World Policy Institute Presents Arctic Deeply Roundtable: Arctic Energy and Sustainable Growth

The World Policy Institute, Friedrich Ebert Foundation, Quebec Government Office, and the Embassy of Canada organized a roundtable discussion entitled “Arctic Energy and Sustainable Growth” at the Canadian Embassy on April 13.

Kate Hardin, Senior Director at IHS Energy, moderated this event.  Shiela Riordan from the Embassy of Canada, Julia Gourley of the U.S. State Department, and Arne Riedel of the Ecologic Institute gave short presentations.  Roundtable participants offered questions and comments.

Shiela Riordan, the Political Minister at the Embassy of Canada, opened the roundtable with remarks about ecotourism and fishing industry opportunities in the Arctic.  She said Canada is the third largest diamond producer in the world, and one of the world’s largest producers of gold, iron, and other minerals.

She described the four fundamental pillars of the Federal Government of Canada’s Northern Strategy: to exercise of Canada’s Arctic sovereignty; to protect Canada’s environmental heritage; to promote social and economic development; and to devolve Northern governance through indigenous land claims and self-government.

Riordan reported the Government of Canada is making active investments in patrol ships, icebreakers, coastal and ocean mapping, and broadband, and is expanding its investments in renewable energy.  The newly created Canadian High Arctic Research Station (CHARS) is an example of the government’s commitment to scientific research.  Established by law last year and expected to open in Cambridge Bay, Nunavut, this summer, CHARS is responsible for advancing Canada’s Arctic research, strengthening Canadian leadership on polar science and technology, and strengthening international scientific research partnerships.

Riordan referred to the Arctic Council as the “preeminent body of collaboration in the North.”  Canada’s second chairmanship prioritized responsible resource development, safe Arctic shipping, and sustainable circumpolar communities.

Riordan highlighted the Arctic Economic Council (AEC) as the legacy of Canada’s chairmanship.  The creation of AEC resulted from Arctic community input on opportunities to supplement the Arctic Council’s agenda.

Julia Gourley, the U.S. Senior Arctic Official (SAO), provided a brief overview of the Arctic Council’s structure, with five of the eight member states—Canada, Denmark (Greenland), Norway, Russia, and the U.S.—having Arctic Ocean coastline.

Under the United Nations Convention on the Law of the Sea (UNCLOS), nations can claim resources beneath the waters up to 200 nautical miles offshore in the exclusive economic zones.  Gourley said the U.S. needs to map its claims as nearly all untapped resources are under the jurisdiction of those economic zones.  According to the USGS Circum-Arctic Resource Appraisal in 2008 (located here), the Arctic Ocean’s untapped resources are found mostly within those zones, with little potential outside them.

Gourley highlighted the peaceful collaboration among the five Arctic Ocean coastal nations on sharing resources such as icebreakers and seismic surveys.  In 2008, the five coastal states adopted the Ilulissat Declaration in Greenland to agree to resolve maritime and OCS boundary issues peacefully.  While not a binding treaty, it provided the dialogue and framework necessary to resolve disputes.  One successful example is the 2010 Russia-Norway Barents Sea maritime treaty that was adopted after 40 years of contention.  Gourley was optimistic that the declaration will provide the framework for the U.S. and Canada to resolve their dispute over the Beaufort Sea boundary.

Highlighting the upcoming 20^th anniversary of the Arctic Council, Gourley said the forum allows the eight Arctic nations to share information in the effort to create binding initiatives, such as the 2011 Search and Rescue Agreement  and the 2013 Marine Oil Pollution Preparedness and Response agreement.

“When you hear ‘conflict is inevitable in the Arctic,’ don’t believe it,” she said.  “We can provide many examples of peaceful negotiations, agreements, and instigation.”

Charles Ebinger of the Brookings Institute asked if the Svalbard (aka: Spitsbergen) Treaty of 1920 would impact territorial access to oil and gas resources in the Arctic.  Gourley said that treaty also raises some questions about fisheries and taxation and the State Department is looking at it.

Cathleen Kelly with the Center for American Progress asked the outcome of the Black Carbon and Methane Task Force under the Canadian Chair.  Gourley said Canada is working with Sweden to create ad hoc bodies to report on emissions reductions and black carbon inventory.  The Arctic states will keep pressure on each other through this framework and show non-Arctic states that reducing emissions “can be done.”  The reporting of black carbon emissions will happen under the U.S. chairmanship.

Kelly suggested the U.S. take the initiative in updating rules and regulations for black carbon emissions, like BOEM did for OCS leasing.

Lindsey Griffith of Garnet Strategies asked how the framework will incorporate Arctic Observer countries.  Gourley said the U.S. wants the countries to talk to each other within the forum of the Arctic Council.  Riordan said the Arctic Council’s role is to raise awareness and

discussion, and share research, and not necessarily to make countries accountable to each other in this regard.

