Sustainable development goals

Investing in water exports to unexpected places

Thomas Schumann, CEO at Thomas Schumann Capital, told Delano about his plans to export water to a country near you, during an interview at the PwC premises in Luxembourg on 11 July 2023. Pictured is the Elephant foot glacier in north Greenland. Photo: Shutterstock

Thomas Schumann, CEO at Thomas Schumann Capital, told Delano about his plans to export water to a country near you, during an interview at the PwC premises in Luxembourg on 11 July 2023. Pictured is the Elephant foot glacier in north Greenland. Photo: Shutterstock

Thomas Schumann Capital outlined the competitive advantages of water export over desalinisation in terms of health, the environmental and the financial benefits. 

“[Desalinisation] does the job [of providing drinking water] but it doesn’t do a good job,” said Thomas Schumann, CEO at Thomas Schumann Capital during an interview on 11 July 2023 when challenged about the existence of alternative sources of fresh water for regions deprived of drinking water.

Greenland fjords: highest quality of water

“It’s very pure water, 100,000 years old […] no microplastics, no pesticides, no herbicides […] not exposed to PFAS,” Schumann said of water from Greenland fjords. According to the US’s Centers for Disease, Control and Prevention, PFAS are a group of chemicals with “uncertain human health effects from exposure to low environmental levels.”

Harnessing the potential of unconventional water sources could benefit billions of people,” declared Manzoor Qadir, deputy director of the UN University’s Institute for Water, Environment and Health.

“Greenland is the largest island in the world. It has 10% of the global freshwater supply,” said Schumann. After carrying scientific and technical studies, the Geological Society of Denmark and Greenland “realised they cannot do it [water export] by themselves.” A tender has been organised and “roughly 12 private companies” were granted a licence “to explore the freshwater for the next 20 years.”

One of these companies, Inland Ice, began exporting “super-premium” water bottles to high-end restaurants at the beginning of the 2020s. Schumann understands that the vast majority of the licensees “are still way behind” in their commercialisation plans.

Environmental impact: Which is the least bad?

Desalination is not without environmental issues. What are you doing with the brine? You’re taking the salt out of the ocean, you’re putting it back into the ocean, which increases salinity, said Schumann. He argued the process creates “major environmental concerns, because you’re destroying marine life specifically in the coastal areas.”  

Besides, Schumann claimed that desalination is “energy intensive.” He noted that several thousand desalination plants in the Middle East and North Africa run on oil and gas. There have been attempts to operate desalination plants with solar energy systems but “this is years out, still […] and on a very, very small scale.”

[The water coming out from reverse osmosis is] of inferior quality because you have no nutrients, no minerals also it doesn’t taste well.

Thomas SchumannCEOThomas Schumann Capital

On the carbon footprint related to water shipment, he rejected the grievances of the opponents of his project, arguing that the carbon footprint is “identical to all other consumer products,” whereas he will deliver a basic and essential commodity. Given the recent initiatives on the electrification of vessels, among other projects, he is optimistic on the shipping industry becoming greener.

In a policy paper published some years ago, Rhett Larson, associate professor of law at Arizona State University, reflected concerns that bulk water exports in Canada could deplete its resource and impact the environment. He also suggested that potential importers may simply be better served by “conserving water, rather than importing water” to avoid “creating unsustainable water dependences.”

Commercial advantages

Schumann claimed that the capital expenditure and operating cost of a desalination plant are “extremely high.” Moreover, he argued that it takes “an average five to seven years to set up a desalination plant [and that] the water coming out from reverse osmosis is “of inferior quality because you have no nutrients, no minerals also it doesn’t taste well.” When accounting also for permitting time and the unclear environmental cost, Schumann estimated the observable cost per litre at around $0.30 for the desalination process.

Schumann estimates the overall to export water at $0.03 per litre. “Water is basically free and is readily available,” but the operator must acquire a 20-year license for 7trn litres per year in Greenland.

According to Schumann, the total running cost must account for the Greenland royalty fees ($0.005/litre), the infrastructure for piping and pumping to the ship ($0.005/litre) and the shipping cost which he estimated at “somewhere between half a cent to eight cents depending on the destination.”

The Alaska project is less advanced as it will require more infrastructure and the water would have to be sourced from an inland lake under a 20-year licence for a lower volume (30bn gallons, or 113bn litres).  

A good oil tanker to transport your drinking water?

The required tankers have “very, very hygien[ic] requirements to make sure that this pristine water is not being contaminated,” said Schumann. Around the world, he noted that there are about 300 to 500 “edible liquid bulk food-grade vessels” generally transporting orange juice and vegetable oil in stainless steel reservoirs with a capacity of “roughly 50m litres.”

An unexpected potential initial client

Thomas Schumann Capital has submitted a proposal to Thames Water in the UK to bridge their demand-supply deficit in the coming decade because “the UK has been systematically depleting its groundwater supply [...] and is only 10 days out from Greenland.” According to Schumann, the water situation is the same for France, Spain, Morocco and Tunisia.

Despite the lower volume in the Alaska project, the needs in the Western hemisphere will be by no means less important. Schumann sees major needs in California, Oregon, Mexico and down the road to Asia. 

Financing of the projects

Schumann explained that his firm is in discussions with potential off-takers for the shipment of water and have a financing offer for $250m against a guarantee. In parallel, the firm is currently in the process of raising “seed money” for up to $5m through the Thomas Schumann Water Security Fund SCSp, a Luxembourg special limited partnership, to finance the $2.5m Greenland licence.

The projects of Thomas Schumann Capital promote Sustainable Development Goal (SDG) 6--“ensure access to water and sanitation for all”--and its CEO thinks that its new fund will achieve an article 9 status.

Ready to go?

“We are ready, able and willing to ship the first tanker in the next six to eight weeks,” said Schumann.