The water industry as a whole consumes a considerable amount of energy in the treatment and distribution of water and wastewater. Like all sectors of society today, the industry is focusing efforts on reducing its CO2 emissions and improving the sustainability of its systems and practices. One way of achieving this is through the use of micro-hydropower (MHP) installations in water infrastructure for energy recovery purposes. This paper presents a review of energy use and CO2 emissions in the water industry as well as highlighting the opportunities and challenges for MHP energy recovery. The results indicate that significant potential exists for energy recovery in the water industry. However, many previous investigations have not considered key complexities such as variations in flows or turbine efficiency. Similarly, accurate costing and return on investment data are often absent or lacking sensitivity analysis. Further research is required to address the risks and long-term reliability of installations, alongside the development of firm policy to direct and incentivise sustainability gains in this area.