In 2015, 16.52 km3 of water was consumed for energy production in China, of which coal production, thermoelectric power and coke used 57.7%, 28.8% and 6.2%, respectively. Most water is consumed in China's northern (north and northwest) provinces where water is scarce and energy production's impact on water resources is further intensified in the north when this water scarcity is taken into account. The top five provinces with the largest consumption of scarce water by energy production are predominantly concentrated in the North China Plain. In 2015, nine provinces did not meet their Industrial Water Efficiency Improvement targets set by the ‘Three Red Lines’ water policy. Of these nine, five provinces (Shanxi, Shandong, Hebei, Xinjiang and Ningxia) are located in northern regions and face severe water stresses. Water consumed by energy production occupied more than 20% of the Industrial Water Allowances (IWAs) that were allowed by the ‘Three Red Lines’ policy in all five provinces. In Shanxi, energy consumption exceeded more than three times its IWA. Our findings underscore that energy production imposes severe pressure on water-scarce provinces' compliance with the ‘Three Red Lines’ policy and thus suggest a necessity to coordinate cross-sectoral policies, planning and investments.