Since the first Arctic Energy Summit convened in Anchorage, Alaska in 2007 the Arctic energy landscape has changed significantly. NILS ANDREASSEN looks at approaching sustainable development in the Arctic from the perspectives shared during the 2017 Summit in Finland.

THE ARCTIC is increasingly defined by its renewable energy and energy efficiency leadership. As governments, communities and Indigenous peoples respond to climate change goals, clean energy will feature prominently. Oil and gas development will occur where economics, environmental and societal interest align. For many in the region, that development will facilitate additional investments in renewables as Arctic states generally work toward a green transition. This green energy transition will happen at different rates and scales, and over different periods of time across the Arctic. The feasibility and the regional benefits of renewable energy projects are increasingly pertinent to sustainable development in the Arctic.

Included in this dialogue must be local communities and Indigenous peoples as key stakeholders, rights-holders, and energy partners with whom project proponents and governments must engage. Engagement at the local level must include the option to say, ‘yes or no’ to development and provide ways in which concerns or hopes will be addressed. It is important that local peoples are at the table and not represented or misrepresented by outside interests.

The Sustainable Development Working Group’s Arctic Renewable Energy Networks Academy (ARENA), and Arctic Environmental Impact Assessment (Arctic EIA) projects highlight the importance of engaging local and community expertise in sustainable development planning. Benefits of doing so include improved project planning and design, better decision-making, and ensuring more equitable benefits to community and Indigenous stakeholders. The ARENA project demonstrates how a collaborative, circumpolar renewable energy training program is bringing lasting benefits to Indigenous and northern communities in Canada, the U.S, Iceland and Norway. Its unique approach to developing “community energy champions” and having these champions present their stories was an effective demonstration of energy literacy, capacity building and training opportunities as good practices.

Similarly, local communities on the North Slope of Alaska have played a key role in prudent oil field development for more than 40 years through a Cultural Resources Management Plan. Industry and community alignment and collaboration is a must; inclusive multi-layered engagement encourages innovation and project success.

In challenging and remote locations, the sharing of ideas and good practices is often a prerequisite for successful cost-effective projects and technology implementation. Collaboration with multiple stakeholders in the Arctic is important at all levels: local, regional, national and global. The merits of regional oil and gas operator collaboration is demonstrated in the Norwegian sector of the Barents Sea. The Barents Sea Exploration Collaboration (BaSEC) achieved significant savings in operating costs through shared logistics, reduction of environmental footprint and enhanced cooperation on HSE matters. Science – including Indigenous and local knowledge – must be a primary basis for decisions in the energy sector, and Arctic endeavours tend to have high levels of scientific activity within the oil and gas industry itself. Research and education generally follow in the wake of large projects, but it is important to coordinate and cooperate early in project development to reduce the research burden on communities. Local communities should be involved in the scientific work, including sharing of Indigenous knowledge which is a valuable resource. It is wise to incorporate this knowledge base and partner with local experts in a range of fields.

The oil and gas industry is transitioning at an increasing pace to renewables and lower carbon emissions through technological innovations and the gradual shift from oil to gas. Many companies additionally engage in developing low carbon, downstream solutions and fuels including hydrogen. This has important implications for Arctic societies and Arctic businesses wishing to secure sustainability in a low carbon future. More focus on the transition roadmap of the energy industry should be included at the 2019 Arctic Energy Summit. The successful transition to renewable energy is an element that affects all energy and political sectors. Carbon pricing is generally held as the best incentive for carbon emission reductions because it is independent of the source of energy and encourages open competition, innovation and technology development. The Norwegian special carbon tax for example, helped Norway become among the lowest carbon emitters. This is highly relevant for the Arctic energy debate since there are clear expectations of the lowest possible carbon emissions from future energy production including oil and gas and other industrial activities in the Arctic.

In addition to lower carbon emissions, Arctic states must remain focused on addressing “energy poverty” which refers to the lack of access to modern, reliable and affordable energy supplies. Reducing transaction costs for northerners will result in improved living and economic conditions, and high cost energy will negatively impact the sustainable development of the region. Meeting affordability goals while increasing clean energy development is the objective Arctic states and others – including the investor and shareholder community – must consider in spending capital on Arctic energy projects infrastructure, industrial projects and societal development projects. Policies for which sustainability is a key component will influence future decision-making by all.

NILS ANDREASSEN is executive director of The Institute of the North.

