Water and energy are critical resources that are reciprocally linked. Energy is required for the pumping, conveyance, treatment and conditioning, and distribution of water and for collection, treatment, and discharge of wastewater. Likewise, as described in this report, meeting energy sector needs depends upon the local availability of water, often in large quantities, for mineral fuel production, hydropower, and thermoelectric power plant cooling. This interdependence is often described as the water-energy nexus. This report addresses how the U.S. energy sector uses and relies on water; it provides summary descriptions divided into four topics: (1) Water for Energy Primer, (2) Fuel Production, (3) Electric Grid and Generation, (4) Policy Response Options and Considerations. CRS Report R43200, Energy-Water Nexus: The Water Sector's Energy Use , addresses the related topic of energy needs of the water sector. Available projections estimate that, by 2030, U.S. water consumption will increase by 7% above the level consumed in 2005; 85% of this growth is attributed to the energy sector (including biofuels). The U.S. energy sector's use of water is significant in terms of water withdrawals and water consumption. Energy Sector: While agriculture dominates U.S. water consumption (71%), the energy sector (including biofuels, thermoelectric, and fuel production) is the second-largest consumer at 14%, and domestic and public uses are third at 7%. Multiple factors contribute to the energy sector being the fastest-growing water consumer. Biofuels produced from irrigated feedstocks play a significant role, as well as expanding production of onshore unconventional oil and natural gas and hydro-stimulation of aging wells. Electric Generation: Water dependence is a risk for hydroelectric and thermoelectric generation. During low-flow or high-heat events, water intakes and high water temperatures may harm or limit thermoelectric cooling. Thermoelectric cooling water represented 38% of freshwater withdrawn nationally in 2010 and almost 6% of water consumed nationally. Also, the withdrawal and discharge of cooling water can harm aquatic organisms. Fuel Production: Water is either an essential input or is difficult and costly to substitute; degraded water is often a waste byproduct. The potential for human-induced seismic events is receiving scientific and political attention because of concerns over the possible connection between oil and gas wastewater injection and the recent increasing frequency of earthquakes, particularly in the central and eastern United States. Efficiency and Conservation: Reducing energy demand through energy and water efficiency and more water-efficient generation (e.g., electricity from wind, photovoltaics, or natural gas) can reduce water demand. Current water efficiency incentives in fuel production include minimizing water management costs and reducing operational disruptions. Embedded Water: U.S. unconventional oil and natural gas production has expanded quickly due to the combined use of hydraulic fracturing and horizontal drilling techniques for well development. This expansion has sparked interest in the quantities of water and other inputs "embedded" in energy resources. In 2012, the Government Accountability Office, in Energy-Water Nexus: Coordinated Federal Approach Needed to B etter Manage Energy and Water Tradeoffs , stated that "making effective policy choices will continue to be challenging without more comprehensive data and research." Improving data on water use by the energy sector is challenging for a number of reasons. For example, much of the U.S. energy sector is private; data consistency, accuracy, and currency are problematic; and it is costly to maintain high-quality data for an evolving and dispersed industry. While data challenges exist, access to relevant research and data is improving. The Department of Energy (DOE) disseminates energy-water related studies on a public online platform. DOE released a report in 2014, The Water-Energy Nexus: Challenges and Opportunities , which identified various data gaps and multiple technology research, development, and demonstration opportunities to increase the technological options available to reduce the water demands and impacts of the energy sector. The reports mentioned in the box below provide additional information on the energy-water nexus while also identifying areas needing improved understanding. While these reports differ in their focus, they each mention the stresses that climate change places on the energy-water nexus. Regional water resource opportunities and challenges for fuel production vary based on several factors, including (1) which fuel is being produced in the region, (2) the local and regional significance of its water use, and (3) regional conditions for management of wastewaters. Much of the growth in water demand for unconventional fuel production is concentrated in regions with already intense competition over water (e.g., tight gas and other unconventional production in Colorado, Eagle Ford shale gas and oil in south Texas), preexisting water concerns (e.g., groundwater decline in North Dakota before Bakken oil development), or abundant but ecologically sensitive surface water resources (e.g., Marcellus shale region in Pennsylvania and New York). The cumulative water needs of multiple drilling and fracturing operations may be locally or temporally significant. Often many shale gas, tight gas, and tight oil wells are located in close proximity to each other as a formation is developed, with many wells being drilled and fractured from the same location. Water