Every Energy Decision is a Water Decision

By H.E. Abdulla Balalaa, Abu Dhabi

The world’s energy future is being shaped by investment decisions that too often overlook one of the most fundamental constraints: water. From electrifying industry and expanding renewables to extracting critical minerals and building the data centers behind artificial intelligence, the energy transformation has a water footprint that is missing from the investment equation. Overlook water and we risk building tomorrow’s energy systems on a fragile foundation.

The Water-Energy Connection

Water is not a footnote to energy security. It is one of its fundamental conditions. Every energy decision is a water decision. For too long, energy security has been measured through supply, affordability, and reliability. Each matters, but none can be assured if the water on which energy systems depend is under pressure.

Power plants need water for cooling. Fuel production and mineral processing depend on it. So do many of the technologies driving electrification. As populations grow, industries change, and digital infrastructure expands, these demands will only intensify. Our recently released report Crosscurrents: Navigating the AI-Water-Energy Nexus highlights the scale of the challenge, projecting that that global data-center water consumption will increase from 4.5 trillion litres in 2025 to 9.32 trillion litres by 2030.

We cannot build resilient energy systems while overlooking a resource essential to their operation. A power project may be technically advanced and financially sound, but if its water supply is vulnerable, so is the investment.

This is a risk. But it is also an opportunity. The energy transition is reshaping how water and energy systems interact. As countries invest in renewables, electrification, hydrogen, artificial intelligence and new industrial capacity, decisions about energy infrastructure will increasingly determine future water demand, availability, and resilience. Yet too often these systems continue to be planned separately.

Turning Constraints Into Opportunities

A more integrated approach can deliver benefits across sectors. Renewable energy supports lower-carbon water production, including desalination. Water-efficient cooling, wastewater reuse, and smarter industrial processes reduce pressure on scarce freshwater resources. Digital technologies and AI help operators optimize both energy and water use, improving efficiency and resilience at the same time.

The UAE knows what it means to make water security a strategic priority. In our climate, securing water has always required sustained investment, innovation, and long-term planning. The UAE Water Security Strategy 2036 targets a 21% reduction in water demand and 95% treated-water reuse (UAE Water Security Strategy), underpinned by a network of around 70 desalination plants that help supply more than 90% of the Mideast Gulf region’s drinking water that comes from desalination.

Renewable-powered desalination can connect clean electricity with water security. Treating and reusing wastewater can create alternative supplies for industrial use and reduce pressure on freshwater resources. These approaches show how constraints can become catalysts for innovation and opportunities for investment.

Rethinking Infrastructure Investment

Technology alone will not close the gap. We must change how we plan, assess, and finance energy infrastructure.

Water and energy are deeply interconnected, yet they are often planned, regulated, and financed in separate silos. That disconnect comes at a cost.

Water availability and climate exposure should be assessed at the outset of energy projects, not after major decisions have been made. Investors need a clearer picture of water-related risks and the resilience of the assets they finance. Governments must align water and energy strategies and create the conditions for efficient, resource-conscious infrastructure to scale.

For financial institutions, this is both a risk-management imperative and an investment opportunity. Bringing water considerations into energy finance can expose vulnerabilities earlier, strengthen projects over their lifetimes and help direct capital toward solutions that deliver across both systems. The scale of the opportunity is significant: developing countries currently spend around $164.6 billion a year on water, yet face an annual shortfall of $131.4–140.8 billion to meet global water and sanitation goals, with private capital still providing less than 2% of that spend, according to the World Bank’s Funding a Water-Secure Future report.

The stakes will only rise as artificial intelligence (AI), advanced manufacturing, and electrification reshape global demand. Infrastructure decisions made today will lock in patterns of resource use for decades. We have an opportunity to get that equation right, or to build in avoidable risks that become more expensive to address later.

From Recognition to Action

On Dec. 8–10, the United Arab Emirates and Senegal will co-host the 2026 United Nations Water Conference in Abu Dhabi, bringing the international community together to accelerate progress on water security and Sustainable Development Goal 6. The conference is an opportunity to turn recognition into action, strengthen cooperation, and mobilize investment for practical solutions.

The test is whether we carry that thinking into the decisions that shape our economies: what we build, where we invest and how we measure resilience.

Every energy decision is a water decision. Governments must plan accordingly. Investors must price the risk, and businesses must design for the resources their operations depend on.

The energy future will be shaped by the choices we make now. Water must be part of every one of them.

H.E. Abdulla Balalaa is Assistant Minister of Foreign Affairs for Energy and Sustainability at the UAE Ministry of Foreign Affairs. The views expressed in this article are those of the author.