficult
      in the future. Without accurate data on water availability, water
      planning and decisions involving allocation of water resources—
      including power plant permitting decisions—may be less informed,
      according to regulators and experts we spoke with. In addition, our
      past work and some specialists we spoke with identified a need for
      more data on the quantity and quality of existing water supplies. For
      example, in our October 2010 report on oil shale, 23 we reported that
      data on the water quantity and quality baseline conditions of
      groundwater and surface water supplies are not sufficient for
      monitoring the potential impacts of oil shale development in the future.
      We believe that effective decisions about withdrawing water from
      existing supplies for energy production cannot be made without first
      understanding how much water is actually available and the quality of
      these supplies, and that the federal government plays a key role in
      generating these kinds of important data.
•     Additional research and data on hydrological processes are needed.
      Our reports and discussions with specialists identified a number of
      areas needing more research, including the interactions between
      groundwater and surface water, to understand the possible transport
      of contaminants from energy development, aquifer recharge rates and
      groundwater movement, and precipitation runoff, as well as how much
      water is available for and used by crops. 24 For example, as we
      previously discussed in our November 2009 report on biofuels, 25


22
    GAO-10-23.
23
    GAO-11-35.
24
  An aquifer is a geologic formation or structure that stores and/or transmits water, such
as to wells and springs. Aquifer recharge is the process by which water is added to an
aquifer, such as through rainfall that seeps into the ground.
25
    GAO-10-116.




Page 15                                                    GAO-12-880 Energy-Water Nexus
      several specialists and agency officials have stated that research into
      hydrogeological processes is needed to understand the rate at which
      aquifers are replenished and the impacts of increased biofuel
      production on those aquifers. Although research suggests there
      should be sufficient water resources to meet future feedstock
      production demands at a national level, increases in this production
      may lead to significant water shortages in certain regions. Even in
      typically water-rich states, such as Iowa, concerns have arisen over
      the effects of increased biofuel production, and research is needed to
      assess the hydrology and quality of a state’s aquifers to help ensure
      the state is on a path to sustainable biofuel production. Consequently,
      not only is there a need for baseline data on existing water supplies,
      but there is also a need for more information on how quickly such
      supplies are replenished and how they are affected by contaminants,
      so that as Congress and federal agencies are developing and
      implementing national energy policies they can ensure that they are
      considering sustainable water supplies for energy production over the
      long term.
•     Research to determine how new technologies will affect the energy-
      water nexus has not been conducted to demonstrate the effects of
      these technologies at commercial scales. For example, according to
      many specialists we spoke with and some studies we reviewed,
      implementing carbon capture and sequestration technologies would
      consume large amounts of freshwater and could affect the quality of
      nearby water supplies, 26 but the extent of such effects is not well
      known. 27 In the case of biofuels, next generation feedstocks for
      biofuels—such as algae or cellulosic materials, including stalks,
      stems, branches, and leaves—have the potential for fewer negative
      effects on water resources, but the magnitude of these effects
      remains largely unknown because these feedstocks have not yet
      been grown on a commercial scale. For example, as we discussed in
      our November 2009 report on biofuels, 28 conversion of cellulosic


26
   Carbon capture and sequestration technologies separate and capture carbon dioxide
from other gases produced when combusting or gasifying coal, compress it, then transport
it to underground geologic formations where it is injected for long-term storage.
27
  In 2010, EPA promulgated a rule establishing minimum requirements under the Safe
Drinking Water Act for the underground injection of carbon dioxide for the purpose of
geologic sequestration. According to EPA officials, they are in the process of
implementing the rule, and they believe the rule is fully protective of underground sources
of drinking water.
28
    GAO-10-116.




