The Emerging Arctic

The northern reaches of the planet are melting at a pace few nations can afford to ignore, yielding potentially lucrative returns in energy, minerals, and shipping. But debate is mounting over whether the Arctic can be developed sustainably and peaceably.

The remote latitudes of the Arctic have long been a province of natural beauty, high adventure, and untold riches. For centuries, mariners risked their lives plying the frigid waters and frozen expanses in search of new territory, trade routes, and treasure for king and country. Where a few, like Norwegian polar explorer Roald Amundsen, triumphed over uncommon challenges, many others, like British rear admiral Sir John Franklin, suffered tragedy and defeat. With rare exception, much of the promise of the Arctic remained out of reach, encrusted in the polar ice.

In the twenty-first century, many experts believe that climate change, technological advances, and rising global demand for resources may at last unlock the considerable economic potential of the Circumpolar North. The melting of Arctic sea ice to record lows in recent years has prompted many nations, principally those with Arctic Ocean coastlines—the United States, Canada, Russia, Norway, and Denmark (Greenland)—to reassess their commitments and interests in the icy reaches atop the globe.

Many forecast Arctic summers will be free of ice in a matter of decades, potentially opening the region up to hundreds of billions of dollars in investment, including energy production, shipping, and fishing. The thaw will also pose new security demands as greater human activity induces states to increase their military and constabulary presence. While most experts dismiss the prospects for armed aggression in the Arctic, some defense analysts and academics assert that territorial disputes and a competition for resources have primed the Arctic for a new Cold War.

Meanwhile, environmentalists are concerned that a new era of Arctic exploration and development could spoil one of the planet’s last great frontiers, a pristine habitat home to iconic wildlife and native communities that have subsisted there for thousands of years. Climatologists warn that the extraction of Arctic fossil fuels will contribute to global warming at a time when they believe nations should be paring back greenhouse-gas emissions and pursuing alternative energy sources.

But for many, the debate is less over whether the region should be developed, but rather if it can be done sustainably and peaceably. The Arctic is emerging on the world stage, and it is not yet settled whether businesses, governments, and other operators can fully manage the unique risks it poses.

I want to stress the importance of the Northern Sea Route as an international transport artery that will rival traditional trade lanes.

Vladimir Putin, President of Russia

A Thawing Arctic

The Arctic, the roughly 8 percent of the earth above latitude 66º 33' north, is warming faster than many climate scientists expected—at nearly twice the rate of the rest of the planet. The extent of Arctic sea ice, which melts to its nadir each September, has steadily declined over the past three decades. The years 2007–2013 saw the six lowest levels since satellite imaging began in 1979. Overall, the ice cap has retreated about 40 percent over this period. The trend is likely unmatched in recent human history, reported a UN panel on climate change in 2013.

Vanishing Arctic Sea Ice

National Snow and Ice Data Center

Although sea ice cover rebounded slightly in 2013, its extent remained well below the thirty-year average. Scientists expect some annual variability as weather patterns change, but predict the contraction will continue in the long term.

Beyond surface area, recent data indicates that Arctic sea ice is also becoming younger and thinner, and hence more inclined to melt every summer. Less white ice and more dark sea means that more solar radiation is absorbed, accelerating the thaw. If global greenhouse-gas emissions continue unabated, said the UN panel, “a nearly ice-free Arctic Ocean in September before mid-century is likely.” Although projections vary, most scientists believe sea ice will disappear for part of the summer by the end of this century at the latest.

Timeline: The Emerging Arctic

The geostrategic significance of the Arctic region has waxed and waned during the last five decades. This chronology highlights commercial, political, and environmental milestones that have shaped the region. (Photo: Andy Rouse/Getty Images)

First Big Energy Find in Siberia

The Soviet Union makes the first major energy discovery in the Arctic with the Tazovskoye oil-and-gas field on the shore of an inlet of the Kara Sea in western Siberia. In 2014, the broader Yamal-Nenets region remains mostly undeveloped, but with tens of trillions of cubic meters of natural gas, it holds the largest reserves on earth. Analysts say it could supply Europe for decades. (Photo: Alexander Zemlianichenko Jr./Getty Images)

An oil-well drilling rig in Prudhoe Bay, Alaska. (Paul Souders/Getty Images)

Alaska’s North Slope Bonanza

Arco and Humble Oil (now Exxon) discover the Prudhoe Bay oil field on the North Slope of Alaska, about 250 miles north of the Arctic Circle. At an estimated twenty-five billion barrels (of which thirteen billion are recoverable), it is the largest ever found in North America. Production does not begin for another nine years, and peaks in 1987.

 

Supertanker Navigates Epic North American Route

The SS Manhattan, the largest, most powerful and heavily strengthened U.S. merchant ship, arrives in New York after becoming the first commercial vessel to navigate most of the Northwest Passage. The historic 4,400-mile voyage, sponsored by Humble, saw the ship sail from the Atlantic Ocean west through the ice-covered waters of the Canadian Archipelago, and then transport a symbolic barrel of Alaskan oil back east to New York. However, the Canadian Arctic route was found to be uncompetitive with pipelines.

