Heated Debates or a Second Cold War?

By Agnes Lidbrink, GLOBUS Contributor

Here at GLOBUS, we’re lucky to be in close collaboration with both academics and students from the Global Sustainable Development Department. It is therefore with much excitement that we are publishing a series of selected pieces from GSD’s 3rd Year module: ‘The Energy Trilemma’, convened by Dr Morakinyo Adetutu.

The fourth piece in this series explores the key role of the Arctic in modern energy discussions. Is the Arctic soon due to see its first ice-free summer? Will it become the future oil hotspot? Agnes Lidbrink covers this and more.

The Arctic as a New Hotspot for Global Energy Discussions

With a global rise in oil demand, major nations of the world are all scrambling to secure their future supplies, yet from an increasingly unstable choice of producers. The ‘black gold’ does not come cheap, and large reserves seem to carry with them an inevitable promise of international tension and conflict.  

Thus, when a new, unexplored area offers promises of great, untouched oil reserves, the world’s attention is captured, even if this area is known as one of the most inhabitable places on Earth. With the release of a report suggesting that 22% of the world’s remaining oil reserves exist in the Arctic, many heads were turned. And with five countries sharing access to the area, the international debates concerning the Northern seas are heating up.  

So far, the area has been left in relatively undisturbed, with a majority of the world’s oil-thirsty eyes being focused at the Middle East. However, with recent political events suggesting that future supply from the Southern countries will be far from secure, the idea of untouched, isolated reserves in the North seems very welcome.  

However, in the midst of the promises and political tension created by the icy resources, the area is disappearing, and at an alarming rate. Because ironically, these reserves have only been made more accessible because of the loss of ice caused by global warming, affecting the region at a rate much higher than the global average.  

Thus, there is clear reason for the world to look to the Arctic, yet currently the melting ice seems to be taken as a pleasant surprise, releasing precious oil and travel routes, instead of a serious problem in need of urgent action. Even though many international actors are calling out companies seeking to exploit the pristine – and already damaged – area, it seems like the current global trend is to side-line environmental concerns in favour of promised energy security and state revenue.  

With the promise of large reserves of oil – one of the most valued resources in modern history – the Arctic is a new global hotspot. International attention is higher than ever before, and even though no official drilling has begun, one thing is for sure – the heated debates are doing little to cool the already melting area down.  

A Global Scramble for Security  

The widespread use and irreplaceable characteristics of oil makes it one of the most valuable resources today, and nations worldwide fight for enough reserves to be able to provide full energy security for its citizens, aiming to ensure a stable supply and reliable access.  

What is Energy Security? 

Ironically, this scramble for energy security also seems to be one of the biggest creators of international tension, and has in itself been cited as one of the biggest global security concerns in modern times.  

‘Growing trade volumes and rising geopolitical risks surrounding key choke points in oil markets highlight the need for policy makers to keep a close watch on oil security’   

International Environment Agency

One of the most important locations in international oil trade today is the Strait of Hormuz, a waterway under Iranian control which sees over 19 million barrels of oil a day pass through its channel. The waters are already under constant international surveillance, and many nations choose to have their oil ships escorted by military. However, violent conflicts have been shaking the oil-rich nation during the past year, often surrounding the topic of the precious fossil fuel. And with the very recent killing of popular Iranian general Qassem Suleimani, the undisturbed access to the key strait seems very fragile, leaving many to think that the waterway may end up playing an even bigger role in the future of international relations and global energy trade.  

Thus, energy security has ended up at the top of the political agenda, with many countries seeking to expand their supply to avoid being affected by potential international disasters knocking on the door. And even though the Middle East continues to be the current hotspot of oil debates, recently many have started to draw their attention to colder environments.  

International Relations in Deep Waters  

In 2008, the US Geological Survey came out with an estimation stating that one quarter of the world’s undiscovered oil resources are thought to be located in the Arctic, sparking a sudden international interest in the region. Earlier thought to be inaccessible and isolated, the rapid decline in ice coverage over the past decades have opened up more of the inhospitable area, causing the race for the Arctic resources to intensify.  

Five countries share access to the estimated oil reserves in the area, with the largest ones being found in Russia (43 oil fields), followed by Canada (11 oil fields), and even though a large part of the arctic remains under the label ‘international waters’, the scramble for promised oil reserves seem to cause some heated debates regarding the otherwise icy ocean.  

Russia already holds the throne as the world’s largest oil producing nation today, and early signalled the importance the attach to the region by placing a Russian flag at the bottom of the ocean at the North Pole – sending a clear message to the other nations interested. Yet they are not the only ones who would benefit from the major oil reserves and their promises of increased energy security.  