Page 16                                                    GAO-12-880 Energy-Water Nexus
      feedstocks is expected to use less water compared with conventional
      feedstocks in the long run. However, commercial-scale production has
      not yet been demonstrated; therefore, any estimates on water use by
      cellulosic biorefineries are simply projections at this time. Focusing
      only on certain potential benefits of new technologies without
      understanding the full impacts of such technologies can have
      unintended consequences, a concern voiced by several of the
      specialists we spoke with. Therefore, along with federal support for
      data and research into new technologies it will also be essential for
      Congress and federal agencies to support data and research to gain a
      better understanding of how adopting these technologies will affect
      both energy and water resources as well as the environment more
      broadly.
•     Data on water or energy use by existing technologies and research
      into how to optimize these technologies is needed, according to our
      past reports and specialists we spoke with. For example, as we
      previously discussed in our November 2009 report on biofuels, 29
      research into biorefinery cooling systems could help reduce the water
      used during conversion of feedstocks into biofuels. According to DOE
      officials, research and development is also needed to improve hybrid
      wet-dry cooling systems for thermoelectric power plants. In addition,
      several specialists told us that analyses are needed on the amount of
      energy or water used throughout the entire life cycle of supplying
      water and producing energy. For example, in the case of
      thermoelectric power, a life-cycle analysis would look beyond just the
      water consumed in cooling towers and would assess the amount of
      water needed to mine, refine, transport, and burn the coal; however,
      such an analysis would require a level of detail beyond that which is
      currently available for water data, according to specialists we spoke
      with. Additional data gathering and research on existing technologies
      can help energy and water suppliers better understand the true
      impacts of existing technologies on energy and water resources and
      consider those impacts in comparison with the potential advantages of
      new technologies. Data gathering and research is another area where
      we believe that federal agencies could play an important role and
      assist with such analyses.
In addition, research into and development of better models and decision
support tools would help inform decisions related to the energy-water
nexus, according to some reports we reviewed and specialists we spoke


29
    GAO-10-116.




Page 17                                          GAO-12-880 Energy-Water Nexus
                           with. For example, as one specialist told us, while there are many national
                           climate change models, regional models are needed to increase the
                           accuracy of projections. Efforts are underway to develop downscaled
                           models, but data may not be available to populate the models. 30 In
                           addition, EPA officials told us that the U.S. Global Climate Research
                           Program, which coordinates and integrates federal research on global
                           environmental changes and their implications for society, is considering
                           regional modeling and studies for cross-agency climate change in the
                           future; however, these plans are not yet final. In the absence of improved
                           models and decision support tools, Congress and federal agencies may
                           be making decisions that affect energy and water supplies without fully
                           understanding the impact of these decisions.


Coordination among         Our past work, the literature we reviewed, and specialists we spoke with
Governmental and           noted that, in general, energy and water planning are “stove-piped” and
Nongovernmental Entities   frequently split across federal, state, and local levels, which results in
                           decision making that does not adequately account for the interactions
Is Key to Improved         between energy and water. Improved energy and water planning will
Planning                   require federal agencies with oversight of these resources to coordinate
                           with one another as well as with other stakeholders, such as state and
                           local agencies, academia, industry, and environmental groups, as the
                           following examples demonstrate:

                           •     Our previous reports have highlighted the need for a better
                                 understanding of the energy-water nexus, and two of these reports
                                 recommended that federal agencies collaborate on research and data
                                 collection efforts related to it. Specifically, in our October 2009
                                 thermoelectric power plant report, 31 we recommended that EIA and
                                 USGS establish a process for regularly coordinating with each other,
                                 other federal agencies, and water and electricity industry experts,
                                 among others, to improve the overall quality of data collected on water
                                 use from power plants. DOE and Interior generally agreed with our
                                 recommendation, and both agencies are currently in the process of
                                 implementing it. Specifically, EIA and USGS have held two meetings
                                 to discuss such matters. USGS organized the initial meeting in


                           30
                              We reported on the need for downscaled climate information in Climate Change
                           Adaptation: Strategic Federal Planning Could Help Government Officials Make More
                           Informed Decisions, GAO-10-113 (Washington, D.C.: Oct. 7, 2009).
                           31
                               GAO-10-23.




                           Page 18                                                GAO-12-880 Energy-Water Nexus
      November 2010, and EIA hosted the second meeting in March 2012.
      Invitees to the meetings also included representatives from federal
      agencies and national laboratories. USGS is scheduled to host the
      next meeting in October 2012. In addition, in our October 2010 oil
      shale report, 32 we recommended that the Secretary of the Interior
      coordinate with DOE and state agencies with regulatory authority over
      water resources on oil shale data collection and modeling efforts, and
      provide a mechanism for water-related research collaboration and
      results sharing. Interior generally agreed and has begun to take some
      steps to implement the recommendation. Specifically, Interior stated
      that it was working to improve coordination with DOE and state
      agencies with regulatory authority over water resources. The literature
      we reviewed and many specialists we spoke with concurred that
      federal agencies should collaborate to better understand the energy-
      water nexus. As some specialists told us, without such coordination
      and collaboration between federal agencies, it will be difficult to
      ensure that energy-water tradeoffs are properly considered.
•     Our previous reports recognized that adequately addressing the
      energy-water nexus will require federal agencies to seek input from
      relevant stakeholders outside of the federal government. Specifically,
      we recommended in both our thermoelectric power plant and oil shale
      reports that federal agencies collaborate with entities outside of the
      federal government. In response to the recommendation in our
      October 2009 report on thermoelectric power plants, 33 DOE and
      Interior generally agreed with our recommendation and, as described
      earlier, EIA and USGS have since held two meetings. In addition to
      the federal agencies that participated, nonfederal invitees to the
      meetings included industry groups, such as the Nuclear Energy
      Institute; universities, such as Southern Illinois University; and
      environmental groups, such as The Nature Conservancy. In our
      October 2010 oil shale report, 34 Interior generally agreed with our
      recommendation to collaborate with entities outside of the federal
      government and has begun to take some steps to implement the
      recommendation. Specifically, Interior stated that it was working with
      state agencies that have regulatory authority over water resources.
      The literature we reviewed and many specialists we spoke with also