Men mockingly push the bow of the SS Manhattan, on its historic voyage. (Dan Guravich/Corbis)

Protection for an Arctic Icon

States where polar bears live—Canada, Denmark (Greenland), Norway, the Soviet Union, and the United States—sign the Agreement on the Conservation of Polar Bears in Oslo, an important first step in multilateral environmental protection in the Arctic. The agreement, which largely bans the killing or capture of bears, is supplemented in 2000 with a U.S.-Russian accord.  (P. de Graaf/Getty Images)

Major U.S. Energy Artery Completed

The Trans-Alaska Pipeline, zigzagging eight hundred miles from Prudhoe Bay to Valdez on the Gulf of Alaska, the northernmost ice-free port in the United States, is completed after four years. With an $8 billion price tag, it is the largest privately funded construction project in history. The pipeline has transported roughly seventeen billion barrels of oil, peaking in 1988 at more than two million barrels per day.

The Trans-Alaska Pipeline snakes across northern Alaska. (Rolf Hicker/Corbis)

Japanese prime minister Shigeru Yoshida signs the Treaty of San Francisco with the United States on September 8, 1951. Photo: Bettmann/Corbis

The final session of the Third UN Conference on the Law of the Sea opens in 1982 at the United Nations’ headquarters in New York. (Courtesy UN)

Governance for the World’s Oceans

Hundreds of years of maritime custom are codified with the signing in Montego Bay, Jamaica, of the UN Convention on the Law of the Sea (UNCLOS). The accord establishes an overarching governance system for nearly three-quarters of the earth’s surface, including the Arctic Ocean and its resources. Article 234 of UNCLOS provides the coastal state with authority to have special rules and regulations regarding environmental protection in ice-covered waters. The United States remains one of only a few nations to not accede, but subscribes to most of the convention as customary international law.

Demonstrators in Tokyo protest the U.S.-Japan security treaty in January 1960. Photo: Keystone/Getty Images

General Secretary Mikhail Gorbachev visits the U.S. State Department in December 1987. (Bettmann/Corbis)

Gorbachev Calls for Arctic Détente

Soviet head of state Mikhail Gorbachev delivers a major policy address in the naval stronghold of Murmansk. Notably, the six-point speech calls for a “zone of peace” in northern Europe and the Arctic and alludes to the potential for foreign shipping on the Northern Sea Route. Soviet traffic on the ice-choked route peaked in 1987 but fell precipitously in the decades following the 1991 dissolution of the USSR.

Record Spill Sullies Alaskan Coast

The Exxon Valdez runs aground in the Gulf of Alaska after maneuvering to avoid icebergs. Eleven million gallons of crude oil wash over 3,000 square miles of ocean and 1,300 miles of coastline. The largest spill in U.S. history at the time, it proves devastating for local wildlife and economies and spurs advances in tanker design and navigation. Although in sub-Arctic waters, this spill provides greater attention to the north and Alaska.

An oil-covered bird is examined on an island in Prince William Sound. (Jack Smith/AP)

USSR Decline Spurs Arctic Protection

The United States, Canada, Russia, Denmark, Sweden, Iceland, Norway, and Finland sign the Arctic Environmental Protection Strategy in Rovaniemi, Finland. A precursor to the Arctic Council, the nonbinding agreement aims to safeguard Arctic wildlife and indigenous peoples from man-made hazards, including radioactive material, heavy metals, and organic pollutants. Reports of toxic dumping coming out of the Soviet Union helped catalyze the agreement. It was the first time that Arctic indigenous peoples's organizations participated in such a process. 

A pod of Beluga whales in Lancaster Sound, Canada. (Photo: Doug Allan/Getty Images)

Arctic Council Established

The eight Arctic states sign the Ottawa Declaration, creating the Arctic Council, the premier international forum for cooperation on common regional issues related to environmental protection and sustainable development. Notably, the Council does not address issues related to fishing, whaling, and military security matters. With a secretariat in Tromsø, Norway, the organization includes six indigenous peoples groups, named the ‘Permanent Participants’ and a number of observers including twelve non-Arctic states.

 

Japanese Prime Minister Kakuei Tanaka and Chinese Premier Zhou Enlai toast to reconciliation on September 28, 1972. Photo: Bettmann/Corbis/AP Images

The Arctic Council flag waves outside a hotel in Sweden. (Arctic Council)

An Arctic fox rests at sunset. (Jenny E. Ross/Corbis)

Arctic Climate Study Gains Global Attention

At its 4th Ministerial meeting in Reykavik, Iceland, the Arctic Council releases the Arctic Climate Impact Assessment. The study garners global attention as it shows that the Arctic is warming twice as fast as lower latitudes and having significant influences on the global climate.

“The Arctic is Russian”

Two submarines descend more than two-and-a-half miles to plant Russia’s flag on the North Pole’s seabed. Led by famed Russian polar explorer Artur Chilingarov, and funded by private interests, the feat is largely dismissed abroad as a publicity stunt. Canada and Denmark also claim the disputed continental shelf, which potentially holds billions of dollars worth of fossil fuels.

