The Climate Change Cash Grab
By Liam Jamieson
The desolate climate of the Arctic has historically made it a place of little economic significance. The Earth’s northernmost region is warming at twice the rate of the rest of the globe. The melting of Greenland’s glaciers, Arctic sea ice loss and Alaskan permafrost thaw are all bad news for the environment. But one person’s melting planet may be another’s red-hot business opportunity, as industries from shipping and mining to tourism and fossil fuel extraction stand to benefit. Which puts the region in the spotlight as leaders worldwide fight for their slice of the Arctic pie.
breaking the ice
Russian Route. Declining Arctic sea ice has opened up northern shipping routes for more months of the year than ever before. But the dead of winter? That seemed impossible, until recently. The Northern Sea Route (NSR) runs along Russia’s Arctic coast and is traditionally navigable only between July and November. However, the Cristophe de Margerie, a Russian liquefied natural gas tanker, voyaged from Sabetta in western Siberia, Russia to Jiangsu, China and back between January and February. It was the first large-capacity cargo vessel to do so. The accomplishment is promising for Russia’s economic investments in the Arctic: The test run proves the NSR may be increasingly accessible, no matter the season.
No Suez Canal Strife Here. The ship that got stuck in the Suez Canal spawned countless memes and tweets. And while Africa’s Cape of Good Hope seemed to be the primary beneficiary of that blockage, the predicament offered Russia a perfect opportunity to promote the NSR to the shipping world. The Arctic alternative promises a 40 percent distance reduction for a typical trip between China and Europe, compared to the Suez Canal. Russian President Vladimir Putin set a goal in 2019 to increase shipping through the passage from 20 million tons of cargo to 80 million tons annually by 2025. His plan included adding new ports and building a fleet of 13 nuclear icebreakers standing ready to help stalled ships. That That could be a compelling pitch after the world waited anxiously for Egypt’s clogged canal to be plunged.
What Holds the Arctic Back? The polar region holds an estimated 13 percent of the world’s untapped oil and 30 percent of the world’s untapped natural gas, meaning it could eventually compete with the Middle East for oil dominance. But its lack of infrastructure, remote location and harsh weather and environmental concerns have made harnessing Arctic oil prohibitively expensive. Plus, the dangers of a spill in such a brutal environment turn off many potential developers. Still, while today’s tapped oil sources run dry, the demand for fossil fuel has not … which could mean demand for Arctic oil will rise alongside sea levels.
politics of the poles
A Growing Gulf. Only eight coastal Arctic states have territorial claims. But six international Indigenous groups are considered “permanent participants” of the Arctic Council, and there are 13 non-Arctic countries with observer status. Among those countries? Singapore, the sovereign Southeast Asian island city-state, which joined in 2013. So why haven’t Gulf nations joined the fold? Vested interest, not proximity, is the primary criterion for inclusion — and the oil industry could be deeply influenced by Arctic action. While individual states could apply to join, experts suggest a bid by the Gulf Cooperation Council to become a player on behalf of the entire region is more feasible.
Russia’s Pipeline to Asia. Russia has a clear advantage as it owns some 80 percent of the oil and gas under the Arctic shelf. However, it’s gotten off to a rocky start, with ambitious plans that keep getting shelved due to skyrocketing costs. Putin’s Vostok Oil project aims to pipeline oil from fields in Russia’s northern tundra lands to the Arctic coast, and is projected to export 25 million tons of oil per year through the NSR to trading partners like China and India. This project will cost more than $150 billion, create more than 100,000 jobs and boost the nation’s GDP by 2 percent.
Pushing Back. Russia’s oil-drilling ambitions have brought pushback from environmentalists around the globe. Experts say Russia’s drilling infrastructure cannot handle increasing permafrost thaw, and Russia’s poor performance in preventing spills does not help its case, with an estimated 819 oil leaks in 2019 alone. Despite scientific pleas to increasingly monitor the effect of temperature changes on oil infrastructure, Russia’s state-owned Transneft, the largest oil pipeline company in the world, has dismissed concerns that global warming and permafrost thaw impact the functionality of their pipelines.
The American Arctic. Just three months into his term in 2017, former U.S. President Donald Trump signed an executive order that opened up federal waters in the Arctic for oil and gas developers to lease, with the goal of creating jobs and achieving energy independence. His executive order did very little though to expand drilling and boost the economy, as his auction of these oil leases just weeks before he left office attracted few bidders. Their reticence was prescient: On Jan. 20, the same day he took the White House, Joe Biden signed an executive order placing a temporary halt on Trump’s oil and gas leasing in the Arctic National Wildlife Refuge. Reinstating Obama-era efforts that withdrew large areas of Alaska’s lands and coasts from oil drilling development, Biden’s order aims to protect environmental and public health, taking a step toward his campaign promise to permanently protect the refuge.
Social Media Storm. Oil companies like Transneft also are under the scrutinous eye of social media activists. Greenpeace Russia’s Twitter account has amassed over 300,000 followers, and has not hesitated calling out companies for poor environmental practices, including Russian mining giant Nornickel, which Greenpeace ridiculed for its spill that leaked 21,000 tons of diesel fuel into two Siberian rivers. Social media activism has also been successful in the United States, with activists using platforms such as TikTok to promote the protection of the Arctic National Wildlife Refuge from drilling. Social media activists like Alex Haurus effectively blocked the Trump administration’s oil exploration plan by raising awareness of the issue, resulting in 6.3 million letters being sent to the Fish and Wildlife Service, which was unable to process all of them before Trump left office.
tourism: final frontier sightseeing
Cruise Control. The Arctic cruise industry has been growing, with sightseeing by boat more possible as sea ice declines. So much so that even large cruise ships are able to pass through the narrow corridors of the Northwest Passage — with more seats meaning higher potential profits. Arctic tourism has been controversial because of its large environmental footprint, plus the pandemic put a pause on most of these trips. But with cruises costing anywhere between $10,000 and $30,000 per person, the Arctic cruise industry has the potential to be incredibly profitable.