32
    GAO-11-35.
33
    GAO-10-23.
34
    GAO-11-35.




Page 19                                           GAO-12-880 Energy-Water Nexus
     believed collaboration with stakeholders outside the federal
     government is needed. For example, in its 2006 report to Congress, 35
     DOE reported that the lack of integrated energy and water planning
     and management has already affected energy production in many
     basins and regions across the country, and that collaboration on
     energy and water resource planning is needed among federal,
     regional, and state agencies, as well as with industry and other
     stakeholders. As some specialists told us, state and local agencies
     are primarily responsible for allocating and managing water
     resources; therefore, energy-water nexus discussions need to involve
     officials from other levels of government. Similarly, public utility
     commissions make energy decisions in many states, and the role of
     these commissions is important to consider when addressing the
     energy-water nexus. 36 Furthermore, as DOE officials noted, many
     political boundaries between states are formed by water bodies.
     Therefore, multiple counties and states can be involved in water
     management decisions, which can lead to conflicts and be an
     impediment to water planning. Because of the various stakeholders
     with a role in managing energy and water, we believe that it will be
     important for federal agencies to improve coordination including with
     their nonfederal partners in order to enhance energy and water
     planning and put the United States on a path that is more sustainable
     for the long run.
•    Many specialists told us that, because of the stove-piped nature of
     energy and water issues in the federal government, a top-down
     emphasis on collaboration among federal agencies and with other
     groups outside of the federal government is needed. Some specialists
     pointed to a recent memorandum of agreement between three federal
     agencies on unconventional oil and gas research as a good model.
     Specifically, in March 2011, the White House released the Blueprint
     for a Secure Energy Future, a comprehensive plan to reduce
     America’s oil dependence, save consumers money, and make the
     United States the leader in clean energy industries. The Blueprint
     instructed the federal government to conduct research to examine the
     impacts of hydraulic fracturing on water resources. To fulfill this


35
  DOE, Energy Demands on Water Resources: Report to Congress on the
Interdependency of Energy and Water (December 2006).
36
  In many states, public utility commissions are responsible for approving the rates (or
prices) electric utilities charge their customers and ensuring they are reasonable. As part
of approving rates, these commissions approve utility investments and, as a result, may
consider whether specific technologies are reasonable.




Page 20                                                    GAO-12-880 Energy-Water Nexus
     directive, DOE, Interior, and EPA signed a memorandum in April 2012
     describing their plans for multiagency collaboration on unconventional
     oil and gas research. According to the specialists we spoke with,
     direction from the White House is what led to action on the part of the
     agencies and the signing of the memorandum, and they believe a
     similar high-level push would be needed to spur meaningful
     collaborative action to address other energy-water nexus issues.
Recognizing the need for better coordination, Congress and some federal
agencies have taken or are beginning to take some steps on energy-
water nexus issues, but many of these actions are either in their early
stages or incomplete, as the following examples illustrate:

•    With the Energy Policy Act of 2005, Congress directed the Secretary
     of Energy, through DOE’s Office of Science, 37 to carry out a number
     of programs related to a wide variety of energy sciences. In particular,
     the act directs the Secretary to carry out a program to address the
     energy-water nexus and assess the effectiveness of existing
     programs at DOE and other federal agencies to address the nexus. 38
     The provision also directs the Secretary to consult with the
     Administrator of EPA, the Secretary of the Interior, the Chief Engineer
     of the Army Corps of Engineers, the Secretary of Commerce, the
     Secretary of Defense, and other federal agencies as appropriate, to
     carry out the provision. DOE officials told us, however, that to date
     they have neither received nor requested any funding specifically
     designated to carry out the provision, nor has the agency requested
     funds for this purpose for fiscal year 2013. Furthermore, according to
     DOE officials, the Office of Science is not the appropriate office within
     DOE to carry out the program because the office conducts research