A lighthouse on an islet in the Spratlys. Photo: Reuters/Corbis

The Russian flag is planted fourteen thousand feet beneath the surface of the North Pole in August 2007. (Russia Out/Courtesy Reuters)

Record Thaw Stirs Climate Debate

Arctic sea ice retreats to its lowest level since satellite imaging began in 1979. The unprecedented melting renews debate over climate change and sparks new interest in the region’s economic prospects. Several routes within the Northwest Passage, a potential shipping shortcut atop North America, are free of sea ice for a short period of time in the summer. (Photo: Theo Allofs/Corbis)

Arctic Ocean Law and Order

Convening in Greenland, the five Arctic Ocean coastal nations—the United States, Canada, Russia, Norway, and Denmark (Greenland)—reaffirm their commitment to the law of the sea in the High North with the Ilulissat Declaration. “And thus we have hopefully, once and for all, killed all the myths of a ‘race to the North Pole.’ The rules are in place. And the five states have now declared that they will abide by them,” said Per Stig Moller, Denmark’s foreign minister, in a statement.

Officials from five Arctic Ocean states meet near Ilulisatt, Greenland. (Jan-Morten Bjoernbakk/Courtesy Reuters)

A Wellspring of Arctic Energy

The U.S. Geological Survey issues a sweeping appraisal of Arctic hydrocarbons, the first of its kind, detailing the region’s vast untapped energy resources. Scientists estimate that the Arctic holds nearly a quarter of the earth’s undiscovered, technically recoverable oil and natural gas, the bulk of which is believed to be offshore.

The International Tribunal for the Law of the Sea in Hamburg. Photo: Christian Charisius/Reuters

A snapshot of the 2008 Circum-Arctic Resource Appraisal. (Courtesy USGS)

Arctic Maritime Routes Unlocking

For a few days, parts of the Northwest Passage and the Northern Sea Route are both navigable for the first time since satellite imaging began. (Photo: Thorsten Milse/Corbis)

Russian president Dmitry Medvedev speaks at a joint seminar on border issues in Oslo, Norway. (Dmitry Astakhov/RIA Novosti/AP Images)

Russia-Norway Border Deal

Russia and Norway settle a forty-year maritime border row, equally dividing some 67,600 square miles of disputed water in the Barents Sea. The resolution includes a deal to develop energy resources together in the area and is lauded by many as a model for future Arctic diplomacy.

First Supertanker Transits the Northern Sea Route

Hauling more than one-hundred-thousand tons of natural-gas condensate, the Russian Vladimir Tikhonov becomes the first supertanker to run the Northern Sea Route. The state-owned vessel completes the transit in less than seven-and-a-half days, a record time, and with little help from icebreakers. Just weeks later, the Japanese-owned Sanko Odyssey becomes the largest bulk carrier to complete the journey.  

The Vladimir Tikhonov transits the Northern Sea Route. (Courtesy Maritime Executive)

Russian Offshore Disaster Exposes Risks

The Kolskaya drilling rig, owned by the Russian state firm Gazprom, overturns and sinks during a storm in the sub-Arctic Sea of Okhotsk, killing fifty-three people. It is the deadliest accident in the history of the Russian oil-and-gas sector, highlighting the extraordinary risks of operating in northern waters.

A survivor of the overturned Kolskaya drilling rig is evacuated from the ship Magadan to a helicopter in the Sea of Okhotsk. (Photo: AP Images)

The Arctic sea ice’s extent in September 2012 is compared to its average minimum extent over the past thirty years, in yellow. (Courtesy NASA)

Sea-Ice Retreat Shatters Record

Arctic Sea ice recedes to a new low, melting to 1.32 million square miles, roughly a quarter of the surface of the Arctic Ocean. The rapid thaw vastly surpasses the two previous records.

The Ob River sailing across the NSR escorted by two Russian atomic icebreakers. (Gazprom)

World's First LNG Supply Via the Northern Sea Route

The ice-capable Ob River, a liquefied natural gas carrier, arrives in the Port of Tobata, Japan, becoming the first LNG supply voyage to successfully use the Northern Sea Route and the Northeast Passage sailing from the Atlantic to the Pacific through Arctic waters. The ship left Hammerfest, Norway, on November 7.

 

Shell Suspends Arctic Drilling

Royal Dutch Shell suspends exploratory drilling in the Arctic after two crippling setbacks in late 2012, and after spending roughly $5 billion on Arctic offshore exploration. In December, the Kulluk drill rig broke free from its tow during a subtropical cyclone and ran aground in the Gulf of Alaska. The energy giant’s Noble Discoverer drill ship also suffered from operational problems, including propulsion issues and fire hazards.

The grounded Kulluk drilling rig is seen from a helicopter. (Courtesy U.S. Coast Guard)

Beijing Pens Deal for Russian Energy

Russia’s Rosneft and the China National Petroleum Corporation agree to partner in the energy exploration of three areas in the Pechora and Barents Seas. The deal, which had been in the works for a decade, is the first of its kind between the Kremlin and an Asian company. Experts believe China’s surging demand for energy will be a major driver of Russian development in the Arctic.

