Tensions are rising between the UK government, water companies and regulators over the future of England’s water supplies, as the Environment Agency warns the country could face widespread drought as early as next year.

New research suggests growing water scarcity could undermine the UK’s ability to meet its legally binding net zero targets and limit industrial growth in some regions.

Study Warns Water Supply Cannot Support All Net Zero Projects

The government has committed to reaching net zero greenhouse gas emissions by 2050 and delivering a clean power system by 2030, with at least 95% of electricity generated from low-carbon sources.

However, research commissioned by water retailer Wave concludes there may not be enough water available to support all planned carbon capture and hydrogen projects, many of which require large volumes of water to operate.

The study, carried out by Durham University and led by Professor Simon Mathias, assessed water demand linked to decarbonisation plans across England’s five largest industrial clusters: Humberside, north-west England, the Tees Valley, the Solent and the Black Country.

“Decarbonisation efforts associated with carbon capture and hydrogen production could add up to 860m litres per day of water demand by 2050. In some regions, for example Anglian Water and United Utilities, deficits could emerge as early as 2030,” said Mathias.

The analysis examined whether future water supplies could meet the demands required to reach net zero across these regions.

Major Water Deficits Forecast for Key Industrial Clusters

According to the research, decarbonisation in the Humberside industrial cluster could push Anglian Water into a supply deficit by 2030, rising to a shortfall of 130 million litres a day by 2050.

Plans linked to the north-west industrial cluster could also push United Utilities into a deficit of around 70 million litres a day by 2030.

Anglian Water acknowledged the deficit estimates but said they were at the upper end of its own projections. The company said spending limits imposed by regulator Ofwat were restricting its ability to invest in securing future water supplies.

The firm also said business water demand is often excluded from long-term planning, limiting system resilience to climate change and reducing the ability to support economic growth.

Regulators Accused of Overlooking Industrial Demand

A spokesperson for Water UK confirmed that water companies’ plans do not currently account for the needs of some large proposed industrial projects.

The trade body said responsibility for this omission lay with the Environment Agency, which oversees water abstraction and planning.

“After being blocked from building reservoirs for more than 30 years, we have finally been given approval to build 10. The problem is that the Environment Agency’s forecasts, on which the size, number and locations of these reservoirs are based, do not account for the government’s economic or low-carbon ambitions. Hydrogen energy needs a lot of water, so correcting these forecasts is increasingly urgent.”

Nigel Corfield from Wave said he had commissioned the work because “water companies don’t have the same statutory obligations for businesses as they do for households, and we sensed that there was going to be a bit of a problem”.

“Government and Ofwat are allowing businesses and these big projects to sort themselves out in terms of how they’re going to get their water,” said Corfield. “We generally don’t think that’s right, because this is about energy security so we think that the best people to provide that and supply that and support that are the water companies.”

Government Defends Hydrogen and Carbon Capture Strategy

The government said it is “rolling out hydrogen at scale”, with 10 projects described as shovel-ready.

It said all hydrogen schemes are expected to have sustainable water sourcing plans and appropriate abstraction licences. Carbon capture projects will only be approved if they meet strict legal standards and provide a high level of protection for people and the environment.

“We face a growing water shortage in the next decade and that is one of the reasons we are driving long-term systemic change to tackle the impacts of climate change,” said a government spokesperson.

“This includes £104bn of private investment to help reduce leakage and build nine reservoirs, as well as a record £10.5bn in government funding for new flood defences to protect nearly 900,000 properties by 2036.”

Professor Dieter Helm, an economist at the University of Oxford, said England does not lack water but suffers from poor water management.

“It’s worse than an analogue industry,” he said. “Until recently, some water companies didn’t even know where their sewage works were, let alone whether they were discharging into rivers. The information set is extremely weak. But a data revolution now means we can map water systems in extraordinary detail, digitally, at a far finer resolution.”

He argued that every drop of water should be measured and reported in real time, with data held by a new, independent catchment regulator rather than water companies.

Proposal for Real-Time Water Monitoring and Transparency

Under Helm’s proposal, the regulator would hold live data on all water uses within each catchment, including abstraction, river levels, runoff and sewage discharges.

The data would be publicly available, allowing anyone to assess water availability or model the impact of new developments such as hydrogen plants on local water systems.

“You should never be able to have an abstraction without an abstraction meter,” he said. “And it should be a smart meter, automatically reporting. You can’t run a system without data, and you can’t rely on the water companies to hold the data for everyone in the system – they’re just one player.”

In his model, the catchment regulator would hold live data on “all the catchment uses of water”, such as abstraction, runoff, water and river levels, sewage discharges, and publish everything on a public website. Anyone, he said, should be able to look up a catchment, see what was going on, and even model the impact of a new project, such as a hydrogen plant, on the system.

“That’s how you run an electricity system,” Helm said. “Why don’t we have that in water? And why don’t we have a body responsible for it? There’s an information revolution required here, quite separate from the question of whether we actually run short of water.”

The government and the Environment Agency have already warned England could face a water deficit of six billion litres a day by 2055.

They have also said the country risks widespread drought next year unless there is significant rainfall over the winter, adding urgency to concerns about water security, infrastructure investment and climate resilience.

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