The United States are home to six of the identified oil reserves through Alaska, and as they currently are one of the world’s largest importers of oil (with a heavy reliance on Middle Eastern sources), their reserves in Alaska may seem like a very attractive alternative for the current government.  

Furthermore, Norway is heavily dependent on the oil and gas sector, with the industry accounting for more than 25% of the country’s GNP. However, recent years have seen Norwegian output declining, causing the government to look for other potential sources to secure their nation’s main income – with the promise of reserves in the Arctic coming as a pleasant surprise.  

However, the Nordic nation is facing a dilemma. Apart from being recognised as an oil-rich country, they also are known internationally as a strong supporter of the Kyoto Agreement, and a strong advocate for a general reduction of CO2 emissions. Thus, with talks of increased exploration of oil reserves in the already melting Arctic reaching the public, they risk losing their notion as a climate champion, prioritising energy security and sovereignty over sustainability in their tough trilemma.  

The Irony of The Melting Ice  

Because the Arctic IS melting, and at an alarming rate. Temperatures in the extreme North are rising two to three times more quickly than the global average, with a result of the thickness of the Arctic ice sheet declining with an average of 3.7% per decade over the past fifty years. And as oil, being a fossil fuel, is one of the main creators of CO2 emissions today, one might dare to suggest that the current melting-rate is unlikely to decrease with the extraction of additional fossil fuel resources, however welcome they might be for global energy security.  

Furthermore, we already know oil has managed to build up a reputation internationally, yet not only as a bringer of joy and increased GDP. The oil spill caused by the Gulf of Mexico disaster in 2010 created a general scepticism about the safety of oil production, and an oil spill in ice- covered waters could have an even larger ecological impact. The risk of oil spills is already enlarged offshore, because they are more difficult to contain, and with the Arctic already being known for its inhospitable and distant locations, an oil spill could have disastrous effects on the surrounding sea life.  

Yet, even without officially starting to extract the fossil fuel from its grounds, the Arctic is already suffering from our increasing oil usage, and if this rate of ice-melting continues, the area is thought to become ice free during the summers around the year 2040. However, the ironic reality is that it is exactly this rate of melting which has made the huge reserves of oil more accessible, and the longer ice-free summers are not only improving conditions for oil and gas exploration in the area, but also opens up important waterways and shipping routes.  

Thus, this might explain why, in reports from the Arctic Council, all Arctic countries are ‘officially’ concerned about how climate change and its consequent global warming is affecting the area, yet no one attempts to cut down on their oil dependency or reduce its Arctic oil exploration. On the contrary, the increased international demand for oil, and its implications for energy security, have made these previously unavailable deposits highly desirable and sought after, often disregarding the potential catastrophic effects the Arctic drilling could have, both on a local and global scale.  

 Heated Debates  

The icy Arctic has a reputation of being unwelcoming, yet now more and more international actors are finding their way up North. Recently, major investment bank Goldman Sachs provided a glimmer of hope for the future of the Arctic, as it ruled out future financing of oil drilling or exploration in the area, a policy which was praised by environmentalists worldwide. However, not many others share their beliefs. Since the Paris Climate Change Agreement, the world’s largest investment banks have provided more than $700 billion to fund aggressively expanding fossil fuel companies, with JPMorgan Chase leading the financing – providing over $75 billion to companies specifically seeking to explore the Arctic oil.  

This trend suggests that even though the Arctic is finally getting the attention it deserves, having been melting at a steady rate for the past five decades, it is for the wrong reasons. The volatile situation today, both regarding the negative impact of fossil fuels and the international tension in oil-producing nations, does not indicate that oil will be less demanded in the future. On the contrary, an increased demand globally contributes to making previously unknown or unavailable resources of economic interest to exploit, side-lining environmental concerns in favour of a steady energy supply and state revenues.  

Conclusion  

Oil is known as one of the most valuable and sought-after resources in modern history, powering our societies and facilitating development. Yet, with rising tensions in the current global oil capitals, many nations fear for the future of their energy security. So when reports came out promising untouched oil reserves at one of the most remote and isolated locations in the world, the scramble for the black gold began. Several countries and companies have shown their interest in the Arctic oil reserves, with actions from both Russia and the US leaving many to wonder if this might even be the beginning of a new Cold War. The Arctic has long been in desperate need of international attention, yet current actions seem to disregard the inescapable reality that the North is melting, seeing the disappearing ice sheets as a welcome surprise instead of an international disaster. This ignorance is threatening not only the livelihoods of the Arctic animals, but also the future of our global climate, yet seems to be disregarded in favour of the energy security, and state revenue, promised by new oil supplies. No matter what the outcome might be, the Arctic is clearly the new hotspot for global energy discussions.  

Photo by Annie Spratt on Unsplash