use for these wells is concentrated in the early stages of well development, usually in the first few weeks. Once the well is producing, little or no water is required unless refracturing is performed. How much water is used for well development is highly variable both across and within formations. Data on source water remain sparse. Groundwater often is used for shale operations when it is available and access is permitted. Surface waters also are used, but may require transport by truck. In cases of limited water access, well developers also have obtained water by purchasing it from municipalities or paying individual land owners for their supplies. As of mid-2013, gaps remained in the availability of authoritative and recent data on the amounts of freshwater consumed and wastewater produced in fuel production. Available data indicate the following: The amount of water needed per unit of fuel produced—referred to as the water intensity of a fuel—ranges from conventional natural gas at the lowest end (less than 1 gallons of water per MMBtu); coal, unconventional gas, and uranium mining and enrichment next (roughly 1 to 10 gallons per MMBtu); oil next (10 to 100 gallons per MMBtu); and irrigated biofuels at the upper end (100 to 1,000 gallons per MMBtu). The water intensity of conventional and unconventional oil produced using different techniques remains poorly documented. The water intensity for hydraulically fractured wells often is less notable than the concentrated, simultaneous demand for water for hydraulic fracturing in a region where many wells are being developed concurrently. Despite the recent increase in water demand for hydraulic fracturing, water use for stimulating oil production from conventional wells through water flooding and enhanced oil recovery have represented the largest water use by the oil and gas sector in the United States. The use of these techniques is anticipated to increase; to what extent saline, wastewaters, or freshwater will be used is less clear. Limited data on production rates and quantities for many saline aquifers can be a disincentive to their use. Each fuel and production technique presents its own risks, potential water quality impacts, and wastewater issues; also, some techniques may be more water-efficient but less efficient at recovering energy resources. Data remain poor on the range of wastewater quantities and qualities derived from conventional and unconventional fuel production. The vulnerability of fuel production to freshwater availability is receiving attention in part because of increasing water demands (e.g., population growth) and concerns over changes to water supplies (e.g., drought and climate change). Instances of low flow and drought conditions have reduced the availability and increased the cost of water for operations in some locations (e.g., Susquehanna River basin in Virginia, West Virginia, and Pennsylvania, and Eagle Ford Shale region in Texas). No analysis is available of the risk posed by a multi-year drought in areas of intense water use for energy (e.g., North Dakota) and how to manage the risk. Fossil fuel transport also may be disrupted by water conditions, such as flood-induced pipeline breaks resulting from riverbed scouring, flood- or storm-related refinery or distribution system disruptions (e.g., Hurricane Sandy disruptions), and drought- or flood-impaired fuel transport. No analysis of energy sector transport risks is available. Produced water—wastewaters (often saline) brought to the surface by oil and gas wells—represents the largest byproduct of fuel production. Approximately 2.3 billion gallons are produced daily from onshore oil and gas wells in the United States. For oil wells, this represents an average ratio of 7.6:1 of produced water to oil produced. By 2025, as a result of aging wells with decreasing oil production, the ratio is expected to average 12:1 for onshore crude oil. U.S. energy-related wastewaters are primarily from conventional oil and natural gas and coal bed methane (CBM). Research indicates that shale gas may produce less wastewater per unit of recovered gas than conventional natural gas (although water inputs during unconventional well development often exceed those for conventional natural gas, as described above). Disposal of shale wastewaters has received more attention recently than wastewaters from conventional production because of the rate of increase in shale development and its associated wastewaters in locations that are not accustomed to oil and natural gas development. Management of energy-related wastewaters is evolving rapidly, with different techniques dominating in different locations and raising concerns related to water quality and seismicity. Where deep wells for the permanent disposal of produced water are limited, producers increasingly are recycling and reusing produced water in fracturing operations. This reduces the amount of freshwater needed and relieves stress on disposal sites. At the same time, reuse of produced waters may increase the transport and handling of saline waters, potentially increasing a risk pathway for spills. The potential for human-induced seismic events associated with oil and gas wastewater injection is receiving scientific and political scrutiny in the context of the recent frequency of earthquakes, particularly in the central and eastern United States. Over 300 earthquakes of magnitude (M) 3 or greater occurred between 2010 and 2012 in the central and eastern United States, compared to an average of 21 earthquakes per year of M>3 between 1967 and 2000. The increase in seismicity seems to be correlated with