Arne Riedel, a fellow at the Ecologic Institute from Germany, presented the German perspective on how to enhance Arctic governance:

• The Arctic Council should work with long foresight as most problems will present themselves 20-40 years from now.
• Germany has long history of Arctic and Antarctic research. The Arctic Council members and working groups should have consensus about including non-Arctic countries with expertise.
• The opening of the Northern Sea Route and Northwest Passage could be opportunity to hold dialogues with shipping and insurance companies about traffic regulations.
• The Arctic Council is not a legally binding forum. While there is no plan to change this, a regional corporation could establish binding agreements on issues such as shipping traffic, carbon emissions, fisheries, oil and resource claims, etc.
• With the UN Climate Change Conference this June as an example, there are ways to get the Arctic nations to agree on carbon and methane emissions, and climate change governance.
• Indigenous peoples should exert their voices and be provided with more resources to participate in meetings.

Pierre LeBlanc of Raytheon Canada raised the concern that if the Arctic Council increases the number of observers, the voices of the Permanent Participants will be diminished, and those voices need to be elevated as they are the most threatened by the changes in the Arctic.

Michael Perkinson of Guggenheim Partners said his company is a leader on Arctic infrastructure.  Working with Barclays, Greenpeace, and investment companies in Norway and Russia over the last eight months, Guggenheim is developing an Arctic Investment Protocol for High North investments (more details forthcoming).  Perkinson said legally binding codes need to be clear cut for investors in the region, and should include indigenous peoples in discussions surrounding deep-water ports, telecommunications, and other infrastructure needs.

David Slayton of the Hoover Institution agreed there is a need for transparency in foreign investment.  For example, more information needs to be provided about what the Russian Federation is doing to develop its Arctic region, where over 1 million people live.  Riedel responded the European Union has a longstanding program to decommission “dirty industry” in Russia, though he didn’t know if this had been affected by recent sanctions.  He agreed current tensions with Russia should not be allowed to result in damage to the Arctic environment.

Hebinger asked Perkinson of Guggenheim and Kip Knudson in Alaska Governor Walker’s Office to offer their perspective on private sector investment in Alaska.  Knudson said 60 percent of the state is owned by the federal government, mostly in the form of national parks and other protected lands, and most prospective resources are on those lands.  He said the oil industry can afford the cost of oil spill solutions whereas renewable energy is still cost-prohibitive.

Perkinson said capital infrastructure in the Arctic must appeal to investors, including property and port owners. “We need to solve the federal ownership problem of Alaska, but there are plenty of capital opportunities in Alaska if risks are mitigated.”

Theodore Roosevelt IV of Barclays Capital said an opportunity exists to deliver Alaska’s natural gas to Asian markets, but “the State of Alaska and oil companies don’t like each other,” and need to find agreement on natural gas revenue sharing.  Roosevelt said South Korea, Japan and China are potential customers for the state.  Knudson responded, “There are more problems between oil companies than between the State of Alaska and oil companies.”

Roosevelt later said the Arctic’s many unique challenges require power purchase agreements to be negotiated in order to make renewable energy projects financeable.  In the U.S., utilities won’t build solar or wind farms because the cost is higher than oil and gas.  Renewable energy costs must be reduced, and proposed carbon taxes are politically volatile.  The U.S. needs to acknowledge energy is directly related to global economic growth.  “China is the largest carbon dioxide producer in the world, but that brought 300 million people out of poverty,” Roosevelt said.  “It is a delicate balance to lower the cost of renewable energy and bolster economic growth.”

Brock Friesen, President/CEO of Inuit-owned First Air in Canada, said there is no transparency in the Canadian Arctic business except airlines, which are privately owned.  Three infrastructure projects are awaiting development,” he said.  Hydroelectric plants would have zero emissions, but are cost-prohibitive to build while fossil fuel is still so accessible.

Cameron Zubko, COO of Ice Wireless in Canada, described how Arctic telecommunications and satellite capacity could be improved.  While a satellite station is located in Nunavut, the amount of transferable data is so large that small towns and villages are unable to keep up the infrastructure.

A current initiative is under way to build 1,100 kilometers of fiber optics in the Northwest Territories (see story here).  The federal program, Connecting Canadians, is investing $305 million to improve broadband access for 280,000 Canadians in rural and remote regions, and includes a $50 million set-aside for the Eastern Arctic regions in Nunavut and Nunavik.

Ice Wireless is also bringing 4G LTE in the country’s Eastern Arctic areas.  Only eight of 25 villages in Nunavut currently have wireless capability.  Broadband speed regulations are low at three megabits per second (Mpbs) while the standard in metropolitan areas such as Vancouver or DC are 25 Mpbs, Zubko said.  As an example, he said downloading the fifth season of Mad Men (seven 50-minute episodes) would cost $400 in overage fees in Nunavut with its 10-20 gigabit capacity per month.  “There is no problem with satellite capacity in the Eastern Arctic—it’s a problem of cost, he said.”  Zubko added that Canada is moving toward fiber links and away from satellites.

Michael Dyment, President/CEO of LTA Aerostructures in Canada, talked about how his company is developing an airship that will service remote regions by providing humanitarian supplies and access to jobs at resource extraction sites.  The airship would use jet fuel and be lifted by helium.  It could be buffeted by winds, he explained, and would perform in harsh conditions.

Erica Dingman of the World Policy Institute wrapped up the event, saying the participants had “literally just talked about the tip of the iceberg,” especially regarding the boom and bust energy cycles and how they impact the U.S. Arctic.  The event was an informative discussion between governments and private sector leaders with a “transatlantic, international approach reminds us the Arctic impacts everyone, even outside.”

Names, affiliations and contact information for this event’s participants can be provided upon request.