37
  The Office of Science is the lead federal agency supporting fundamental scientific
research for energy and the nation’s largest supporter of basic research in the physical
sciences.
38
  Energy Policy Act of 2005, Pub. L. No. 109-58, §§ 971, 979, 119 Stat. 594, 905 (codified
at 42 U.S.C. §§ 16311, 16319 (2006)). Specifically, the act directs the Secretary to carry
out a program of research, development, demonstration, and commercial application to (1)
address energy-related issues associated with the provision of adequate water supplies,
optimal management, and efficient use of water; (2) address water-related issues
associated with the provision of adequate supplies, optimal management, and efficient
use of energy; and (3) assess the effectiveness of existing programs within the
department and other federal agencies to address these energy and water related issues.
The program is to include, among other things, planning, analysis, and modeling of energy
and water supply and demand.




Page 21                                                    GAO-12-880 Energy-Water Nexus
      on the fundamentals of science. Instead, officials stated that the Office
      of the Under Secretary, which oversees work in areas such as energy
      efficiency and renewable and fossil energy, would be the more
      appropriate office to conduct such research. 39 Regardless of which
      office is best suited for this activity, by not carrying out this provision,
      we believe that DOE is missing an important opportunity to provide
      information that could possibly help fill some of the research and data
      gaps we and others have identified.
•     Congress is also considering pending legislation related to energy and
      water that calls for enhanced collaborative efforts. A House bill, the
      Energy and Water Research Integration Act of 2012, would direct the
      Secretary of Energy to (1) integrate water considerations into energy
      research, development, and demonstration (RD&D) programs and
      projects; (2) develop a strategic plan identifying RD&D needs for
      those programs and projects; (3) collaborate with other federal
      agencies, within DOE, and with nongovernmental entities in
      developing the plan; and (4) develop an Energy-Water Architecture
      Council consisting of federal agencies and nongovernmental entities
      to promote data collection, reporting, and technology innovation. 40
      Another House bill, the Coordinating Water Research for a Clean
      Water Future Act of 2012, would, among other things, direct the
      President to begin implementation of a National Water and Research
      Development Initiative to, among other things, conduct research on
      how to ensure the systematic and coordinated collection of publicly
      available data on regional and national water resources and provide
      for interagency coordination of federal water research and
      development. 41
•     Some federal agencies have recognized the importance of
      collaboration on the energy-water nexus and have acted accordingly.
      For example, in April 2012, EPA proposed six principles to foster
      collaboration in the water and energy sectors to meet water and
      energy needs nationally and locally. One of the principles called for
      key stakeholders—governments, utilities, manufacturers, and
      consumers—in both sectors to move toward integrated energy and


39
  The Office of Science may be able to enter into inter- and intra-agency agreements,
under authorities like the Economy Act, with other federal offices to assist in carrying out
the provision to the extent those offices are able to provide relevant assistance. See 31
U.S.C. § 1535 (2006).
40
    H.R. 5827, 112th Cong. (2012).
41
    H.R. 5826, 112th Cong. (2012).




Page 22                                                     GAO-12-880 Energy-Water Nexus
                                  water management from source, production, and generation, to the
                                  end user. Actions to support the principle include breaking down
                                  institutional barriers, improving transparency, and maximizing
                                  efficiencies; encouraging government agencies to look across
                                  missions; and developing partnerships between government and
                                  service providers.
                              •   DOE, led by Sandia National Laboratories, held a series of workshops
                                  on energy and water issues in 2005 and 2006, according to DOE’s
                                  2006 report to Congress. The effort, known as the Energy-Water
                                  Roadmap process, included representatives from a broad range of
                                  groups, including environmental organizations; policy and regulatory
                                  groups; industry associations; and federal, state, and tribal
                                  government agencies. It was intended to help DOE and the United
                                  States assess current energy and water issues and concerns and
                                  identify appropriate interactions and coordination approaches. As part
                                  of this effort, participants at the workshops identified (1) gaps between
                                  current federal and state energy and water research and management
                                  programs and (2) major science and technology research and
                                  development steps necessary to address the challenges and gaps.
                                  According to the website for the Sandia National Laboratories, the
                                  Energy-Water Roadmap process was expected to result in a report
                                  summarizing needs; prioritization criteria; major gaps; innovative
                                  technical approaches and associated research needs; research and
                                  development priorities and strategies; and associated policy,
                                  regulatory, and economic assessments. However, as of September
                                  2012, no report has been issued.