An attendant refuels a car at a China National Petroleum Corporation gas station in Hainan province. (Meng Zhongde/AP Images)

Asian States Join Arctic Council

The Arctic Council adds China, India, Italy, Japan, Singapore, and South Korea as observer states (the UK, Netherlands, Poland, Spain, Germany, and France are already observers). Political analysts believe the decision may fuel greater debate on the region’s economic development. In the days leading up to the council meeting, the Obama administration unveiled a new strategy for the Arctic, focusing on security, stewardship, and international cooperation. Other council members have updated their national visions for the region in recent years as well. (Photo: George Hammerstein/Corbis)

Greenpeace Takes On Russian Drilling

After two activists tried to scale a Gazprom drilling platform in protest of Russia’s energy ambitions in the region, Russian security forces seize Greenpeace’s Arctic Sunrise icebreaker in the Pechora Sea and arrest all thirty on board. Gazprom announced the start of oil production at the facility two months later, making it Russia’s first offshore field in the Arctic.

The Arctic Sunrise enters the Northern Sea Route off Russia’s coastline. (Greenpeace)

Sovereignty and Governance

The Arctic is of primary strategic significance to the five littoral Arctic Ocean states—the United States (Alaska), Canada, Russia, Norway, and Denmark (Greenland). Many observers consider Russia, which is investing tens of billions of dollars in its northern infrastructure, the most dominant player in the Arctic. But the region is also a focal point for the three other Arctic states—Iceland, Sweden, and Finland.

Most nations beyond the Arctic will also be touched by developments there because the region’s shipping, fishing, energy and mineral production, scientific research, tourism, and other activities affect their security and economic welfare. For instance, shorter trade routes through the Arctic could be a boon to export-driven nations like China, and vast natural-gas deposits in Siberia may forestall Russian economic diversification. More broadly, physical changes in the Arctic will have globally significant climatic and environmental implications (see CFR’s Crisis Guide: Climate Change).

The Arctic is administered according to the domestic laws and regulations of each Arctic state, but also subject to bilateral, regional, and international agreements. The Arctic Council is the principle international forum for regional collaboration. The overarching legal framework that governs activities on, over, and beneath the Arctic—as with all the world’s oceans—is the 1982 UN Convention on the Law of the Sea. UNCLOS has settled a number of important issues related to ocean usage and state sovereignty. Among them, it has:

By virtue of UNCLOS, each coastal Arctic state is granted control over all living and nonliving natural resources within its exclusive economic zone, such as fish stocks and hydrocarbons. The 1.1 million square miles of open water lying north of the five Arctic EEZs, sometimes referred to as the Arctic Ocean “donut hole,” is considered high seas and outside national jurisdictions.

The United States subscribes to most of UNCLOS, but it remains one of the only nations not to have acceded to the treaty. Some Republican lawmakers view the convention as a potential burden on U.S. sovereignty and have opposed it since the Clinton administration moved it to the Senate for ratification in 1994. Meanwhile, the majority of the military establishment, as well as successive administrations—George W. Bush’s and Barack Obama’s—have endorsed the regime, holding that it fortifies U.S. interests.

In 2008, the five littoral Arctic Ocean nations reaffirmed their commitment to the law of the sea in the Arctic with the Ilulissat Declaration, but a few sovereignty disputes persist. The United States, the European Union, and others maintain that the Northwest Passage is an international strait with free navigation rights, while Canada asserts that it is an inland waterway over which it maintains exclusive jurisdiction. Washington and Ottawa also disagree on their maritime boundary in the resource-rich Beaufort Sea.

The United States also contests the Kremlin’s claims that parts of the Northern Sea Route above Siberia are internal Russian waters. Meanwhile, Denmark and Canada both claim Hans Island, an uninhabited spot of land in the center of Nares Strait. Finally, several states have laid competing claims to the seabed—and any resources beneath it—of the Lomonosov Ridge, an undersea mountain range bisecting the Arctic Ocean.

Eye on the Arctic

United States

The Alaskan Arctic, including the outer continental shelf in the Beaufort and Chukchi Seas, holds the largest undiscovered oil deposits in the Arctic region, estimated at about thirty billion barrels. But a lack of infrastructure is a major challenge to development. The Trans-Alaska Pipeline’s throughput peaked in 1988, and its operators are eager to find new resources to sustain its profitability. Industry analysts say oil production off the coast of Alaska could begin in a decade, but note that the shale revolution and environmental concerns have reduced the appeal of remote Arctic energy.

Russia

Russia refers to its Arctic, which is believed to hold more than half of the region’s undiscovered energy, as a “strategic resource base” for the future. The Russian economy is extremely dependent on fossil fuel revenues, which provide for roughly half the federal budget. The Yamal-Nenets region in West Siberia is home to Russia’s largest reserve of hydrocarbons, but Moscow is also looking to explore for oil and gas in East Siberia and offshore on its continental shelf. Russian state-owned energy giants Gazprom and Rosneft will lead the way, partnering at times with major international firms, including ExxonMobil and the China National Petroleum Corporation.

Norway

Norway is one of the world’s top energy producers, supplying much of Europe’s oil and gas. But Norway’s petroleum production peaked in 2001 and its reserves in the North and Norwegian Seas are declining rapidly. Industry analysts say the country’s hydrocarbon future lies in the Barents Sea, which Oslo opened for exploration in 1981. Norway and Russia resolved a decades-old maritime border dispute in the Barents Sea in 2010 and have agreed to partner in the region on energy development. But experts say environmental sensitivities may impede offshore exploration.  

