Like Water for Energy: The Water-Energy Nexus Through the Lens of Tax Policy

Water is essential for life. Inadequate potable water supplies lead to poverty, disease, starvation, and civil strife. Climate change is likely to put more pressure on the world's supply of fresh water. Rising sea levels will introduce salt into some fresh water systems.

As high mountain snow cover and glaciers decline, they will store less fresh water. As regions heat up, droughts will become more persistent. Producing energy uses water. How much water is used depends on the source of the energy.

Yet in the rush to transition to a renewable energy economy, policy makers have paid little heed to the potential water consequences. Reducing C02 emissions will not help society if the alternative energy sources use more water than the traditional energy sources they replace. This Article examines the links between renewable energy tax incentives and water consumption. Tax incentives for renewable energy sources should account for water consumption as well as the potential for reduced CO2 emissions.

This Article begins with a review of water use statistics for traditional energy sources and a comparison of water use statistics from various renewable energy sources. Next, this Article analyzes the U.S. federal tax incentives for energy sources, paying particular attention to newer incentives for renewable sources and the water impact of those incentives. Finally, this Article provides some recommendations for legislative action.