Uncertainties that Affect     Uncertainties—including the future makeup of the nation’s energy
Energy and Water Must Be      portfolio and the potential impacts of climate change—must be
Considered in Setting         considered when developing and implementing national energy and water
                              policies, according to our past work on the energy-water nexus, studies
Federal Policies Related to   we reviewed, and specialists we spoke with. As the following examples
These Resources               demonstrate, these uncertainties could significantly affect the future
                              supply and demand of both energy and water, and therefore are external
                              factors that must be accounted for when developing national policies:

                              •   The magnitude of the impacts on water resources stemming from the
                                  nation’s future energy use will vary depending on what sources of
                                  energy are pursued. For example, developing unconventional energy




                              Page 23                                          GAO-12-880 Energy-Water Nexus
     sources, such as shale oil and shale gas, 42 could have significant
     impacts on the quality and quantity of water resources, but the
     magnitude of these impacts is unknown because of uncertainty about
     the future scale and scope of shale oil and gas development.
     Similarly, if oil shale becomes economically feasible to produce on a
     commercial scale, the industry could have significant impacts on
     water quality and quantity, but the magnitude of these impacts is
     unknown because of technological uncertainties and because the size
     of a future oil shale industry is unknown, as we discussed in our
     October 2010 report on oil shale. 43 In addition, a recent report from
     DOE’s National Renewable Energy Laboratory looked at a variety of
     scenarios for the increased use of renewable energy sources to
     generate electricity. For example, the laboratory reported that if the
     country were able to switch to 80 percent renewable electricity by the
     year 2050, such a switch could reduce the power sector’s annual
     water use by approximately 50 percent. 44 However, renewable energy
     sources also vary in their water use, so the type of renewable energy
     we use in the future will have varying impacts on water supplies. For
     example, solar photovoltaic panels and wind turbines consume
     minimal water during normal operation. 45 However, concentrating
     solar power plants that use wet cooling could significantly increase
     water demand, consuming up to twice as much water per unit of




42
  Shale oil and shale gas refers to product that is trapped within underground shale
formations; these fine-grain sedimentary rocks can be rich sources of oil and natural gas.
Unlike oil shale, shale oil and shale gas do not require heating for resource extraction.
43
 GAO-11-35.
44
  The report looked at a variety of scenarios, ranging from 30- to 90-percent renewable
generation in 2050. The report focused on 80-percent renewable generation because the
laboratory’s analyses concluded that renewable energy generation from technologies that
are commercially available today, in combination with a more flexible electric system,
would be technically adequate to supply 80 percent of projected U.S. electricity generation
in 2050, albeit at increased electricity prices compared with today’s baseline. Nearly 50
percent of the renewable electricity in this 80-percent scenario consists of variable wind
and solar photovoltaic generation. (National Renewable Energy Laboratory, Renewable
Electricity Futures Study: Exploration of High-Penetration Renewable Electricity Futures,
vol. 1 (2012).)
45
  Solar photovoltaic panels and wind turbines use small amounts of water for panel and
blade washing, respectively.




Page 24                                                   GAO-12-880 Energy-Water Nexus
      electricity produced as traditional fossil fuel power plants. 46 Concerns
      with concentrating solar power plants are particularly acute in the
      Southwest—a prime location for siting these facilities because of
      abundant sunshine—because water supplies in the region are already
      limited. 47 Consequently, not fully understanding and accounting for
      the potential differences in the future energy portfolio’s impact on
      water supply and quality when developing a national energy policy
      may result in negative unintended consequences.
•     As we previously discussed in our March 2011 report on energy for
      water supply, 48 to address growing concerns about emerging
      contaminants and nutrients in the nation’s water bodies, additional or
      more stringent regulatory standards could increase the energy
      demands of treatment processes in the future, but the degree to which
      energy use would increase depends on the regulations that are
      implemented. Specifically, promulgation of more stringent standards
      would most likely require additional levels of treatment, and the use of
      more energy-intensive technologies, such as ozonation and
      membrane filtration, 49 may be necessary to meet such new
      standards. 50 Regulatory changes could also increase energy
      demands at other stages of the urban water life cycle. For example,
      higher standards for effluent discharge from wastewater treatment
      plants could increase the energy required for treatment of the effluent.
      Furthermore, stricter water quality standards for receiving waters