Denmark (Greenland)

Greenland is keen to develop the energy and mineral resources that could help the self-governed island gain full independence from Denmark, though some residents and advocacy groups are wary of the environmental risks. After Cairn Energy, an independent Scottish oil company, discovered the Pitu field in 2010, the government awarded its first licenses for offshore energy exploration. (As of early 2014, there were no commercial discoveries.) Nuuk is also moving to unlock the island’s considerable mineral wealth, including rare-earth metal deposits that experts say could provide roughly a quarter of the world’s supply.

Canada

Canada is a leading energy producer and the largest foreign supplier to the United States. Geologists believe some areas of the Canadian Arctic—the Mackenzie Delta, Beaufort Sea, Baffin Bay, and Arctic Islands—hold major reserves, but Canada has trailed other Arctic states in developing these resources. However, interest in offshore exploration has recently grown. Chevron and Norway’s Statoil joined forces to explore the Beaufort Sea in 2012, and Statoil and Canada’s Husky Energy made one of the largest oil discoveries in recent years in the sub-Arctic waters off the coast of Newfoundland in late 2013.


Norway is one of the world’s top energy producers, supplying much of Europe’s oil and gas. But Norway’s petroleum production peaked in 2001 and its reserves in the North and Norwegian Seas are declining rapidly. Industry analysts say the country’s hydrocarbon future lies in the Barents Sea, which Oslo opened for exploration in 1981. Norway and Russia resolved a decades-old maritime border dispute in the Barents Sea in 2010 and have agreed to partner in the region on energy development. But experts say environmental sensitivities may impede offshore exploration.

Sustaining current and projected rates of Arctic oil and gas could transform local economies and global energy dynamics.

Lloyd’s of London

Economic Prospects

Energy Image

Energy

The Arctic is particularly enticing given the extensive hydrocarbon deposits already discovered, as well as the vast expanses yet to be explored. The first major energy discoveries in the region, namely the Tazovskoye field in Siberia and Prudhoe Bay in Alaska, were made in the 1960s.

The most recent Circum-Arctic Resource Appraisal, conducted in 2008 by the U.S. Geological Survey (USGS), estimated that nearly one-quarter of the earth’s undiscovered recoverable petroleum resources lay in the region: 13 percent of its oil, 30 percent of its natural gas, and 20 percent of its liquefied natural gas. More than 80 percent of these resources are thought to be offshore. “The extensive Arctic continental shelves may constitute the geographically largest unexplored prospective area for petroleum remaining on earth,” said the USGS.

Energy analysts say that investment in the Arctic will hinge on profitability, which in turn depends on a number of factors, including global commodity prices, exploration and production technologies, geographic access and infrastructure, legal and political climates, and environmental concerns. “Half the Arctic’s basins are unexplored. But this is now changing, with oil firms increasingly heading north, nudged by high oil prices, better technology, a dearth of easier opportunities, and melting ice,” wrote the Economist in 2012.

A lack of infrastructure in the region, particularly in the North American Arctic, is perhaps the biggest obstacle to energy investment, analysts say. Alaska has only the Trans-Alaska Pipeline and a few southern shipping routes for energy transport. In general, the most attractive energy plays are those that are closest to market, and the shale-oil-and-gas revolution has reduced the appeal of remote Arctic fossil fuels over the last few years. For example, Russian state-owned Gazprom abandoned the Shtokman field in the Barents Sea, by far the largest potential offshore Arctic gas project, in August 2012, citing spiraling costs.

A 2012 report by UK-based insurer Lloyd’s of London says that oil and gas investment in the Arctic will account for a relatively small but strategically significant portion of the energy industry’s global investment over the next two decades. “Sustaining current and projected rates of Arctic oil and gas could transform local economies and global energy dynamics,” Lloyd's concluded.

Few countries have been as keen to invest in the Arctic as Russia, whose economy and federal budget rely heavily on hydrocarbons. Of the nearly sixty large oil and natural-gas fields discovered in the Arctic, there are forty-three in Russia, eleven in Canada, six in Alaska, and one in Norway, according to a 2009 U.S. Department of Energy report. Development of energy in the Russian Arctic has been dominated by state-backed firms, but industry analysts expect Western petroleum companies to provide needed technology and management expertise, as demonstrated by the partnership of ExxonMobil and Rosneft.

Meanwhile, Royal Dutch Shell, ConocoPhillips, and Statoil have drilling leases in the U.S. waters off the coast of Alaska, which are projected to hold the largest undiscovered oil deposits in the Arctic (roughly thirty billion barrels). Shell may resume exploratory drilling in the Chukchi Sea in the future, though since suffering major operational setbacks in 2012, it has not conducted operations in the U.S. Arctic.

Shipping Image

Shipping

As Arctic sea ice retreats, shipping lanes are opening that many trading nations hope could compete with or complement conventional routes during summer months. The Northeast Passage—a roughly three-thousand-mile shipping lane across the top of Eurasia connecting the Atlantic to the Pacific—first became ice-free for a short period in the summer of 2007, and gained international attention as a seasonal shipping route between the two oceans. Russia’s Northern Sea Route (NSR), which runs from the Kara Gate to the Bering Strait, was also open for the same period.

