XILINHOT, China -- By many measures, this northern Chinese city is an ideal candidate for being China's Wyoming.
It has more brown coal reserves than any other Chinese region, and it is only 600 kilometers away from power-hungry Beijing. The sparsely populated landscape here provides enough space for new coal mines and downstream businesses.
There's just one problem: The coal industry consumes huge amounts of water, while this land is one of China's driest. Informal ads offering well-drilling services hang everywhere outside of Xilinhot's coal fields, signaling how pressing the conflict is.
China's demand for coal is creating a fierce competition for water. The nation has been scrambling for ways to ease the water scarcity, but proposed remedies raise more questions than answers.
Currently, more than half of China's industrial water usage is in coal-related sectors, including mining, preparation, power generation, coke production and coal-to-chemical factories, according to China Water Risk, a nonprofit initiative based in Hong Kong. That means that the water demand of the Chinese coal industry surpasses that of all other industries combined.
A geographic mismatch worsens the water stress. Statistics from China Water Risk show that 85 percent of China's coal lies in the north, which has 23 percent of the country's water resources. As the majority of the Chinese coal industry is built where coal reserves are, those water-scarce regions are increasingly pressured to give more water.
To answer China's rising appetite for power, Chinese policymakers have decided to establish 16 large-scale coal industrial hubs by 2015. If the plan materializes, those hubs are estimated to consume nearly 10 billion cubic meters of water annually, equivalent to more than one-quarter of the water the Yellow River supplies in a normal year, according to a report jointly issued last year by the environmental group Greenpeace and the Chinese Academy of Sciences.
Researchers from the two groups say that China is now running into a tough choice: Should it adjust the national coal development plan that is set to fuel the economy, or should it go ahead and build up large-scale coal industrial hubs that could cause a serious water crisis?
Water quality also at stake
Already, the Yellow River, China's second-longest river and the cradle of ancient Chinese civilization, is at high alert due to overwithdrawal of water by riverside industries, most of which are related to coal.
Some coal businesses have dammed streams for their own water use, cutting off a lifeline to ecosystems downstream. In Inner Mongolia, the practice has turned the Wulagai wetland -- once home to swans, red-crowned cranes and other species -- into an immense desert region that is now the origin of sandstorms in Beijing.
Water quality is also at stake. According to the joint report, riverside coal mines pour more than 80 million tons of wastewater every year into the Yellow River with a large amount untreated. China's environmental monitors found a dangerous rise of pollutants linked to coal production in streams around major coal mines. As a result, water there is no longer safe to touch.
In response, Chinese leaders in recent years have tried hard to replace coal with renewable energy, import coal and also improve water efficiency in the domestic coal industry. A report from HSBC Global Research last month notes that the national government and industries are trying to address the challenge, including through technology tests and recent water limits on thermal power plants.
Although all those measures help with preserving water, they come with their own challenges.
China's fast-expanding wind power installations have posed a threat to grid safety, due to the on-and-off nature of wind. While buying foreign coal helps skip coal mining -- the most water-intensive part of the coal industry -- it is a trade-off to the nation's energy security.