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The Double-Edged Sword of Arctic Development

This article is part of an Arctic in Context series featuring Winter 2017 Arctic Research Fellows from the International Policy Institute, in the Henry M. Jackson School at the University of Washington. This Arctic research program is dedicated to improving the transfer of research and expertise between higher education and the policy world in the area of global affairs.

By Michael Brown 

Since 2007, the Arctic narrative has focused on the threat of climate change and the resulting prospects for oil and gas development. Seeing opportunity at the top of the world, interest in the region surged from corporate boardrooms to the ministerial levels of government, both around the circumpolar region and beyond. As estimates of oil and gas reserves were released, many envisioned cargo ships traversing the newly ice-free waters. Non-Arctic nations quickly issued new strategies and declarations on how to approach a region that, until that point, they had mostly ignored.

Today, while global economic trends start to drift away from fossil fuels and the costly realities of development in an unpredictable region, the threat of climate change is intensifying for the people who live in the Arctic. But what might this situation, where opportunity wanes and threat waxes, mean for the Arctic Council? The organization, lauded for its innovative focus on cross-border relationships and elevation of indigenous interests, relies on funding from member states. Governmental neglect could diminish support for the Arctic Council and Arctic governance in general, to the detriment of those who live in the region.

Evolution of a Narrative

In 2007 and 2008, three events boosted international interest in the Arctic and colored the way the region would be viewed. First, in 2007, the flag Russia planted on the North Pole’s seabed raised eyebrows for its distinct Cold War imagery. Mere months later, scientists declared the year’s summer ice coverage to be at an all-time low. The following year, the U.S. Geological Survey released a report estimating that the Arctic contained 22 percent of the world’s recoverable fossil fuel deposits.

Climate change, combined with the race to access the resources that were becoming available, cultivated an image of an Arctic that had opened for business. A steady drumbeat of headlines like “Great Arctic Oil Rush” and “Arctic Drilling Countdown” emblazoned The New York Times starting in 2007—although in 2014, coverage in the national press suddenly shifted to “Shell Delays Arctic Drilling Plan” and “Shell Exit Arctic as Slump in Oil Prices Forces Industry to Retrench,” reflecting new economic dynamics that dampened energy prospects.

Parallel to this media timeline, both the new priorities declared by the Arctic Council and the sudden uptick in U.S. engagement with Arctic issues reflect the importance placed on resources in the region. The Arctic Council’s 2009 Tromso Declaration and the 2009 Arctic strategy, NSPD-66, issued by U.S. President George W. Bush, were the first policies to mention Arctic resources from the Council and the U.S., respectively. The Arctic was even more prominent in the 2013 strategy released by President Barack Obama, which aimed to “Provide for Future United States Energy Security.” Tellingly, Hillary Clinton was the first secretary of state to visit the Arctic Council’s ministerial meeting in 2011, and John Kerry followed suit in 2013 and 2015. Over this period, the Arctic narrative stressed newly uncovered economic opportunities as ice melted, driving states to reconsider a region they once thought of as peripheral.

Changing Global Dynamics

The 2014 oil price slumps hit Arctic oil prospects hard, and it does not seem likely that prices will climb too high in the long term. In 2016, the CFO of Royal Dutch Shell declared that “peak oil demand” might occur within five years as renewables claim large portions of the energy market. The same year, the International Energy Agency painted a complicated picture for the future of oil, showing continued growth, but arguing that renewables will be the big winners through 2040. Bloomberg’s Bureau of New Energy Finance is even more optimistic about renewable energy, arguing that mass adoption of electric vehicles will displace millions of barrels of demand for oil.

Global economic currents might bypass the need for Arctic oil and gas. Even if demand for oil remains strong and electric vehicles flop, fracking in non-Arctic areas has provided cheaper alternative sources of oil and gas than those in the Arctic. According to the Arctic Human Development Report, while ice and permafrost will continue to melt, Arctic oil and gas won’t necessarily get any cheaper to bring to market. A warmer Arctic is, if anything, even more difficult to develop—stable permafrost turns to mud and sea ice becomes more unpredictable. This issue isn’t universal: Areas like the Barents Sea north of Norway and the Kara Sea off of Russia’s northwest coast are already developed, but outside of these two areas, there are few oil operations starting up in the Arctic.

Perhaps the hopeful headlines of 2007 about Arctic energy resources were overblown. It now appears that the interest of international governments and corporations has peaked, and could be reversing course as the global economy progresses toward renewables. In effect, the Arctic may regain its former status as a peripheral region.

But even if the Arctic were to lose attention from the international community, it’s operated within that framework for a long time and made progress regardless. Take the Arctic Council, an international forum founded in 1996 that put indigenous representatives at the same table as national governments—a bright spot of cooperation in a world that typically disregards indigenous concerns. For over 20 years, its work has produced quality scientific work, brought governments together to talk shop, and yielded important treaties, like the 2011 agreement on Arctic search and rescue.

Still, while the stakes are rising in the Arctic, the Council’s funding remains almost entirely ad-hoc from voluntary national budgets. And while the Council provides an innovative example of how to handle international affairs, more and more experts are calling for structural reforms to better meet the challenges of intensifying climate change. The likelihood of an operational overhaul was low even at the peak of global attention a few years ago. Now, as natural resources in the High North look less attractive, and governments divert their attention elsewhere, political will to restructure the Council seems remote.

The success of the Arctic Council as an institution is predicated on policymakers in the south paying attention to the work the Council is producing and shuffling some coins northward. The danger here is not that governments will tighten their purse strings and turn out the lights in the Arctic, but rather that they will just let business continue as usual. Some Arctic residents may be happy that Shell isn’t about to start drilling, while others were likely counting on that boom to bring some prosperity their way. Turning to technologies that might help stave off climate change will also reduce governmental attention to the Arctic, a region where the inevitable effects of global warming will need to be addressed.

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Michael Brown is an M.A. student at the University of Washington doing a concurrent degree in international studies and public administration. He previously spent a year in Finland on a Fulbright grant studying Finland's Arctic strategy and cross-border cooperation in the European Arctic.

Find the lead article to the series here.

[Photo courtesy of NASA/Kathryn Hansen] Share/Save

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