the increase in the number of disposal wells, many of which are injecting wastewaters brought to the surface at shale oil and gas wells and in the use of hydraulic fracturing. Of the 30,000 injection wells in the United States used for wastewater disposal, however, only a few are correlated with seismicity of M > 3. The largest seismic events associated with injection seem to involve faulting that is deeper than the wastewater injection, suggesting that transmission of pressure into the basement rocks elevates the potential for inducing earthquakes. Recent state actions and anticipated federal actions are affecting or are anticipated to affect the management of produced water. In Texas, produced water generally is disposed through deep-well injection (often on-site) or evaporation ponds; interest in reuse is increasing as the result of limited water availability in some regions (e.g., West Texas) and recent drought conditions. In May 2013, the Texas legislature clarified liability and ownership of produced waters transferred among oil and gas operators for purposes of recycling for a beneficial reuse. Pennsylvania regulations constraining surface water disposal wastewaters from shale gas production and the limited in-state deep well-injection options have resulted in a rapid increase in the rate of produced water recycling for shale gas fracking. Operators in Pennsylvania are required to prepare a wastewater source reduction strategy to maximize recycling and reuse. In August 2013, EPA proposed to discontinue efforts to establish discharge standards for wastewaters from CBM under the agency's Effluent Guidelines Program. EPA has been unable to identify a wastewater treatment technology that would be economically achievable. The agency will continue with a rulemaking for wastewaters associated with shale gas extraction, which is expected to be proposed in 2015. Water availability issues, such as regional drought, low flow, or intense competition for water, can curtail hydroelectric and thermoelectric generation. Fuel and power plant choices and capital investments made in the near term are likely to establish the trajectories for electric generation's long-term water use and vulnerability. An assessment of the drought vulnerability of electricity in the western United States found the majority of basins showing limited disruption risk; also, most of this risk could be mitigated by known strategies, including maintaining excess generation and transmission capacity. While identifying broad resiliency, the western U.S. assessment revealed two regions whose electric generation was at greater risk: The Pacific Northwest was shown to be vulnerable because of its heavy reliance on hydroelectric generation. The Texas grid was vulnerable because of heavy dependence on thermoelectric generation that relied on surface water for cooling, and because of the region's vulnerability to drought and poor connections to the other U.S. grids, which reduces the ability to purchase power to offset generation curtailment. No similar assessment of grid drought vulnerability for the eastern United States has been performed. (See following section, " Thermoelectric Cooling Represents Difficult Tradeoffs ," for a discussion of electric generation in the eastern United States.) Recent drought experiences include the following: In the summer of 2011, high temperatures in Texas resulted in increased electricity demand. At the same time, the drought reduced the amount of water available for cooling electric generators. The grid operator put into effect its emergency action alert system, which at first recommended conservation by customers and later deemed customer conservation critical to avoid rotating outages. During a few days, the peak demand purchases in the real-time wholesale electricity market were at or near the market cap (i.e., $3,000 per megawatt-hour). In the end, only one Texas plant had water-curtailed generation; others were nearing curtailment when weather conditions improved. During the drought of 2012, the mid-continent electric grid avoided major drought-related disruption. Some individual power plants curtailed operations due to water access problems or water temperature issues; others pursued regulatory waivers to continue operations at higher water temperatures or made cooling system investments. Lost generation at drought-impaired facilities was offset by other generation or purchasing power from other sources on the wholesale market. In Section 9505 of P.L. 111-11 , Congress required the Secretary of Energy to assess the risks posed by climate change for water supply to federal hydroelectric power generators and to update the assessment every five years. The August 2013 report found: Future changes to precipitation and runoff could potentially impact hydropower generation, water quality and supply, critical species habitat, and other important water uses that indirectly affect hydropower generation. At a national level, the median decrease in annual generation at federal projects is projected to be less than 2 billion kWh (2% of total), with a relatively high climate-model uncertainty. While these estimates are similar to the recently observed variability of generation from federal hydropower and may appear to be manageable, extreme water years (both wet and dry) will pose significantly greater challenges to water managers, especially in water systems that have more limited reservoir storage and operational flexibility. For large reservoirs and reservoir systems, it is often the multi-year droughts that most harm generation, as illustrated by summer 2013 conditions in