CINDY DICKSON, executive director of the Arctic Athabaskan Council (Canada) spoke with THE CIRCLE about the realities and challenges of development in the Arctic.

THE CIRCLE: What are the modern realities of living in the Arctic?

CINDY DICKSON: The reality is that the climate is changing. Our old way of life is drastically changing. We can no longer solely survive on the land as a way of life. In a modern world, we need jobs. Our children have similar tastes and want similar choices as other children.

When I was growing up – and I am under 50 – we did not have modern bathrooms with flushing toilets. We used ‘honey buckets’ and instead of regular sinks, showers and bathtubs, we used a steel tub and a wash-basin. If we wanted a shower we went to the school.

Having a house phone was a luxury and forget about cable. We wore hand-me-downs and were lucky to get out of Old Crow (Yukon) once a year. Nowadays we all have modern bathrooms, cable, cell phones and many of us travel to Mexico to vacation (although I have yet to go!). Our children want their own cell phones, latest fashions and whatever gadget the next kid has. All this convenience and its working parts comes from renewable and non-renewable resources and costs money. A lot of money.

There has been a huge change since my childhood. I don’t see the old way of living anymore. The values and choices are different. To go out on the land is very expensive. Most people use snow machines and fuel is very costly. People can no longer stay out for months and most have to come back for their day jobs. It’s not like long ago when everyone used to hunt from March to June. People don’t use as many fur products these days so that industry doesn’t thrive as it once did.

TC: From an Indigenous perspective, what needs to happen to make development in the Arctic more sustainable?

CD: In my opinion development is not sustainable. There is usually a beginning and an end and some type of impact. Unless, perhaps,
you are an organic vegetable farmer. I believe we need to see better communication, education, prevention and mitigative measures developed between government, industry, community and environmentalists.

There must be equal responsibility for all these things. For example, if an industry is going to dig a hole, it should be the responsibility of our federal or territorial government to educate the community on why the hole is being dug, what is being dug up, what it is used for and what are the pros and cons and jointly develop plans for prevention and mitigation.

TC: What ways can the various interest groups (industry, environmental, governments) work more effectively with Indigenous people to have a more sustainable Arctic?

CD: Having had the opportunity to work on environmental issues as well as with industry and First Nations, I firmly believe governments should fund First Nations to educate their membership and beneficiaries. People need the capacity to make informed decisions.

First Nations governments are extremely busy and wear many hats. It would be very helpful to have dedicated federal or territorial funding so that First Nations hire their own experts to educate and plan. Our communities need the capacity to make the best decisions. Once that happens it would be beneficial for industry, environmentalists and other governments to work collaboratively with First Nations to provide a balanced and proactive approach.

TC: What are the barriers to those relationships taking place?

CD: I don’t like to see our people divided because of inaccurate information. It’s time environmentalists and industry work together. In my experience it’s always one against the other and we don’t receive all the information to make informed choices. Even our environmental impact assessment processes seem set up to pit us against each other. There isn’t a common place where these issues and opportunities can be worked out. Others may disagree but having worked on both the research and environmentalist side, and with the oil and gas industry, I have come to this conclusion.

The reality is we drive our big trucks, own more than one house, wear expensive clothes – many of which are oil-based – and we all want these modern conveniences. To have the best of both worlds I think it’s time we embrace the reality that this is where we are, and we should set aside differences to have a better place for our children and grandchildren.

The Arctic Council is considered the most important international forum in the Arctic. However, SVEIN VIGELAND ROTTEM notes that the inclusion of more stakeholders in the Council’s work raises questions as to capacity and coordination.

THE ESTABLISHMENT of a permanent secretariat in Tromsø, Norway and the signing of three internationally binding agreements created under the auspices of the Arctic Council have raised its political prominence in recent years. At the 2013 Kiruna ministerial meeting the question of observer status for the EU and Non-Arctic States headed the agenda. China, India, Italy, Japan, Singapore and South Korea were granted permanent observer status. Aspirations to this designation by these and other countries show how the region is perceived as important by stakeholders outside the geographically limited Arctic region. The Arctic Council is popular.

Furthermore, the Council’s agenda is widening and getting more diffuse. The Arctic Council has produced substantial knowledge on circumpolar issues and informed the debate on challenges and opportunities in the region, ranging from research on climate change to introduction of shipping guidelines and emphasizing regional health issues. It is a significant player in the region as a producer of knowledge, presenter of guidelines and recommendations, Arctic environment assessment and as a monitoring body. In 1996 the Council was running 30 projects; today the number is passing 80 and is likely to grow. One could claim, however, without any serious discussion on which direction.

