The Arctic This Week Take Five: Week of November 19, 2018

• The Plan to Repeal U.S. Arctic Drilling

This week U.S. Democrat Senator Ed Markey of Massachusetts and others stated their desire to introduce a bill in December that will repeal a provision in the Trump Tax bill that was passed in December of last year. The provision they seek to repeal opened up the Arctic National Wildlife Refuge in Alaska (ANWR) to oil drilling. Senator Ed Markey is currently adding the final touches to the Senate’s bill. A similar bill was introduced into the House of Representatives in May (Washington Examiner).

Take 1: A shift in the U.S. House of Representatives has emboldened many Democrat Representatives and Senators to seek ways to undermine the President’s agenda. While there is support among some Republicans for this bill, it still remains uncertain if it will garner enough votes to get approved by the Senate. Yet, there is increasing grassroots efforts from Native American organizations and other local groups that are trying to apply pressure to businesses, banks, and the government to alter their views on drilling in the ANWR. Perhaps, now or in the near future these efforts will pay off.

• China Shifting Role in Arctic Governance

This week a paper published by Beijing-based Social Sciences Academic Press and Qingdao-based Ocean University of China stated that China’s role in Arctic governance has shifted from a “rule follower” to a “rule maker.” The paper goes on to note that now China is taking the initiative in shaping the global governance agenda in the Arctic. It states that the country remains aware of the concerns of other countries, and seeks to maintain the regional security while promoting world peace. The authors state that this can be accomplished through regional collaboration (Global Times).

Take 2: While the paper published is not an official government policy or statement it does potentially hint to what the future of China’s agenda looks like. China sees any changes to the natural conditions in the Arctic as having a direct effect on the country’s climate system and its agriculture, forests, fisheries and oceans. With such high stakes it’s no surprise that it sees its own role in Arctic governance growing. The future sees a China that is more assertive in Arctic issues. How this will play out with regional powers remains uncertain.

• Arctic Days Forum Commences in Russia

This week Moscow hosted the Arctic Days Forum. The forum scheduled to run from November 21-25 is comprised of more than 10 business and cultural events dedicated to Arctic issues. It seeks to draw public attention to the natural, historical and cultural sites of the Arctic, and to generate greater awareness of the potential that exists in Russia’s Extreme North to become a tourist destination. President Putin in his introductory remarks commented on the importance of the region to Russia. He also stressed the importance of preserving the environment and natural diversity even as development is occurring (Arctic Days, The Arctic).

Take 3: The forum in Moscow allows the country to reemphasize the importance of Arctic development to the general population. Russia seeks not only to expand resource extraction operations there but also to develop the region’s tourist potential. While heartening to read President Putin’s comments on the need to preserving the environment, the reality of these words will be seen in how Russia acts in the next few years.

• Murmansk Expands Coal Operations

This week an agreement was signed in the Russian city of Murmansk between the Russian State Transport Leasing Company and the Federal Agency for Maritime and River Transport. The concession agreement includes 24 billion rubles (€320 million) for a new port terminal. When completed in 2019, the new terminal will have the capacity to ship out 9 million tons of coal annually. When fully developed by 2023, the port will be able to double that amount. The new terminal will be located on the western side of Kola Bay and will be connected by a 46 km long railway (The Barents Observer).

Take 4: Currently, the benefits of the plan outweigh any negatives. Investment will create an estimated 3,000 jobs and will make the small town of Mezhdurechie (pop. 1,000) a new major logistics and infrastructure hub in the Russian North. Once completed, the terminals will also be shipping out mineral fertilizers. Still, if coal decreases in value or usage as expected worldwide, there remains the risk that these investments might not have the long-term benefits that planners are hoping for. With the signing of this agreement Murmansk has staked its future in coal.

• Melting Ice Slows Down Alaska Drilling Efforts

Hilcorp Energy, the company that last month approved to begin drilling off the Alaskan coast, has stated this week that it has to delay its plans as a result of thinning sea ice. The company was approved by the U.S. federal government to begin extracting oil from the Beaufort Sea. Yet, before any drilling can occur, the company must first build a temporary island five miles offshore. The island, planned to be about nine acres, requires shoreline ice, which forms each winter. The company needs the ice in order to build the foundation of the island and connect it to the mainland. A lack of ice means that Hilcorp Energy won’t begin construction till 2020, a year behind its original plan (NPR, The Guardian).

Take 5: The warming Arctic climate creates new opportunities, but these can come at unanticipated costs. In this case, Hilcorp Energy has to delay its plans by a year, increasing the price of initial investment and potentially increasing the risk of further delays. Future companies that seek to invest more in the region must plan for not just how melting ice benefits operations but also how it and the other negative effects of climate change, such as melting permafrost, affect the feasibility of their plans. In the long run increased costs won’t deter future investments, as the area is a natural resource treasure trove.