46
  Concentrating solar power plants operate by using mirrors to reflect and concentrate
sunlight onto receivers that collect the solar energy and convert it to heat. This thermal
energy is used to produce electricity via a steam turbine or heat engine driving a generator
to produce electricity.
47
  According to DOE officials, concentrating solar power plants are generally being built
with dry cooling systems in the Southwest to minimize water use. However, according to a
2009 DOE report to Congress, while dry cooling can eliminate over 90 percent of the
water consumed by wet-cooled concentrating solar power plants, wet cooling is preferred
to minimize cost and maximize efficiency.
48
    GAO-11-225.
49
  Ozonation is a water treatment process that destroys bacteria and other microorganisms
through the infusion of ozone, a gas produced by subjecting oxygen molecules to high
electrical voltage. Membrane filtration uses pressure to force untreated water through a
semipermeable membrane, thereby filtering out bacteria and other microorganisms,
particulate material, and natural organic matter.
50
  Such standards may include drinking water standards set under the Safe Drinking Water
Act or standards for the treatment of wastewater discharged from municipal wastewater
treatment plants under the Clean Water Act.




Page 25                                                    GAO-12-880 Energy-Water Nexus
    could necessitate that more plants employ advanced treatment
    standards, resulting in increased energy use for the additional
    treatment or to pump effluent farther away to other waters. As a result,
    policymakers will need to consider the energy inputs that will be
    required to meet new water quality standards when developing these
    regulatory choices.
According to the literature we reviewed and specialists we spoke with,
climate change, population growth, increased competition for resources,
and demographic shifts are expected to exacerbate the challenges
associated with water and energy supply and demand, and shifts in any
of these areas are expected to increase demand for both of these
resources. Moreover, the effects of climate change are expected to vary
by location and, in some locations, are expected to increase demand for
both energy and water resources while simultaneously decreasing water
supplies. According to the literature we reviewed, higher temperatures
from climate change are expected to lead to additional demand for air
conditioning and, therefore, electricity. This increased electricity demand
will, in turn, lead to increases in water consumption associated with power
generation. However, at the same time, climate change is expected to
change the quantity and reliability of water supplies so that less water
may be available in some regions, thereby resulting in reduced water
supplies for use by the energy sector, according to some specialists we
spoke with. In addition, as one specialist told us, higher temperatures
from climate change will produce more evaporation from water reservoirs
and other bodies of water, such as the Great Lakes, which can produce
significant water losses. Furthermore, the literature we reviewed and
specialists we spoke with noted that the impacts of climate change are
uncertain with some areas receiving more precipitation than they currently
experience, rather than drought.

Problems associated with climate change are only exacerbated by
population growth and competition for water resources. Specifically, more
people will consume more water, increasing the municipal sector’s water
demand. To meet these increasing demands, some states, especially
those in areas that are already water stressed, such as Texas, have
pursued alternative sources of water, such as desalinated water, which
are more energy-intensive than traditional groundwater and surface water
supplies. In addition, because of a warmer climate and decreased
precipitation, farmers are expected to withdraw more water to irrigate
crops. Minimum water levels are also necessary for other uses, such as
recreation and industry, as well as to support wildlife and maintain
ecosystems. Furthermore, demographic shifts, such as migration to the



Page 26                                         GAO-12-880 Energy-Water Nexus
                     hot, arid Southwest, could place additional demands on both energy and
                     water supplies. In light of all of these uncertainties, some specialists told
                     us that water and energy policies must be resilient and flexible enough to
                     adapt to changing circumstances. For example, these specialists told us
                     that because of the uncertain effects of climate change, the development
                     of plans and policies should be adaptable to account for variability over
                     time and by location.

                     The growth in water and energy demands for development and other
Conclusions          uses is occurring at a time when the nation’s supplies are stressed by a
                     growing population, a variety of new and changing uses, and
                     environmental challenges such as climate change. A number of agencies
                     have responsibility for managing specific aspects of the energy-water
                     nexus, including DOE, EPA, USDA, and Interior, but these agencies do
                     not consistently or strategically collaborate on these inextricably linked
                     issues to ensure a harmonized approach to energy and water resource
                     planning. This lack of coordination often results in a stove-piped approach
                     to managing these resources that does not take into account all the
                     possible tradeoffs and interrelationships. Some agencies have taken
                     steps to examine this issue within their own agency, such as DOE and
                     Interior’s jointly organized meetings to improve thermoelectric power plant
                     data in response to a recommendation from our October 2009 report.
                     However, in general, federal efforts remain uncoordinated. Moreover,
                     there is a need for enhanced research and data efforts that could benefit
                     from greater interagency cooperation. The Energy Policy Act of 2005
                     requires DOE to implement a program of research, development,
                     demonstration, and commercial action to address energy and water
                     issues and assess existing federal programs, but DOE has not yet
                     implemented this program. In not carrying out this directive, DOE is
                     missing an opportunity to provide information that could help Congress,
                     other federal agencies, and the public better understand the key energy-
                     water nexus issues identified in our series of reports and take coordinated
                     action to protect these invaluable resources.