the Colorado River Basin. More than 80% of U.S. electricity is generated at thermoelectric facilities that depend on cooling water; these facilities withdrew 117 billion gallons of freshwater and 44 billion gallons of saline water daily in 2010, representing 45% of total water withdrawals. The two common cooling methods for thermoelectric power plants are once-through cooling and evaporative cooling. Most once-through cooling is found at power plants located in the eastern United States and is associated with older facilities, or is at coastal facilities using saline waters. Newer facilities and those in more arid regions generally use evaporative cooling. DOE data indicate that 25% of proposed power plants are planning on using reclaimed wastewater for cooling, at least 22% are proposing fresh groundwater, and 17% are planning on dry cooling or generation technologies that do not require cooling. Once-through cooling, while largely non-consumptive, requires water to be continuously available for power plant operations. This reduces the ability for this water to be put toward other water uses and can make cooling operations vulnerable to low flows. Evaporative cooling withdraws much smaller volumes of water for use in a cooling tower or reservoir, where waste heat is dissipated by evaporating the cooling water. Evaporative cooling consumes more water at the facility than does once-through cooling. Cooling technologies that consume less water and use degraded water supplies may reduce freshwater use. These options include dry cooling, hybrid dry-wet cooling, cooling with fluids other than freshwater (e.g., brackish groundwater, produced waters), and emerging technologies. While hybrid and dry cooling options may reduce water consumption, they can reduce operational efficiency (potentially increasing greenhouse gas emissions) and often are more costly. Thermoelectric withdrawals were 20% less in 2010 than in 2005 for reasons including use of more water-efficient cooling technology by new power plants. However, future withdrawals associated with electric generation may grow slightly, remain steady, or decline depending on a number of factors, including reduced generation from facilities using once-through cooling (industry actions resulting from proposed federal cooling water intake regulations) or shifts in how electricity is generated (e.g., less from coal and more from certain natural gas technologies and wind). In contrast, water consumption could increase, especially if more water-consumptive cooling is adopted (e.g., evaporative cooling) and if current carbon capture technologies are added to power plants. In addition to water for cooling purposes, many power plants also use water for handling solid waste, including ash, and for operating wet flue gas desulfurization scrubbers. According to the U.S. Environmental Protection Agency (EPA), in 2009, power plants discharged 0.7 billion gallons of wastewater daily. In 2013 EPA proposed revisions to Clean Water Act rules that govern wastewater discharges from such plants. The proposed rule would reduce the use of these process waters by 19%-58%, depending on the regulatory option selected when the rule is finalized. A final rule is expected to be issued by September 2015. Policy makers at the federal, state, and local levels are deciding whether to respond to the growing water needs of the energy sector, and if so, which policy levers to use. In the United States, private entities make many of the energy sector's water decisions. Often federal entities lack authority over water use, and states have most of the water allocation authority. Instead of direct influence on water use, the public sector influences private water decisions through other routes (e.g., tax incentives, loan guarantees, permits, regulations, planning, and education). If action to manage energy-sector water issues is deemed appropriate, a range of options are available, as shown in Table 1 : minimize water use, facilitate access to water, or improve decisions and data. Energy choices represent complex tradeoffs; water use and wastewater byproducts are two of many factors to consider. For many policy makers, concerns other than water—low-cost reliable energy, energy independence and security, climate change mitigation, public health, and job creation—are more significant drivers of their positions on energy policies. Analyses quickly get complex when attempting to comprehensively evaluate energy-water tradeoffs. Some energy alternatives, such as solar photovoltaics and wind turbines, do not pose significant energy-water tradeoffs, but may pose other challenges, such as intermittent production or reduced dispatchability, which is the ability and ease with which output from an electric generation facility can be altered. Other energy tradeoffs include transport and storage. Some fuels are easier to store and use existing transport networks and multiple transport modes, while others may require new or expanded infrastructure investments (e.g., pipelines). Significantly, low-carbon energy is not necessarily low in water or environmental impact (e.g., new hydropower reservoirs, freshwater-cooled utility-scale solar), and specific carbon mitigation policies and actions may increase or decrease water consumption. Because of these complexities and the difficulty in comparing different types of impacts, analyses supporting decision-making are often incomplete. It is within this complex and confusing context that policy decisions that influence future energy and related water policies are being made.

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