For instance, a voyage from Shanghai to Hamburg via the NSR shaves roughly 30 percent of the distance off a similar trip via the Suez Canal and avoids the heavily pirated Strait of Malacca and waters off the Horn of Africa. Operators can either arrive at their destinations earlier or use the extra time for super-slow sailing, reducing fuel costs and emissions. Most NSR journeys are destinational (carrying natural resources out of the Arctic to global markets) and point-to-point (cabotage) trips in the Russian Arctic, but trans-Arctic shipping is slowly growing. However, these distance savings on Arctic voyages are only possible if there is minimal or no sea ice.

Only five cargo vessels transited the route in 2009, but this number jumped to seventy-one in 2013. That is tiny traffic compared to the seventeen thousand ships that pass through the Suez Canal annually, but with countries like Russia investing tens of billions of dollars in their northern infrastructure, including the construction of new ports of call and nuclear-powered icebreakers, some planners hope the region will emerge as a “Suez of the north.”

But industry executives and analysts cite a number of challenges for shipping along the NSR. Even during the summer, unpredictable weather and ice floes make navigation difficult. Ships often require an icebreaker escort, which can cost some $400,000, and additional insurance that offsets some of the route’s potential savings. Moreover, Moscow’s control of the NSR and the attendant icebreaking fleet is troubling for some shipping executives, who fear the Kremlin could abruptly hike fees. Finally, while the NSR may provide a viable alternative for shipping bulk cargo such as oil, coal, and ore in the near future, it may be of limited value for container shipping, which operates on a tight delivery schedule. Many analysts say it will take at least another ten years of warming before shipping along the NSR is practical.

There is also modest anticipation for an uptick in shipping along the Northwest Passage, the legendary sea route atop North America that runs some nine hundred miles from Alaska through the Canadian Arctic Archipelago. The pathway can cut several days off a traditional voyage through the Panama Canal if there is minimal or no sea ice present. The Danish-operated Nordic Orion became the first bulk carrier to traverse the Northwest Passage in September 2013, reportedly saving about $80,000 in fuel. But experts believe the commercial potential of the seasonal shortcut is much less than that of the NSR.

Lastly, the 2,100-mile mid-ocean corridor stretching across the North Pole, known as the Transpolar Sea Route, could provide the most direct shipping lanes for some maritime traffic and supplement other Arctic routes. However, sea ice remains a considerable challenge for most of the season, and analysts believe its commercial viability is likely decades away.  

By the Numbers

4.2 million people reside in the Arctic region. 10% are indigenous.

Includes territory beyond but bordering the Arctic Circle
Source: Arctic Human Development Report

22% of global undiscovered petroleum resources lie in the arctic. 78% of it is natural gas, 22% of it is oil.

Source: U.S. Energy Information Administration

Oil and natural gas fields in Russia, the U.S., Canada, and Norway.

Fields of more than 500 million barrels recoverable
Source: U.S. Energy Information Administration

95% of Russian natural gas reserves and 60% of Russian oil reserves are in the Arctic.

Source: State Duma of the Russian Federation

The amount of oil leaking into Arctic waters from substandard Russian infrastructure is equivalent of more than 14 Exxon Valdez spills a year.

250,000 barrels of oil spilled in the 1989 Exxon Valdez disaster.
Source: Russian Economic Development Ministry via AP

The Northern Sea Route significantly reduces transit time compared to the Suez Canal.

If there is no or minimal sea ice along the Northern Sea Route
Source: COSCO Shipping Group

Cargo ship transits on the Northern Sea Route increased from 4 in 2010 to 71 in 2013.

Source: Northern Sea Route Information Office

Russia has the largest icebreaker fleet, including the only nuclear-powered vessels.

Polar icebreakers of at least 20,000 horsepower
Source: U.S. Coast Guard

One new U.S. Icebreaker costs $1 billion and takes 8-10 years to procure.

Estimated for one heavy U.S. Coast Guard polar icebreaker
Source: Congressional Research Service

The positive story is that it’s not the Wild West. 

Ólafur Ragnar Grímsson, President of Iceland

Diplomacy and Security

Less than a decade ago, many geopolitical analysts warned that the Arctic had all of the makings for great-power rivalry reminiscent of the Cold War. However, the movement has gone quite the other way. Despite a few remaining territorial disputes, the overwhelming majority of Arctic resources fall within accepted national boundaries and all Arctic governments have committed to settling disagreements peaceably. Notably, Russia and Norway resolved a decades-old maritime border dispute in 2010, equally dividing some 67,600 square miles of water in the Barents Sea, and partnering in the region on energy development. The historic deal is often cited as a model for future Arctic diplomacy.

The Arctic Council, the leading international forum for cooperation in the region, was established by the eight Arctic states in 1996 with participation from indigenous peoples like the Inuit and Saami, and all member states except the United States and Norway have appointed ambassador-level diplomats to represent their interests in the region. With a secretariat in Tromsø, Norway, the council is a forum that sponsors major assessments and studies, and develops policies and guidelines that focus on environmental protection and sustainable development. Chairmanship of the council rotates every two years.

