What are the biggest policy barriers to addressing water scarcity globally? During today's OnPoint, Jon Freedman, leader of global partnerships and government affairs for General Electric Co.'s water business, discusses a new report focused on addressing water scarcity through recycling and reuse. The report, co-authored by Freedman, outlines four overarching policy prescriptions, including incentives and education, for tackling water supply challenges.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Jon Freedman, leader of Global Partnerships and Government Affairs for GE's water business. Jon, thank you for coming on the show.
Jon Freedman: Thank you for having me, Monica.
Monica Trauzzi: Jon, you're the lead author of a new report that focuses on addressing water scarcity through recycling and reuse. You've outlined a sort of menu of options for policymakers as they navigate this critical issue. Why now, and what's been lacking in the conversation on water scarcity that led GE to release this report right now?
Jon Freedman: Well, you know, McKinsey & Company recently released a report where they said the world's reached a tipping point where demand for water is now greater than supply, and I think we're actually seeing this play out across headlines all over the world. You know, we've seen this in Brazil. The taps are literally running dry in Sao Paulo. We're seeing it in China and even here in the U.S. in California. And so, you know, we're also seeing this impact our 50,000 water customers in 130 countries, and so we have a technology solution, but also we're not seeing the technology adapted rapidly enough to address scarcity, so we're kind of speaking out on the policy front.
Monica Trauzzi: OK, and the reason why that technology's not being adopted is because of policy hurdles. I mean, what are the biggest policy hurdles that exist?
Jon Freedman: I think there are a lot of barriers to allowing for the adoption of technologies that will promote greater reuse and recycling of wastewater which, by the way, is a huge opportunity for addressing water scarcity. You know, right now, the word reuses about 3 to 4 percent of its wastewater. Here in the U.S., it's 6 to 8 percent, and in California, which is in the fourth year of its worst drought in the past 500, they're reusing 8 to 10 percent. So you have this huge resource that is essentially being discharged into oceans and rivers dirty that could be treated and reused for agriculture, industry, even drinking water. And so, you know, when we look around the world, we say to our customers, "Why aren't you reusing more water? Why aren't you implementing our technologies?" and the answer's almost invariably the same, which is, you know, it's simply cheaper to take water from a river or the ground where it could be free or even a potable municipal system than it is to buy and implement reuse technology. So economics is a huge barrier.
Monica Trauzzi: Some people might hear what you're saying and see it as the private sector just looking for more government incentives, more money from the government. Is that what it is?
Jon Freedman: Well, that's not really the case, and in fact, if you read the report, you'll see that this is designed as a menu of policy options, and it talks about what are the things that government can do to promote greater reuse, and there are really four main things. One is education and outreach, and that's really the platform on which all the other policies stand. You have to convince people it's safe to reuse water. And then the second thing is remove barriers. Only one of the barriers is economics. I think a bigger -- almost equally big barrier is a lack of clear standards. So we have a customer who processes chickens. They want to take wastewater, clean it and use this recycled water to clean the chickens in this process, a very water-intensive process. But there are no clear standards saying what level of treatment they need to use before they can use the water safely to touch a food product. So you have to have clear standards, and the report talks about that as well. Incentives is one of the things the report talks about, and then the fourth thing is mandates, you know, governments simply saying "Hey, you have to reuse water because there's not enough."
Monica Trauzzi: On education, how would you qualify the current level of understanding among U.S. policymakers about the water scarcity issue?
Jon Freedman: It depends who you're talking about. At the federal level, the U.S. Department of Interior, of which the U.S. Bureau of Reclamation is part, extremely high awareness. You know they're very good at understanding water scarcity, and they're addressing it in the western 17 U.S. states. That's the mandated Bureau of Reclamation. But, you know, the U.S. government is very kind of fragmented when it comes to water policy. So EPA has authority over not water scarcity, but water quality. So they look after that. And I think there's no holistic kind of approach that looks at the entire country at the federal level.
Monica Trauzzi: So under the incentives umbrella, you talk about pricing mechanisms. What could a potential pricing mechanism look like?
Jon Freedman: Well, you know, one of the perverse things about water pricing is that there are a number of tariffs that actually charge you less per unit of water the greater volume of water you use, which actually encourages more use. And you have to eliminate those. And the second thing is a lot of water tariffs are simply too low. They don't reflect the full cost of producing and distributing the water, so you have to bring the tariffs up to reflect the full cost of providing the water, and the E.U., by the way has, through the E.U. framework directive, has mandated that the 28 member states do that.
Monica Trauzzi: So you said the technology exists to move forward, but what does the innovation curve look like? What can we expect in the future?
Jon Freedman: Well, first of all, from a technology standpoint, you can recover 70 to 85 percent of wastewater today through membranes, and then if you use thermal and crystallization technologies, you can get up to 99-plus percent. It tends to be energy-intensive, though, so the key to the kingdom is bringing down the energy cost, and one of the things we're looking at is called energy neutral wastewater treatment. So you actually harness the energy in the wastewater to create biogas and, in turn, electricity, and so that's really the new frontier.
Monica Trauzzi: All right, very interesting. We're going to end it right there. I thank you for coming on the show.
Jon Freedman: Sure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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