I would like to present three recommendations to meet the governance challenges facing the Arctic Council.

• First, a clearer vision/strategy for the work done at the Council is needed. The Senior Arctic Officials (SAOs) have started defining vision, but it needs to be higher on the agenda. A formulation of such a strategy both at political and working group (WG) levels will enhance continuity and allow for a more structured and coordinated approach to whatever political issues have been given priority. A comprehensive vision for the Arctic could be formulated at an Arctic Summit.
• Secondly, with an increasing workload, coordination challenges need to be addressed through an expert panel to look at the question of coordination and restructuring. This debate must involve all relevant stakeholders (permanent participants, SAOs, and WGs).
• Finally, a recurring challenge is the frequency of travel and growing number of meetings related to Arctic Council business. A solution might be to arrange one of the two annual SAO meetings in the capital city of the state holding the chairmanship. This would increase participation for relevant stakeholders including Indigenous people. In connection with such a SAO meeting, the WGs could conduct workshops on issues relevant to the agenda. This should apply both to designing new projects and running existing ones. An annual “Arctic Week” could be arranged in the capital of the state holding the chairmanship.

These suggestions, if implemented, could strengthen the work of the Arctic Council and it could still be the most important international forum in the Arctic, with a clearer vision and more inclusive character.

SVEIN VIGELAND ROTTEM is a senior research fellow at the Fridtjof Nansen Institute

In 2014 the captain and owners of the freighter Nordic Orion made an historic decision: instead of carrying their load of coal from Vancouver, Canada to Finland via the Panama Canal, they headed through Arctic waters for the Northwest Passage. It was the first time a freighter chose the Canadian Arctic route over the Panama route, based entirely on business logic. ALAN ATKISSON says that voyage marks the start of a transformation in the Arctic economy.

WHILE IRONIC that the first freight to traverse the Northwest Passage for cost-saving reasons was environmentally unfriendly coal, the voyage indicates warming Arctic waters are opening the region for development.

The Northwest Passage — when experiencing lighter-than-usual ice conditions — is shorter and cheaper. The risks have become manageable and insurable. Plus, the Nordic Orion’s owners knew the ship could take a 25% larger load, while saving USD $80,000 in fuel costs. Many of the factors driving change in the Arctic economy, as well as the many associated opportunities and risks, are described in an upcoming report from WWF looking at the Arctic’s economy in marine, maritime, and coastal development terms — the “Blue Economy.”

Investors believe that over USD $1 trillion will be heading to the Arctic in coming years, principally to develop infrastructure: roads, ports, airports, hotels, housing, hospitals, schools and other facilities. Guggenheim Partners, a global investment and advisory financial services firm, has estimated that over USD $500 billion in infrastructure is already being planned.

This combination of warming physical conditions and increasing investment is not only changing the Arctic, it is changing how humanity sees the Arctic. No longer a remote and inaccessible place dominated by nature and impenetrable ice, visited only by researchers and adventurers, the Arctic is fast becoming a tourist destination, an aquaculture development zone, a real estate opportunity, an Internet cable route, a shipping shortcut and more. The speed of change is likely to catch many people by surprise. Some Arctic researchers I’ve spoken to are inclined to dismiss these trends, saying for example that expectations for the opening of the Arctic to shipping or mining are greatly exaggerated. But those who doubt that an unstoppable wave of economic investment is heading to the Arctic should take a closer look at the investment intentions of large players such as China. Transformative change often starts slowly but builds with surprising speed.

Most of the Arctic economy, including tourism, is linked to its ocean and coasts. Iceland received well over two million visitors last year, an increase of about 400 per cent in one decade. Svalbard tourism increased by 100 per cent over the same period. Last year a tour company operating out of Murmansk was offering five different departures for the opportunity to ride an icebreaker to the North Pole, while Norway’s national tourism agency has produced a YouTube campaign on how to hike in Arctic coastal regions to better prepare tourists for vacationing in extreme Arctic conditions.

The Arctic is an increasingly attractive item on the “bucket list” of many tourists. While this helps improve knowledge and hopefully, concern about the Arctic environment, tourism increases environmental risk.