                     To help address some of the research and data gaps that we and others
Recommendation for   have identified related to the tradeoffs associated with the energy and
Executive Action     water nexus, and to ensure collaboration to address the nexus, we
                     recommend that the Secretary of Energy take the actions necessary to
                     establish a program to address the energy-water nexus, with involvement
                     from other federal agencies as described in the Energy Policy Act of
                     2005.



                     Page 27                                           GAO-12-880 Energy-Water Nexus
                     We provided a draft of this report to USDA, DOE, Interior, and EPA for
Agency Comments      review and comment. In its written comments, reproduced in appendix II,
and Our Evaluation   DOE agreed with our recommendation. Specifically, DOE stated that it
                     already has a number of research activities underway related to the
                     energy-water nexus, such as energy-water data collection and modeling.
                     In addition, DOE stated that it will initiate more assertive engagement with
                     program managers through an internal workshop to discuss existing
                     activities and clarify priority areas for further data collection and analysis.
                     As part of its efforts, DOE stated that it will continue to engage other
                     agencies and collaborate with experts.

                     EPA provided technical comments, which we incorporated as appropriate.
                     In its technical comments, EPA stated that the agency supported the
                     findings of the report, but noted that more emphasis should be placed on
                     the changes in population demographics that stress the supply of energy
                     and water. Specifically, the agency identified increasing population shifts
                     to coastal areas, desalinization, increased use of air conditioning, and
                     agricultural irrigation as stressors of particular concern. We agree that
                     these areas could affect the energy-water nexus, as we discuss in our
                     report. EPA also identified the need for a comprehensive systems
                     analysis of energy, water, and agricultural cycles and their feedback loops
                     to help avoid unintended consequences. USDA and Interior did not
                     provide any comments.


                     As agreed with your office, unless you publicly announce the contents of
                     this report earlier, we plan no further distribution until 30 days from the
                     report date. At that time, we will send copies to the Secretary of Energy,
                     the appropriate congressional committees, and other interested parties. In
                     addition, the report will be available at no charge on the GAO website at
                     http://www.gao.gov.

                     If you or your staff have any questions about this report, please contact
                     Anu K. Mittal at (202) 512-6100 or mittala@gao.gov or Frank Rusco at
                     (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of
                     Congressional Relations and Public Affairs may be found on the last page




                     Page 28                                           GAO-12-880 Energy-Water Nexus
of this report. GAO staff who made key contributions to this report are
listed in appendix III.

Sincerely yours,




Anu K. Mittal
Director, Natural Resources and Environment




Frank Rusco
Director, Natural Resources and Environment




Page 29                                         GAO-12-880 Energy-Water Nexus
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and
              Methodology



Methodology

              To conduct this work, we systematically reviewed GAO’s five prior reports
              on the energy-water nexus to develop the key issues that Congress and
              federal agencies need to consider when developing and implementing
              national policies for energy and water resources. To validate these
              themes, we conducted a content analysis of 11 key studies and reports
              that examine this nexus, including peer-reviewed scientific periodicals,
              government-sponsored research and studies, and reports from
              nongovernmental research organizations. We also included in the content
              analysis 19 interviews with a wide range of 37 specialists whom we
              identified as having expertise related to the energy-water nexus in the
              United States. For the purposes of our interview analysis, each interview
              represents the views of one specialist even if more than one specialist
              was present at the interview. We selected these specialists using an
              iterative process, soliciting additional names from each person we
              interviewed. From among those identified, we conducted structured
              interviews with specialists who could provide us with a broad range of
              perspectives on the energy-water nexus as well as specialists whom we
              identified during our systematic review of studies who have analyzed (1)
              the energy-water nexus in general or (2) particular segments (i.e., water
              use by thermoelectric power plants) of the nexus. These specialists
              represented a variety of organizations, including federal officials;
              university researchers; water and energy industry representatives from
              groups such as the American Water Works Association and the Electric
              Power Research Institute; and nongovernmental organizations, such as
              the Pacific Institute. 1 Representatives from federal agencies included
              officials, scientists, and researchers from the Department of Energy’s
              national laboratories and Energy Information Administration; the
              Environmental Protection Agency; the Department of the Interior’s U.S.
              Geological Survey; and the U.S. Department of Agriculture. We also
              reviewed federal laws and regulations as applicable.