One Hefty Parking Fee. It’s not only cruise companies that profit from tourism. Small Arctic towns receive a much-needed economic boost from visiting travelers. Pond Inlet is a picturesque, predominantly Inuit town in Canada’s Nunavut territory. Although it faces high unemployment rates, visiting cruises have stimulated the local economy and have helped address some of those employment issues. In 2018, the Canadian community of 1,600 people received over $250,000 in cruise docking fees. Despite those benefits, some have voiced concerns about cruises’ impacts on local wildlife, which many locals rely on for hunting.
Is Santa’s Village Melting? While old St. Nick may not live in the North Pole, he does live nearby in Finland’s Lapland region. The area’s Santa Claus Village theme park is a holiday hot spot for European tourists that provides a variety of activities including dog-sledding, snowmobiling and a reindeer farm. But with the warming climate, a lack of snow around the Christmas season threatens the attraction’s success.
See It Before It’s Too Late! Glaciers, sea ice, polar bears — climate change has placed a ticking clock on witnessing these marvels of nature. “Extinction tourism,” which has also been seen in threatened places like the Great Barrier Reef, is when visitors ramp up to see beautiful sites before they disappear. The trend is a bleak reality undergirding the rise in Arctic visits that hasten the Arctic’s decline, as the lucrative extinction-tourism industry potentially comes with a serious environmental cost.
the fight for Greenland
Struggle for Independence. The Kingdom of Denmark has granted Greenland, which is three times the size of Texas, a significant amount of self-autonomy. However, around two-thirds of Greenland’s 56,000 residents want total independence from the Danes. Only issue? Greenland is economically reliant on Denmark, and breaking off would stop Denmark’s annual $740 million funding to the island. As the island already struggles with social issues, including high suicide rates and unemployment, many Greenlanders don’t want economic independence if it means a decline in living standards.
A Starting Point: Rare Earths. Rare earths, also known as rare-earth metals, are made up of the 17 metallic elements on the periodic table essential to many high-tech devices, including smartphones, televisions, computers and electric vehicles. They are incredibly valuable and increasingly scarce, and Greenland’s retreating glaciers are revealing some of the largest deposits of rare earths in the world. With a metallic gold rush potentially in the works thanks to global warming, rare-earth mining could pave the island’s path to independence.
Trump Tried to Buy Greenland. The former U.S. president attempted to buy the island in 2019, and while widespread mockery ensued, the proposition was somewhat rooted in geopolitical strategy. The United States is heavily dependent on China for rare earths, so having access to Greenland’s deposits would make the United States less fiscally vulnerable. Though Trump failed, America did pledge $12.1 million in aid to Greenland. It also reopened its consulate there in 2020 as an effort to strengthen diplomatic relations while combating growing Chinese and Russian ambitions in the region.
China’s Growing Presence. Speaking of China, it too has expressed interest in Greenland. The island’s rare-earth deposit in Kvanefjeld is owned by Australian company Greenland Minerals, but Chinese state-controlled company Shenghe Resources is the company’s largest shareholder. Rare earths aside, China sees Greenland as an opportunity to have a stronger foothold in the Arctic, with ambitions to expand infrastructure and trade routes throughout the region. However, Beijing saw those hopes severely hampered after a left-wing Greenland party opposed to the China-backed mine won the largest vote share in parliamentary elections on Tuesday.
A Breezy Alternative for Kivalina. Wind energy has become an attractive energy source in the Arctic’s high latitudes. The people of the Alaskan barrier island Kivalina know the impacts of climate change better than anyone, as they are preparing to move due to climate-induced coastal erosion. With average annual winds at 7.94 miles per hour, the nearby Kisimigiuktuk Hill has been classified as a “superb” resource for wind turbine development. Wind-powered energy will power their new home after relocation, saving them money while helping keep their environment clean.
Reindeer vs. Wind. Wind farms can be economically sound and beneficial to the environment — but only if they’re done properly. The Sámi people, an Indigenous group that populates northern parts of Norway, Sweden, Finland and Russia, have opposed the development of wind farms on their territories. Not because they oppose green infrastructure, but because wind farms disrupt reindeer herding, a crucial aspect of Sámi culture. Having dubbed wind energy efforts “green colonialism,” the Sámi argue that turbines do more harm than good and that existing energy resources, like hydroelectric dams, should be upgraded before building any new infrastructure.
Midnight Solar. A region that only gets a few hours of sunlight per day in winter might seem like the last place to invest in solar energy. But when places like Alaska have energy prices that are almost double that of the rest of the country, residents are eager to find any sustainable, affordable alternative to fossil fuels. Advancements in technology have allowed solar energy to take off around the Arctic. And as winds tend to be stronger in the winter while sunlight is abundant in the summer, the combination of wind and solar could provide season-round sustainability in the Great North.
- Liam Jamieson, OZY Author Contact Liam Jamieson