Record-setting levels of smog this week shut down Harbin , a city of 11 million people in northeast China. Officials blamed increased coal consumption during the first days of winter heating, underscoring the urgency of the China State Council’s recently announced initiative  to address persistent smog in major cities.
But while the Air Pollution Control Action Plan has ambitious goals—cutting air particulates and coal consumption—it may create unintended problems for the country’s water supply.
The Plan aims to reduce particulate matter in the North China Plain by 25 percent and reduce coal’s share of the national energy mix to 65 percent by 2017. One of the plan’s key recommendations  is to replace coal with cleaner natural gas, including synthetic natural gas (SNG) converted from coal. Converting coal to natural gas, however, is an extremely water-intensive process. One cubic meter of SNG requires 6 to 10 liters  (1.58-2.6 gallons) of freshwater to produce1. So in an attempt to control urban air pollution in the east, China might jeopardize its water supplies elsewhere.
Using WRI’s Aqueduct Water Risk Atlas, we overlaid the locations of these approved SNG plants on our water stress maps to assess the potential water risks. Many of these plants are located in water-stressed regions, and could exacerbate water scarcity. Read on for our major findings.
Chinese SNG Industry Faces High Water Risk
As of September 2013, the Chinese government approved 18 large-scale SNG plants with a total capacity of 75.1 billion cubic meters of natural gas per year (see full project list in appendix). SNG plants require water for cooling, production, and to remove contaminants post-production. China’s proposed SNG plants, most of them located in arid and semi-arid regions in Xinjiang and Inner Mongolia, together will consume a total of 500 to 700 million cubic meters of freshwater annually at full operating capacity. That’s almost 20 percent  of the region’s total industrial water use in 2011. The plants would therefore significantly exacerbate stress in areas already experiencing chronic water shortages.
What Is Water Consumption?
When we refer to "consumption,"  we mean the portion of an area’s total water use that is not returned to the original water source. While coal production and synthetic natural gas facilities return most of the water they need to the source, a noticeable percentage of water is evaporated during the process of converting coal into natural gas—in other words, that evaporated water does not return to the source, and is therefore consumed.
Other findings include:
More than 76 percent of the proposed SNG capacity will face high or extremely high baseline water stress, meaning each of the locations either competes with many other users for limited available water supplies, or has very little water available at all.
11 of the approved plants, eight from Xinjiang Province and three from Inner Mongolia, are located in catchments that do not have major reservoirs. They also face medium-to-high or high risk from seasonal variability. So, in the dry season, those plants may have to reduce production capacity or experience temporary outages due to the lack of resilience in water supply.
Under a memorandum of understanding with the Inner Mongolia Government, Beijing will become the first Chinese city powered by SNG, receiving at least 4 billion cubic meters  of the fuel annually. This production would consume more than 32 billion liters of freshwater, enough to meet  1 million Inner Mongolians’ domestic needs for an entire year.
SNG development around the city of Ordos illustrates how these water-intensive plants can disrupt regional water security. In the middle of the Mu Us Desert , Ordos’ booming coal-to-gas bases face severe competition  for water between domestic and industrial users. Our analysis found that Ordos’ five approved SNG plants will need approximately 140 million cubic meters of freshwater annually, which is around 10 percent of Ordos’ total water supply, or 40 percent  of the region’s industrial water use as of 2011. Once these SNG plants are completed, they could further disrupt water supplies for farmers, herders, and other industries.
This graph illustrates water consumption for fuel extraction and processing of selected fossil fuels. Each dot represents the average water consumption by fuel type, and the bar indicates the range of water volumes consumed by different production processes within each fuel type. (Note: The production of shale gas requires a significant amount of water withdrawal, however, consumptive use is relatively low. Most of water used in the hydraulic fracturing process returns to the environment or is reused in the system.) Sources: Mielke, E., Anadon, L. D. & Narayanamurti, V. Water Consumption of Energy Resource Extraction, Processing, and Conversion. 2010 and Zhu, R.C. Research on the SNG Technology. Coal Quality and Technology (China). 2011 (in Chinese)
SNG’s Other Environmental Implications
While SNG emits fewer particulates into the air than burning coal, it releases significantly more greenhouse gases than mainstream fossil fuels. Peer-reviewed studies in the journal Energy Policy estimate that life-cycle CO2 emissions are 36–108 percent higher  than coal when coal-based SNG is used for cooking, heating, and power generation. Rapidly deploying SNG projects might, therefore, be a step backward for China’s low-carbon energy strategy.
China’s government will need to think carefully about whether SNG’s air pollution benefits outweigh its water and climate change costs. Additionally, since water risks will likely disrupt SNG production and new plants would further strain already stressed water resources, the national government must engage with the nation’s water authorities—in this decision, and in future energy planning. The Ministry of Water Resources and Ministry of Environmental Protection are good places to start. Meanwhile, water authorities should consider tightening caps on industrial water withdrawal and water-pollutant discharge or introducing stricter local environmental standards in high water-risk areas.
But to ensure a sustainable future, it’s important for China to prioritize energy projects that face fewer environmental risks, especially from water and greenhouse gas emissions. Only then will China more successfully manage its conflict between economic growth and resource demands and find lasting energy security.
Appendix: SNG Projects Approved as of September 2013
Council Approves XITIC Equity Investment in Shundong Petrochemical Coal Gas Projects (in Chinese)
Zhu, R.C. Research on the SNG Technology. Coal Quality and Technology (China). 2011 (in Chinese) ↩