              We conducted a content analysis on the key literature and interviews with
              specialists using NVivo software. Content analysis is a methodology for
              structuring and analyzing written material. Specifically, using our
              systematic review of GAO’s energy-water nexus reports to identify key
              issues that Congress and federal agencies need to consider when
              developing and implementing national policies for energy and water


              1
               The Pacific Institute conducts interdisciplinary research and partners with stakeholders to
              produce solutions that advance environmental protection, economic development, and
              social equity in California, nationally, and internationally.




              Page 30                                                    GAO-12-880 Energy-Water Nexus
Appendix I: Objectives, Scope, and
Methodology




resources, we reviewed each study and interview and coded statements
within them based on themes we developed from the GAO reports. The
coding was conducted independently by two GAO analysts after checking
for intercoder reliability. We developed agreement statistics and
discussed and resolved any discrepancies in coding. We used the
following categories to quantify the literature and responses of specialists:
“some” refers to at least two studies or specialists, “several” refers to at
least five studies or specialists, and “many” refers to eight or more studies
or specialists.

We conducted this performance audit from March 2012 to September
2012, in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for
our findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




Page 31                                          GAO-12-880 Energy-Water Nexus
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Energy



of Energy




             Page 32                                     GAO-12-880 Energy-Water Nexus
Appendix II: Comments from the Department
of Energy




Page 33                                     GAO-12-880 Energy-Water Nexus
Appendix III: GAO Contacts and Staff
                  Appendix III: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Anu K. Mittal, (202) 512-6100 or mittala@gao.gov
GAO Contacts
                  Frank Rusco, (202) 512-3841 or ruscof@gao.gov


                  In addition to the contacts named above, Elizabeth Erdmann (Assistant
Staff             Director), Antoinette Capaccio, Janice Ceperich, Alison O’Neill, Steven
Acknowledgments   Putansu, Rebecca Shea, and Lisa Vojta made key contributions to this
                  report.




(361388)
                  Page 34                                        GAO-12-880 Energy-Water Nexus
GAO’s Mission         The Government Accountability Office, the audit, evaluation, and
                      investigative arm of Congress, exists to support Congress in meeting its
                      constitutional responsibilities and to help improve the performance and
                      accountability of the federal government for the American people. GAO
                      examines the use of public funds; evaluates federal programs and
                      policies; and provides analyses, recommendations, and other assistance
                      to help Congress make informed oversight, policy, and funding decisions.
                      GAO’s commitment to good government is reflected in its core values of
                      accountability, integrity, and reliability.

                      The fastest and easiest way to obtain copies of GAO documents at no
Obtaining Copies of   cost is through GAO’s website (www.gao.gov). Each weekday afternoon,
GAO Reports and       GAO posts on its website newly released reports, testimony, and
                      correspondence. To have GAO e-mail you a list of newly posted products,
Testimony             go to www.gao.gov and select “E-mail Updates.”

Order by Phone        The price of each GAO publication reflects GAO’s actual cost of
                      production and distribution and depends on the number of pages in the
                      publication and whether the publication is printed in color or black and
                      white. Pricing and ordering information is posted on GAO’s website,
                      http://www.gao.gov/ordering.htm.
                      Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
                      TDD (202) 512-2537.
                      Orders may be paid for using American Express, Discover Card,
                      MasterCard, Visa, check, or money order. Call for additional information.
                      Connect with GAO on Facebook, Flickr, Twitter, and YouTube.
Connect with GAO      Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.
                      Visit GAO on the web at www.gao.gov.
                      Contact:
To Report Fraud,
Waste, and Abuse in   Website: www.gao.gov/fraudnet/fraudnet.htm
                      E-mail: fraudnet@gao.gov
Federal Programs      Automated answering system: (800) 424-5454 or (202) 512-7470

                      Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-
Congressional         4400, U.S. Government Accountability Office, 441 G Street NW, Room
Relations             7125, Washington, DC 20548

                      Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
Public Affairs        U.S. Government Accountability Office, 441 G Street NW, Room 7149
                      Washington, DC 20548




                        Please Print on Recycled Paper.