Today: Demand for purified seawater expected to rise as cost of renewables falls; in conversation with steelmaker Outokumpu's sustainability chief; America’s natural-gas bounty cushions U.S. markets from global shocks.

Welcome back: An Iranian drone attack damaged a desalination plant in Bahrain, bringing the war to the oil-rich Persian Gulf’s most strategic resource: drinking water.

The Wall Street Journal's Dov Lieber and Thomas Grove write that with desalination plants, the set of infrastructure targets being struck in the war has expanded, marking a new and dangerous escalation in a region where many countries have limited onshore sources of fresh water.

The Middle East’s abundant desalination plants, which remove salt from the Persian Gulf’s seawater, are the key source of drinking water for millions in the arid region. The Middle East accounts for more than 40% of the world’s desalination capacity, with around 5,000 plants feeding its water systems.

Bahrain is almost completely dependent on its plants for drinking water for its population of 1.6 million. Israel depends on the plants for about 80% of its water. About 90% of Kuwait’s water needs are met by desalination.

In places like the Middle East and North Africa, desalination prices have been falling because cheap renewable power is becoming more readily available. Demand is expected to rise the cost of renewable power drops.

• The Middle East war had bolstered the case for investment in clean energy sources and battery storage, Microsoft said. (FT)
• Jefferies is telling clients to double down on clean energy investments despite the current surge in oil and gas prices. (Bloomberg)

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At the start of the year, the European Union introduced the world’s first carbon tax. The sustainability chief of Finnish stainless steel company Outokumpu thinks it’ll keep European smelters competitive.

But in order to ensure the Carbon Border Adjustment Mechanism is effective, gaps in its rules needed to be tightened, Heidi Peltonen, vice president of sustainability at the Helsinki-based producer, told WSJ Pro Sustainable Business's Yusuf Khan in an interview.

• Taxes should be calculated and applied where steel is melted and poured, not where products are finished. Otherwise, Peltonen said, for products like washing machines assembled in Europe with raw materials from elsewhere, companies could shift production from strict climate regimes to weaker ones to avoid costs.
• CBAM should be applied downstream to finished products. “If you are fighting against imported washing machines which do not have any carbon pricing in place, you are losing the game,” Peltonen said.
• Ensuring continued European production is critical in an era of deglobalization, with countries looking to secure production of minerals, metals and products within their own borders, Peltonen said.

CBAM applies to high-impact goods such as steel, fertilizers and cement, which have the highest emissions intensity. Exporters have to pay the cost of the carbon to bring those products into Europe. If they are produced in an environmentally friendly way, those taxes are removed.

Natural-gas prices around the world surged this past week after the largest LNG export facility on earth was shut down by an attack from Iran. Prices for LNG, which is seen as a cleaner-burning fossil fuel compared to coal and oil, climbed a relatively tame 11% in the U.S.

The WSJ's Ryan Dezember reports that Americans aren’t likely to feel much pain from higher power bills as they did four years ago when energy markets were shocked by Russia’s invasion of Ukraine. They can thank ample domestic inventories, record production and capacity to export LNG from the U.S. that is—for now, at least—pretty much maxed out. 

It’s another story overseas. Benchmark gas prices jumped 67% this past week in Europe, which became more reliant on LNG to keep the lights on after shunning Russian suppliers four years ago. Prices rose sharply in Asia as well, where most LNG shipments from the Persian Gulf wind up.

• The Long-Feared Persian Gulf Oil Squeeze Is Upon Us (WSJ)
• The Big Winner From the Persian Gulf Energy Crisis? Russia (WSJ)

• Judge rules that Apple Watch buyers who sued over “carbon neutral” claims failed to support their complaint. (Trellis)
   
• Google to invest $50 million by 2030 to eliminate superpollutants including methane, fluorinated gases and black carbon. (ESG News)
   
• U.S. sportswear giant Nike has promoted Cimarron Nix to the role of chief sustainability officer. (FashionUnited)
   
• Vermont's Northeast Kingdom produces less than a tenth of the state’s total waste, but bears all of the burden. (VT Digger)
   
• HSBC bank appoints Denise Odaro as its new head of sustainable finance and transition, Europe and Americas. (ESG Today)
   
• As demand for aluminum soars, China is pursuing policies that will spur more smelters to run on clean electricity. (Canary Media)
   
• Sea levels across the world are already “much higher” than most scientific assessments had estimated. (FT)
   
• The Green Party's recent by-election victory reflects the party’s growing support in U.K. opinion polls. (Oxford Analytica)

WSJ Pro Sustainable Business gives you an inside look at how companies are tackling sustainability. Send your comments to editor Perry Cleveland-Peck at perry.cleveland-peck@wsj.com and reporters Clara Hudson at clara.hudson@wsj.com and Yusuf Khan at yusuf.khan@wsj.com. Follow us on LinkedIn at perrycp, clara-hudson and yusuf_khan.