Tapping energy efficiency to avoid water shortages

Climate change and a rapidly growing global population have intensified pressure on energy and water resources. Water scarcity disrupts agriculture, industry, energy production and environmental balance. Increasing water pollution has rendered many rivers and aquifers incapable of supporting ecosystems or sustaining human activities.

In recent decades, water scarcity has become a global issue. Meeting these challenges requires a deep examination of energy and water management policies to balance societal needs and resource sustainability. At the intersection of water scarcity and energy efficiency, strategies optimising water use while mitigating environmental and societal impact are crucial.

The Energy Conservation Act, 2001, is the cornerstone of India’s climate strategy. Amendments in 2022 shifted aims significantly towards a cleaner, more sustainable future by allowing the government to specify carbon credit trading schemes, encourage industry to use non-fossil fuels and impose penalties for non-compliance with energy conservation standards. The Bureau of Energy Efficiency (BEE) launched the Perform, Achieve and Trade scheme in 2012, under which energy-intensive industries were given specific energy reduction targets. Those exceeding their targets were allowed to trade energy-saving certificates. The BEE also launched the Energy Efficiency Financing Platform to channel finance into energy-efficient measures.

The move towards renewable energy use has coincided with India becoming a global leader in clean energy, fuelled by subsidies and tax incentives. The government wants to achieve 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.

Water conservation has worried successive governments. Water has been a matter for individual states, with the government having rights in respect of interstate rivers. However, the government and states have recently collaborated. The National Water Mission (NWM), launched in 2011 by the Ministry of Jal Shakti, or Water Resources, (ministry) encourages industries to improve water use efficiency. The Bureau of Water Use Efficiency, set up under the NWM in 2022, promotes the efficient use of water in irrigation, domestic supply and municipal and industrial demand. In 2024, the ministry highlighted the significant progress made since the launch of the Jal Jeevan Mission in 2019 in partnership with state governments. This increased access to tap water for rural households, and by February 2024, all rural households in nine states and union territories had such a supply.

As well as complying with energy laws and securing related benefits, companies have used CSR and ESG initiatives to meet sustainability challenges voluntarily. Leveraging ESG goals to drive innovation and transitioning to a circular economy through minimising waste and maximising resource use are mechanisms for companies to tackle sustainability challenges.

Large companies have actively undertaken CSR and ESG initiatives. Witness Hindustan Unilever trying to restore traditional water bodies and developing rainwater harvesting systems. The commercial giant has collaborated with NGOs by using innovative technology-enabled tools. The conglomerate Godrej runs four watershed projects, partnering with the National Bank for Agriculture and Rural Development to restore ecological balance in drought-prone regions. These, in 2019, offset more than four times the water used in all its activities.

India is the world’s third-largest energy consuming country. Its share of global primary energy consumption is likely to increase to 12% or so by 2050 from 7% in 2022. India is also the largest user of groundwater, with an expected shortfall of 50 billion cubic metres for domestic consumption by 2030.

Sustainability measures are required immediately. Government schemes play a crucial role, but are not sufficient to achieve long-term goals. Corporate initiatives should recognise that energy and water conservation is not merely good business but a strategic necessity and a moral and ethical responsibility. With major cities facing primary resource shortages, companies should increase energy and water conservation efforts. These will also burnish corporate reputations and attract consumers, investors and employees who value sustainable practices.

Sharath Chandrasekhar and Rimali Batra are partners at DSK Legal.

The authors would like to thank principal associate Aravind K for his contribution.