In recent years the possibilities of the Arctic have hit the news now and again. Mostly it goes unnoticed. For many people the Arctic is still just a big chunk of very cold, inaccessible and uninhabitable land. The Arctic region covers more than 30 million square kilometers or 18 million square miles. However, since 1979 the extent of Arctic sea ice has decreased rapidly and according to a UN climate report Arctic summer ice is set to be gone in less than 40 years, much faster than anticipated. While this present huge opportunities for developing the Arctic region, scientists also worry that the melting of the Arctic permafrost could be a “economic time bomb” as it releases unusually large amounts of methane (potent greenhouse gasses) that could potentially cause significant climate changes.
The Arctic actually isn’t just a piece of uninhabitable land. It is to home to about 4 million people from 40 ethnic groups and an economy of US$230 billion. While it is a region ripe with opportunities, it is also one of the last true wildernesses on earth and an extremely challenging environment. According to the United States Geological Survey about 13% of undiscovered oil and 30% of undiscovered gas reserves are in the Arctic. In a world facing rising oil prices, countries as well as international oil corporations have shown much interest in recovering these vast reserves. However, it is widely believed that the potential oil and gas fields are out at sea, far from land as well as infrastructure and in extreme climatic conditions, making production far too expensive. Exploring other and cheaper options such as shale gas in North America and conventional gas production in in the Middle East could be better and more viable options! The Arctic as the new energy source should not go completely unquestioned.
It is not only oil and natural gas that is of interest and with good reason. In a world constantly seeking to secure more natural resources to fulfill the needs of an ever-growing and increasingly affluent population, the Arctic is rapidly becoming a new battleground for natural resources other than oil and gas. The region contains a vast reservoir of sought-after resources, including metals, fish, fresh water, and high-value minerals such as diamonds and rare earths.
The melting of the Arctic ice offer one last thing – a brand new shipping route which means shorter trade routes through the summer ice-free Arctic. The first commercial ship sailed through the “Northwest Passage” in the Arctic Ocean in 2009 and 46 ships used the route in 2012 which was the warmest Arctic summer on record. Traffic is picking up rapidly – about 400 vessels were expected to cross the “Northwest Passage” by the end of the 2013 season.
Developing the Arctic will be a complex task and is also likely to cause of geopolitical tensions. It is not only the five countries whose territories border the Arctic: Russia, the United States, Canada, Denmark and Norway that want part of the prize. Countries such as China, Japan and South Korea also want a share in the Arctic’s adventure, despite being non-Arctic states. Other non-Arctic players, e.g. India and the European Union, are holding tight to the argument that the Arctic is a common zone that should be accessible to every state for research, exploration and transport purposes. Many of the countries are already starting to prepare for their future presence in the region, even the non-Arctic players. China is building an Arctic fleet including icebreakers. Japan is building warships, icebreakers and technical ships. Meanwhile Russia has really started to flex its muscles in the Arctic in the last few months – as well as elsewhere. According to the Spiegel International President Vladimir Putin said at a meeting in December that Russia was “intensifying the development of that promising region” and needs “every lever for the protection of its security and national interests there.” The Russians are also creating a special military force dedicated to protecting the Russian interests in the Arctic and to counter potential threats from e.g. the United States.
The Arctic has implications for energy security, global trade, politics and climate change. Global tensions will most likely arise and international cooperation will be necessary. However, while great nations of the world have started the race to win their right to explore this emerging region of the world, let’s not forget that the Arctic is not an uninhabited region. In the quest to explore and harness the region’s vast resources, governments and businesses alike must take into consideration the potential impact of their actions on the environment and the people who call this cold and difficult region their home.
Sources:
Financial Times – Arctic sea ice melting faster than expected, UN report finds
The voice of Russia – Arctic ice thawing: natural resources perspective
The Globalist – Arctic Shipping on the Rise
Spiegel International – Arctic Scramble: Russia to Flex Military Muscle in Far North
Strategy+business – Is the Arctic the Next Emerging Market?