But Arctic cooperation takes place in a variety of other forums. Nordic nations—Denmark, Sweden, Norway, Finland, and Iceland—also partner on sustainability and issues related to Arctic indigenous peoples via the Nordic Council. Nineteen countries are party to the International Arctic Science Committee, a nongovernmental organization dedicated to research. The nonprofit Arctic Circle, formed in 2013 by Icelandic president Ólafur Ragnar Grímsson, aims to provide a setting for political and business groups, as well as other organizations from around the world, to discuss Arctic issues.

Still, steady diplomacy has not precluded nations from maneuvering to protect their interests in the region. Each of the eight Arctic nations has updated their strategy for the region in the last several years, including the United States (see interactive diagram below). Russia, the only non-NATO littoral Arctic state, has made a military buildup in the Arctic a strategic priority, restoring Soviet-era airfields and ports and marshaling naval assets. In late 2013, President Vladimir Putin instructed his military leadership to pay particular attention to the Arctic, saying Russia needed “every lever for the protection of its security and national interests there.” He also ordered the creation of a new strategic military command in the Russian Arctic by the end of 2014.

Economic powers further afield are also angling for a larger role in the Arctic. India, Italy, Japan, Singapore, South Korea, and China became Arctic Council observer states in 2013. Analysts say Beijing is particularly attracted to the region given its mounting energy demands and reliance on maritime trade. Chinese officials now characterize their country as a “near-Arctic state,” and Beijing has recently increased its investment in polar research, spending some $60 million annually, and ordered a second, $300 million ice-breaking research ship. China strengthened its toehold in the Arctic by signing a free trade agreement with Iceland, its first with a European country, and building an embassy that is Reykjavik’s largest.

Arctic Council Member States

We must stop this trickle of Arctic oil before it becomes a flood.

Faiza Oulahsen, Greenpeace Activist

Policy Options

The fate of the Arctic will hinge in large measure on the decisions that statesmen and industrialists make in the coming years. Those converging on the region must balance the pursuit of wealth and power with the protection of a fragile ecosystem. While the present trend of multilateralism bodes well for the region, experts say that much policy work remains if there is to be a stable and sustainable future in the Arctic.

Governance and Diplomacy

The UN Convention on the Law of the Sea is considered the bedrock of Arctic governance, and most international-law experts believe Washington must finally accede to the agreement to codify its maritime rights and sovereignty. But even with UNCLOS and the Arctic Council, no institution has the authority to regulate and police the entire region. Further integration of national regulatory regimes in the Arctic, whether through bilateral or multilateral accords, could help bridge this gap. Some experts encourage states to coordinate more closely on military matters and recommend that the Arctic Council reconsider its ban on discussing such issues. In June 2013, defense leaders from its eight member states agreed to strengthen security cooperation in the Arctic, including marine surveillance and joint military exercises.

Responsible Energy Development

In 2013, the eight Arctic Council members signed a marine oil-pollution preparedness and response agreement aimed at improving interstate coordination, but drilling regulations are still left to individual states. A report by Pew recommends a number of new policies to account for the Arctic’s special logistical challenges, including imposing new limits on seasonal drilling, standardizing spill-response equipment, and installing redundant systems. Other experts call for an Arctic-wide oil-spill treaty that would force energy firms to bear the full cost of spills. Environmentalist groups like Greenpeace believe the risks associated with Arctic drilling are simply too high and propose an outright ban.

Shipping Guidelines

There are no Arctic-specific safety and environmental standards for shipping, but coastal states may regulate marine pollution from vessels sailing within their respective EEZs. In 2009, the Arctic Council encouraged member states to support efforts by the UN’s International Maritime Organization (IMO) to harmonize and adopt mandatory rules for Arctic ship design and construction, crew training, and marine safety equipment. A draft text of a “mandatory polar code” was agreed to in early 2014 and could enter into force by 2016. But some critics believe the IMO should go further, implementing greater restrictions on the use of heavy fuel oil and emissions of black carbon, which may contribute significantly to global warming.

Fishing Controls

Traditionally, overfishing in the Arctic has not been a major concern given its ice cover and lack of commercially attractive species. However, warming conditions and migrating populations are prompting calls for new regulations, particularly on the high seas. Arctic coastal states manage fisheries within their EEZs, but international waters are exposed to overexploitation by non-Arctic states. Conservationists cite the overfishing of pollock in the Bering Sea “donut hole” in the 1980s as a cautionary tale. In 2013, a majority of Arctic states pushed for an accord that would ban industrial fishing on the open water until further study was done on fish stocks, but an agreement has yet to be reached. Experts say several existing treaties provide useful precedents, including the 1995 UN Agreement on Straddling and Highly Migratory Fish Stocks.

Infrastructure

A general lack of infrastructure on both sea and land is perhaps the largest barrier to development in the Arctic, although some states, like Russia, are investing more money in the challenge than others. Maritime experts say that more public and private funding is needed for significant improvements to ship navigation and charting, radio and satellite communication, icebreaker capacity, and port facilities. For instance, many believe Alaska needs a deep-water port to accommodate rising traffic along the Bering Sea.

Parallel investments are also needed on land in new roads, railways, airfields, and pipelines. But funds will also be required to stabilize existing infrastructure in areas where permafrost is melting. Perennially frozen ground could shrink markedly in several countries by midcentury, saddling governments, businesses, and residents with substantial costs. According to some estimates, sinking soil could cost Canada’s North hundreds of millions of dollars in renovation expenses. Policy experts encourage communities facing these challenges to share construction technologies and other best practices.

