The ADM Capital Foundation Limited

Power generation makes up the largest use of industrial water in China. The amount of water required for the extraction and production of coal-fired power generation and other coal-related industries is estimated to account for over half of industrial water use in China today. In fact, 93 percent of power generation in China is water-reliant. No water equals no power and vice versa, as power is also required to clean and distribute water.

Since 2011, China Water Risk (CWR), a project of ADM Capital Foundation, has become the go-to place for information on China’s water crisis. Based in Hong Kong, ADM’s strong connections with the corporate sector have been hugely influential in persuading banks and other financial institutions to publish groundbreaking reports on the water risks associated with China’s power and mining sectors. CWR’s work promotes solutions to China’s water crisis that focus on energy generation, as energy savings represent a “double savings” of both energy and water, and lower overall energy consumption.

Through its partnerships, CWR’s research gets widely recognized. In September 2012, HSBC published a report, No Water, No Power: Is There Enough Water To Fuel China’s Power Expansion?, based on CWR’s analyses and research. The report was the first of its kind and was covered in a variety of financial news outlets, leading analysts and institutional investors across sectors to pay greater attention to China’s water crisis. In April 2013, ADM staff authored another report for Crédit Lyonnais Securities Asia, one of the region’s largest and most highly rated independent equity brokers, which shared the report with investors. The report warns that all coal-dependent sectors could be at risk; coal-related industries account for more than half of China’s industrial water usage. Building on these two groundbreaking reports, China Water Risk released another report in April 2015, Toward a Water and Energy Secure China, focused on the water risk exposure profiles for coal-fired power generation, hydropower, nuclear power, and the less-talked-about risks brought on by the aggressive expansion of renewables. A report on the relationship between ‘fast fashion’ production and groundwater depletion was published earlier in 2017.

CWR’s work has also helped build momentum toward policy shifts on water and energy. Two of its reports informed the development of the December 2013 Water-for-Coal Plan by China’s Ministry of Water Resources, which partially limits future coal development based on water availability. As competing needs for limited water rises, CWR will continue to examine tradeoffs in balancing water and the economy. For example, desalination generates fresh water, but requires high energy input; synthetic gas provides cleaner energy, but requires more water to make; and carbon capture is extremely water intensive.

CWR employs an analysis of the complexities water risk, including its intersections with other issues like food, energy, and industrial pollution. To tackle wastewater pollution effectively, CWR focuses on helping the leadership of some of China’s most polluting sectors set best practices and turn investor attention toward the reputational risks brought on by defying regulations.