An in-depth analysis by the International Energy Agency (IEA), published on November 4, 2025, underscores the critical importance of adopting an integrated approach to energy and water management within the industrial sector. This comprehensive strategy is projected to unlock substantial operational savings, enhance resource resilience, and significantly contribute to mitigating global water scarcity, a pressing issue affecting half the world's population.

The industrial sector stands as a pivotal player in global resource consumption, accounting for nearly 40% of total annual energy use and just under 20% of freshwater withdrawals. Despite these interdependencies, energy and water resources are frequently managed in isolation. The IEA's findings, spearheaded by analysts Vida Rozite, Emma Mooney, and Tomás de Oliveira Bredariol, highlight that a combined management approach can drastically improve efficiency, reduce losses, and lower operational expenditures, thereby creating jobs and reducing emissions.

Water is intrinsically linked to energy supply, with the global energy sector withdrawing approximately 0.6 billion cubic meters (bcm) of freshwater for every exajoule (EJ) of energy demand. Consequently, reducing energy consumption directly translates into water savings. The IEA's analysis projects that increased uptake of energy management and AI-enabled savings in industry could lead to a 28% reduction in energy use per unit of value added by 2035. This energy demand reduction would correspond to an estimated 17 bcm less freshwater withdrawn, equivalent to the total municipal water use in Sub-Saharan Africa in 2020.

Conversely, inefficient water use and substantial losses also drive up energy demand. Globally, about 30% of freshwater is wasted due to leaks and inefficient practices, necessitating more energy for extraction, treatment, and transportation. In some regions, water supply and treatment systems experience losses as high as 60%. Industrial sectors, such as semiconductor and food and beverage manufacturing, face significant energy costs for treating ultrapure water (UPW), which can be 4 to 18 times higher than for drinking water. Addressing these water losses can yield substantial energy cost reductions, with electricity often comprising 25-40% of a water treatment plant's operational expense.

The IEA advocates for integrated energy and water audits, which can provide a holistic assessment of costs and benefits, including upstream and downstream impacts. Evidence suggests that water conservation programs can, in some instances, deliver greater energy savings than energy-focused initiatives alone. Industrial sites implementing water audits have reported water savings of 10-50%, alongside additional cost reductions of up to 20% for energy and water treatment chemicals. A U.S. manufacturing sector analysis indicates that investing in water efficiency is ten times more cost-effective than developing alternative water supplies, potentially reducing water usage by 60%.

To foster this integrated approach, energy ministries and agencies are encouraged to expand energy audits to include water efficiency, incentivize combined audits, and incorporate water efficiency into auditor training programs, as seen in India. They should also integrate water usage into energy surveys and benchmarking studies, mirroring practices in the U.S. and Singapore. Furthermore, promoting inter-agency cooperation and raising industry awareness through training and recognition schemes, such as the U.S. Better Plants program, will be crucial in driving this essential transition towards more resilient and sustainable industrial operations.