The Arctic is a bellwether. The risk there should warn our whole world.

Ban Ki-moon, Secretary-general of the United Nations

Resources

experts

Scott Borgerson

CEO, CargoMetrics and Cofounder, Arctic Circle

Lawson Brigham

Distinguished Professor of Geography and Arctic Policy, University of Alaska Fairbanks

Michael Byers

Canada Research Chair in Global Politics and International Law, University of British Columbia

Heather Conley

Senior Fellow and Director of the Europe Program, Center for Strategic and International Studies

Marlene Laruelle

Research Professor of International Affairs, George Washington University

further-reading

General/Overview

Changes in the Arctic (February 2014)

This wide-ranging report from the nonpartisan Congressional Research Service reviews U.S. policy in the Arctic and the implications of climate change for regional security and commerce.

Demystifying the Arctic (January 2014)

A panel of experts convened by the World Economic Forum challenges common notions that the Arctic is an ungoverned wilderness or a geopolitical tinderbox.

Arctic Yearbook (2013)

A project of the of the Northern Research Forum and the University of the Arctic, this annual publication is a leading scholarly journal covering the geopolitics of the Circumpolar North.

The Future of the Arctic (April 2013)

In this CFR meeting, Icelandic president Ólafur Ragnar Grímsson and maritime expert Scott Borgerson discuss how some governments are moving more intently than others in the Arctic.

The Melting North (June 2012)

Growing commercial activity in the Arctic, including energy exploration and shipping, could upset the region’s delicate natural balance and hasten global climate change, explains this special series from the Economist.

The Race for the Arctic (2006– )

This long-running series from Der Spiegel, which includes articles, background features, and opinion pieces, explores the spectrum of Arctic issues from a European perspective.

Economic Prospects

Arctic Opening (2012)

This in-depth report from Chatham House and Lloyd’s of London provides policymakers and executives with practical guidance on managing the unique risks and economic opportunities emerging in the high latitudes.

Arctic Economics in the 21st Century (July 2013)

Center for Strategic and International Studies senior fellow Heather Conley evaluates the economic benefits of an opening Arctic and the potential costs of exploiting the region’s bounty. The report sketches a national strategy for the development of the U.S. Arctic.

The Future of Arctic Shipping (November 2013)

The steady retreat of Arctic sea ice in the coming decades will open seasonal shipping lanes, but Arctic routes will not become a “new Silk Road for China,” says this report from the Arctic Institute.

Geopolitics and the Northern Sea Route (January 2012)

The emergence of new seasonal shipping lanes in the Arctic could have dramatic effects on global power dynamics, explains foreign policy expert Margaret Blunden.

Opportunities and Challenges for Arctic Oil and Gas Development (January 2014)

Largely focused on offshore energy in North America, this paper from the Wilson Center and Eurasia Group examines the prospects for oil and gas development across the Arctic region, with lessons drawn from the experiences of Norway and Russia.

Arctic Oil and Gas (2013)

Ernst & Young briefly analyzes the oil and gas potential of each Arctic Ocean coastal state, and compares the attractiveness of various investment opportunities.

Sovereignty, Security, and Diplomacy

Chill Out (May 2012)

This Brookings Institution report assesses the Arctic’s growing foreign policy significance, concluding that strong prospects for multilateral diplomacy in the region make interstate conflict there unlikely.

Arctic Strategies and Policies (April 2012)

Lassi Heininen of the University of Lapland compares the Arctic strategies of the region’s eight proximate states and the European Union.

The Newly Emerging Arctic Security Environment (March 2010)

Despite their rhetoric of international cooperation, Arctic states are preparing for potential conflict in the Arctic, explains Canadian military expert Rob Huebert.

The National Interest and Law of the Sea (2009)

In this CFR report, maritime expert Scott Borgerson highlights the strategic significance of the oceans for U.S. foreign policy, arguing that Washington should accede to the UN Convention on the Law of the Sea.

Environmental Protection

Arctic Standards (September 2013)

New safety and oil-spill prevention policies must be adopted to mitigate the risks posed by offshore energy development in the U.S. Arctic, explains this in-depth report from The Pew Charitable Trusts

International Governance and Regulation of the Marine Arctic (February 2010)

This report from the World Wildlife Fund advocates a new multilateral agreement on Arctic environmental defense that would promote ecosystem-wide management.

educational-resources

These discussion questions, essay questions, activities and assignments, and supplementary resources are designed to help educators use the “The Emerging Arctic” InfoGuide in the classroom through an active, learner-centered approach.

Discussion Questions

Ideas for questions to use in facilitating full-class discussions, assigning small group discussion topics, or posting on a class discussion board. Questions allow students to critically reflect on the material provided in the InfoGuide and hone their communication skills.

Essay Questions

Suggestions for essay topics that enable students to dive deeper into the material found in the InfoGuide and conduct their own research and analysis.

Activities and Assignments

In-class activity ideas and homework assignments based on “The Emerging Arctic” that promote participatory learning and critical thinking. These can be adapted based on students’ levels and classroom needs. For high school teachers, these activities are accompanied by a list and description of the Common Core State Standards they meet.