Other Arctic Blue Economy sectors are experiencing similar growth and challenges. Norway’s salmon aquaculture industry grew by 500 per cent from 1997-2016, and by 31 per cent from 2015-16. About 40 per cent of that growth happens in Arctic coastal waters; and Norway has also begun investing in Icelandic aquaculture.

The Arctic currently produces 10 per cent of the world’s oil and 25 per cent of its natural gas, mostly from onshore sources. It is believed to hold 22 per cent of the world’s undiscovered reserves under the Arctic Ocean. These sectors tend to dominate reporting on Arctic economic development issues.

Many articles on the Arctic economy focus on developing energy and mineral extraction; but a closer look at recent trends underscores that the Arctic is “open for business” in a much broader sense with significant conservation consequences. While there is much we don’t know about the economic trends that will shape the Arctic’s mostly “Blue” environments, it’s time to take the expectations of rapid growth more seriously. One helpful resource is WWF’s widely-cited Principles for a Sustainable Blue Economy, which have also been recognized by the World Bank and the United Nations. They can provide a starting reference for an Arctic adaptation to help steer these bold new investment plans in more sustainable directions.

Momentum keeps building. At the end of January 2018, the President of China, Xi Jinping announced he wants to extend China’s enormous “Belt and Road” infrastructure development project — which is principally an enormous investment fund — to the Arctic. “China hopes to work with all parties to build a ‘Polar Silk Road’ through developing the Arctic shipping routes,” said the country’s official State Council Information Office.

China sees enormous economic opportunity in the Arctic and intends to commit a great deal of new infrastructure investment in the far north. So do many other countries. The time to start preparing for this wave of change is now.

ALAN ATKISSON is president of AtKisson Group, consultants on sustainable development.

The World Bank defines the Blue Economy as “the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health”. OKALIK EEGEESIAK suggests for Inuit, the term Ice Blue Economy would be more appropriate.

INUIT ARE marine coastal people. The sea ice and the Arctic Ocean define our culture, food, transportation, language, well-being and livelihoods. All of these depend on sea ice, the floe edge and increasingly, the open ocean.

Most of our communities are located on the coast or beside main waterways for direct and easy access to the sea. The Arctic marine environment nourishes our body, mind and soul. It is our food security. It keeps us strong and has sustained us for thousands of years. The Arctic Ocean is irreplaceable to us which is why Inuit have been using it sustainably and responsibly for millennia.

This is a critical time of change in the Arctic. It is imperative that Inuit be involved in Ice Blue Economy discussions. These decisions will shape the future of Arctic shipping, small crafts, commercial fisheries, oil and gas exploration, tourism and its peoples.

Inuit have always pursued innovation, partnerships and processes to drive economic development, prosperity and social equity in our communities. Much of this is related to marine activities.

The Inuit Circumpolar Council is an international organization with official United Nations status. We are a Permanent Participant at the Arctic Council giving voice to the 160,000 Inuit living in Canada, Greenland, Alaska and Chukotka – four very different political entities. Inuit may have a relatively small population in a global sense, but our homelands are vast and our collective voice strong through one language and one culture. We occupy and use a great part of the circumpolar world.

Will Inuit benefit from a changing Arctic and the Ice Blue Economy? Will we have the skills to live with and through the challenges ahead?

In 2017 ICC held the Circumpolar Inuit Economic Summit to explore potential collaborations among Inuit businesses and share experiences. A significant outcome was the establishment of a task force to create an International Inuit Business Council for business cooperation and development for Inuit at the local, national and international level.

Economic development can mean different things to different Arctic countries, regions and even individual communities within Inuit regions. One thing is certain: economic development done right means equity. It means long-term sustainability for our communities, brighter futures for our youth and the opportunity to break the cycles of poverty that plague our communities. It means economic development is not done for the peoples of the Arctic, but by them. We must pursue economic development that considers social equity to be as important as, or more important than, shareholder and stock value. We must create economic development opportunities that build cultural sustainability and community wellness rather than compete with them.

Economic solutions can address immediate challenges such as food insecurity, social development and climate change if they are approached through a new lens led by, and in partnership with, Inuit. A healthier, educated, selfdetermined and skilled labour force along with a robust tax base in the Arctic will create cost efficiencies for industry, governments and Inuit.

Innovative, successful Ice Blue Economies include fisheries, renewable energy, tourism, shipping and mining. Inuit-led success stories are only made possible through multi-lateral partnerships between the private sector, government and communities.

