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adequate supplies. These issues are growing in importance as industry grows in (or moves to) lower income countries that are frequently water stressed. The challenge is to prioritize and satisfy basic local water requirements ahead of those of industry. Water needs to be provided at an affordable cost to the population (and at no cost to those who cannot afford it) for meeting basic domestic needs, but could perhaps be provided at a premium for industry. While quantity is often the focus of water security, quality issues can be as important. Contaminated and untreated water effectively reduces the water supply, notwithstanding the pollution it causes. All of these risks can extend to the supply chain. Energy security is dependent not only on supply but also, importantly, on access (WEF, 2012a). Reliability of transmission and distribution systems for electricity, including risks related to disruptions to supply (especially in countries with a limited range of energy sources) and relations between nations and trading partners raise significant concerns for industry, especially with respect to price volatility. As with water, there is an interaction with the MDG of universal access to energy in lower income countries where access is non-existent or energy costs are prohibitive. 8.4.4 Governance and policy-making Governments and their policies are the principal enablers for water and energy efficiency. There is frequently a lack of coordination and collaboration between policy- and decision-makers in the realms of energy and water. There is a common perception that energy efficiency is too complex for public policy, and that it is best resolved in the marketplace (UNIDO, 2008). As industry is primarily focused on production, its interest is to secure water and energy at the lowest prices and not necessarily within a As industry is primarily focused on production, its interest is to secure water and energy at the lowest prices and not necessarily within a programme of water and energy efficiency. This provides an opportunity for policy intervention. programme of water and energy efficiency. This provides an opportunity for policy intervention (UNIDO, 2008). The challenge is to develop a sustainable approach to policy intervention. Manufacturing has traditionally been considered in terms of a vector for mass employment, but it also is ‘a critical driver of innovation, productivity and competitiveness’ (McKinsey & Company, 2012, p. 15). Policy-makers need to understand the diversity of industry and its position in the wider national and regional economy. In the case of energy, governments need to be aware of industries affected by energy costs, the impacts of energy costs, and what might drive location (McKinsey & Company, 2012). Similar points may apply to water use in terms of affordable access to reliable supply and treatment services. However, cost and other market considerations are often not as prominent as the overall availability of water resources, especially for larger plants that may have their own water supply and treatment facilities. 8.4.5 Legislation and regulation Energy regulation is more directed towards production and distribution than use in industry, although in many industries, energy efficiency is driven by regulations concerning carbon footprints and GHGs. For water resources, regulation generally concerns use and discharge. For example, the USA’s Clean Water Act protects surface water from pollution discharges and the EU Urban Wastewater directive is aimed in part at industrial wastewater. Overall there appears to be an increase in water regulation facing industry: this increases cost and may jeopardize predictable supply (JPMorgan, 2008). Laws and regulation can be effective drivers of efficiency, and they are often based on both offering incentives and threatening penalties. A less forceful method is to use voluntary guidelines. Regulation is becoming more global; for example, China is mirroring much of the USA’s regulatory framework with its State Environmental Protection Agency (SEPA) (Goldman Sachs, 2008). In contrast, better use of energy and water in lower income countries may be the indirect result of regulations in developed countries with markets and companies that are subject to higher environmental standards (WWAP, 2012). This must be seen in the context that an estimated 70% of industrial waste (and 90% of sewage) is discharged without treatment into usable water supplies in developing countries (UN, 2003). 74 CHAPTER 8 THEMATIC FOCUSPDF Image | Water and Energy
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