Part 2: Artificial Arctic Feedback Loops: How Might Market Forces and Geopolitics Influence an Evolving North?

This blog is a continuation of Part 1

The United States Geological survey estimates that the arctic region could hold enormous quantities of oil and gas; 13% and 30% respectively of the planet’s undiscovered reserves. Over the last several decades, various attempts have been made to extract fossil fuel resources from the arctic, but these efforts have been largely exploratory and unprofitable. One of the limiting factors in artic resources extraction is the limited transportation infrastructure in the region, but if shipping presence in the region increases due to reduced sea ice, maritime transport of oil and gas may make arctic resource extraction a more viable option for international energy companies. This is, of course, largely dependent on the cost of crude oil which has, over the last three years, maintained the lowest prices in a decade (not including a brief shock during the 2007-2008 recession). These low commodity prices have further discouraged arctic exploration, especially in the United States, where shale gas exploration offers a far more profitable alternative. In Russia, however, existing oil and gas production is likely to decline steeply over the next decade, driving the northern superpower to invest heavily in arctic and near arctic exploration. Should demand for oil and gas continue to grow, as is predicted by IEA’s world energy outlook; and should prices of crude oil recover, oil and gas development of the arctic would further postpone the transition to a zero carbon global economy, increasing the planets long term carbon emissions, causing further warming of the arctic, and yielding easier and cheaper resource extraction in the region.

 It is Russia’s interest in the region that signals the last of the artificial arctic feedback loops discussed here. Oil and gas resources are not the only reason for northern counties to begin investing heavily in the arctic region. Perhaps the most politically motivating argument for diverting national resources to the north is that it provides enormous strategic benefits. There are eight countries in the world that control territory within the arctic circle, but there remains an area of close to 1,000,000 square miles of unclaimed ocean territory. Until recently, control of the arctic circle promised little value to any nation that laid claim to it, and as a result, territorial disputes in the region have been few and far between. When they have occurred, they have been resolved through peaceful bilateral negotiations. However, as regional warming opens the region to increasingly regular navigation, and easier to access resources, a national presence will become essential for both economic gain and national defense. Already, Russia is pursuing military re-entrenchment in its arctic territories, and countries as far south as China are beginning to show interest in building a presence in the region. The many benefits arctic warming offers to countries who control territory in the region, including increasingly useful land, could lead to an increasing global climate dichotomy in which some countries witness an overall improvement in the value of their territory and are thus increasingly unmotivated to tackle global climate change1 , while other equatorial and temperate countries suffer from the combined impacts of flooding, desertification, disease2 , reduced agricultural productivity, and extreme heat.

Three artificial arctic feedback loops; improved regional navigation leading to increased arctic disturbance, increased resource extraction leading to prolonged emission release, and competitive development of increasingly valuable territory may each have profound effects on both the global climate and political balance of power, should they move forward. Russia and China’s interest in the region suggest that despite currently prohibitive costs of resource development, interest in the arctic region is accelerating. If crude oil prices increase over the next several years, the world could see a rush to lay claim to this forgotten region of the world. Increased arctic activity would both delay a zero carbon economy and increase climate pressure on the region, likely leading to further investment and development.

While crude oil prices are low, and shipping chokepoints are relatively stable, the international community has a relatively brief opportunity to develop and implement policies to limit the worst effects of these artificial feedback loops. Perhaps arctic nations need to find new ways to manage market forces in order to limit development and navigation in the region. Or maybe it will be determined that the economic and security benefits of arctic investment are great enough to risk further regional warming. If northern nations stand to benefit from a warming arctic, what international safeguards should be in place to protect nations that will, for the most part, experience negative impacts of climate change? The Paris Agreement began to address some of these concerns, and as a result gained the support of the Arctic Council. However, further planning is needed. Once investment in the arctic begins, it may be difficult to manage and predict the impacts it will have on the planet.

Oscar Serpell

Associate Director of Academic Programming
Oscar Serpell oversees student engagement activities, new student programming, and alumni connections. He also participates in several key research projects at the center and also writes blog posts and policy digests on timely energy policy topics.
  1. In the 1950’s and 60’s soviet scientists developed plans to dam the Bering strait in an attempt to artificially warm the north because it was believed that the economic benefits to the Soviet union would be enormous. []
  2. Recent research in the arctic, as well as recent outbreaks in Russia and other northern regions suggest that receding ice cover could expose communities to bacteria and viruses which humans have not encountered for many years. These exposures could remain isolated to the north, but could equally spread to southern countries. []