Can Water be Competitive and Carbon Neutral?

The UK's water industry will soon have to face phase one of the Carbon Reduction Commitment. But will it be ready in less than a year to commit to carbon neutrality while meeting business goals? By Gareth Evans.

Economics and the environment have never been entirely comfortable bedfellows, but amid the current global recession, within the UK at least, the fortunes of each have probably never been more intimately linked, nor their unlikely partnership so scrutinised.

According to recent research from the UK Environment Agency (EA), the credit crunch has driven many companies away from implementing green measures in general.

"The UK water contributes accounts for 3% of the country's total energy use."

Even amongst those that are, while the 'save energy' message has been well received the corresponding call to 'save water' has gone largely unheeded – with only around 15% of the firms surveyed having established a formal policy for water efficiency.

The irony of this is that while 90% of the respondents to the EA's survey failed to put improving water management on a par with saving energy – the possible business benefits they routinely overlook are every bit as large.

When it comes to water companies themselves, the potential environmental and economic implications are even greater. The UK water industry as a whole contributes about four million tons of CO2 annually and accounts for 3% of the country's total energy use, with wastewater treatment accounting for a little over half of the sector's entire greenhouse gas emissions. Elsewhere around the globe the picture is much the same. In a world intent on embracing carbon trading, water providers are, inevitably, left actively courting carbon neutrality – with technology being asked to smooth the way for this ultimate marriage of convenience between economic advantage and environmental benefit.

Carbon neutral moves

Improving energy efficiency is one obvious area where technological advancements are likely to bring a quantifiable carbon footprint reduction and the race is on to develop ever more efficient site equipment, with lowered embedded carbon and more sustainable 'cradle-to-grave' life cycles. As a result, systems increasingly appear simultaneously designed to mitigate their carbon consequence as much as enhance their primary role. In the current climate – both economic and environmental – improving carbon management and reducing operational expenditure could well become the mantra of the moment.

Reducing its collective carbon footprint represents a huge challenge for the industry – and with less than a year to phase one of the UK's carbon reduction commitment, the gauntlet has already been thrown down. With regulatory pressures beginning to converge across Europe as full implementation of the water framework directive looms, it is inevitable that the priority this establishes on lifetime costs and improvements will have an impact on energy efficiency as well as water quality.

"Reducing its collective carbon footprint represents a huge challenge for the industry."

Many believe, however, that energy efficiency alone will not be sufficient to make significant reductions possible – never mind begin to approach the modern 'Holy Grail' of carbon neutrality.

As Martin Hall, the director of strategic consulting at Mouchel, told Aqua Enviro's one-day conference last year, "we need a lot of radical thinking." In some ways this process has already begun, with an increasing number of water companies looking to the likes of reed bed technology and optimising the energy harvest from digester biogas to begin the journey towards a carbon-neutral goal.

Firms such as ARM and May Gurney, for example, have been working with a number of water companies across the country – including Anglian Water, Dwr Cymru / Welsh Water and Severn Trent – to develop the potential of these technologies, spurred on by the twin drivers of tightening discharge conditions and the growing demand for demonstrable sustainability. In the end, though, it seems likely that the business benefits will have to make the most compelling case.

Building the business case

Like any other impending step-change to established practice, there has to be at least the potential to gain some bottom-line benefit. In practical terms, this will see water companies developing new expertise in carbon trading – but as Nyla Sarwar of Aqua Enviro says, "it is important that the water industry strikes a balance between reducing emissions and increasing water quality."

There are those who suggest that the impetus for a low-carbon UK water industry may arise from one of the oldest of business pressures – competition – particularly if the calls made by Professor Martin Cave in his interim review ultimately come to fruition. One of his key recommendations would see an initial 28,000 large public and private sector organisations throughout England and Wales able to choose their own water and wastewater services – subsequently rising to a complement of 162,000.

"While the 'save energy' message has been well received the corresponding call to 'save water' has gone largely unheeded."

As industry consultant Bevan Rees explains, "each of these client organisations is itself vying in a commercial environment that already favours a low carbon footprint, and where sustainability is a significant supply-chain criterion for many of their own customers. The business advantage is obvious."

Once freed to select the 'greenest' water provider a company can enhance its own green credentials by proxy – and with the advent of open competition, market forces will ensure that prices remain, by definition, competitive. In Scotland, where legislation giving businesses similar choice took effect in April 2008, about a third have changed suppliers, or renegotiated contracts.

While costs were a major factor in this, anecdotal evidence suggests that the carbon question formed a significant driver for change; it seems the economic is implicit in the environmental, and vice versa.

Matching business advantage to green goals is seldom straight-forward, particularly when the aim is as bold as becoming truly carbon neutral, but there is an obvious natural fit between reducing energy costs and improving environmental performance. Speaking to the Royal Society of Arts in mid-February, EA chairman Lord Chris Smith suggested that making the shift to a low-carbon economy could allow the UK to regain its world-leading role. It's stirring stuff – but only time will tell how successfully it can be achieved.