Inuit have addressed the Ice Blue Economy and the future of the marine region through innovative stewardship planning. In 2017 ICC released the Pikialasorsuaq Commission report proposing a vison of the Northwater – the marine region between Canada and Greenland. The Commission made three recommendations after listening to the communities that use the Pikialasorsuaq:

• reinstate free movement for Inuit across the Pikialasorsuaq;
• establish an Inuit Management Authority; and
• create an Inuit-led monitoring regime.

This unique and highly sensitive marine region is central to the biological integrity of the central Arctic ecosystem and the cultural integrity of Inuit in Canada and Greenland. Inuit wish to be the stewards of it. To that end, in 2017 the ICC was part of the Canadian delegation negotiating the Central Arctic Commercial fishing moratorium. This was precedent setting for its precautionary principle, and its management and monitoring plan for commercial fisheries.

As Inuit, we don’t have a choice as to whether we are part of the “Ice Economy” or the “Blue Economy”. We are the Blue Economy.

OKALIK EEGEESIAK is chair of the International Inuit Circumpolar Council.

Long-term investors (LTIs) bring a unique set of resources that make them ideal partners for sustainable development. JAMES E. PASS addresses the benefits of LTIs in the Arctic.

THE ARCTIC stands at the crossroads of important trends in climate change and development. Given recent calls for private capital participation in development, especially infrastructure, Guggenheim Partners wants to emphasize how and why we believe LTIs can be the ideal partner for sustainable development in the Arctic with appropriate environmental and social safeguards.

The ability of LTIs to hold assets throughout business cycles and their preference for alternative investments, such as infrastructure and real estate, make them attractive partners to local leaders, planners, conservation groups and other stakeholders to create sustainably developed environments, while preserving plentiful natural habitat. They can provide capital that understands the convergence of long-term value and sustainability. LTIs have provided capital for essential projects for decades, including power, water, transportation and real estate development.

Since 2013 Guggenheim Partners has maintained an Arctic Infrastructure Inventory, detailing the physical asset needs of the region. Over the next 15 years USD $ trillion of investment in the Arctic is needed. LTIs can help to meet this investment gap. The Arctic and near-Arctic is a vibrant region, counting 12 million inhabitants and a USD $500 million annual economic output. Despite this footprint, many basic needs and economic opportunities go unmet. Some of these require the following investment needs:

• Renewable Energy $60.6 billion
• Rail $23.3 billion
• Maritime $16.8 billion
• Social Buildings (schools, hospitals, etc.) $2.4 billion

LTIs can provide some of the capital to fund revenue producing assets but governments need to be a partner in investment, with input from local communities, planners and conservationists. When LTIs provide targeted capital for specific purposes, public capital can flow where it is needed most. To ensure the long-term license to operate for these private and public investments, national and regional development plans with strong social license are needed.

In 2016, Guggenheim Partners participated in the creation of the Arctic Investment Protocol at the World Economic Forum. This document provides a framework and a commitment for investors in the region. The Protocol helps investors understand how to contribute to sustainable development, but it is only the beginning. Robust standards, tools and indicators are necessary to properly measure and understand both environmental impact and societal impact.

Guggenheim Partners, along with others, advocates for the development of more precise standards, tools and indicators to measure sustainability. Current practice is an improvement over efforts from years past but the mobilization of tremendous resources needs an institutionalized framework. To value sustainability investors need to measure it first.

The Arctic is changing at a rapid pace in both climate and human dynamics. In the years to come there will be opportunities for responsible economic growth. There will also be an imperative to protect this region. By proactively steering development on a sustainable and managed path, this region can be preserved while meeting the economic needs of its residents.

JAMES E. PASS is senior managing director at Guggenheim Funds.

The Arctic is warming faster than any other region on Earth and rapidly becoming a wetter, more variable environment. Over the past 50 years, the Arctic’s temperature has risen at a rate more than twice the global average. JANET PAWLAK says these changes affect the Arctic’s role as a regulator of global temperature and its influence on Northern Hemisphere weather; its contribution to sea-level rise; the lifestyles and livelihoods of those who live and work in the Arctic; Arctic marine and terrestrial ecosystems and the habitats of Arctic species.

Faint rainbow over broken pack ice, Svalbard, Norway, September 2009

THESE ARE some of the conclusions of the 2017 assessment of climate and the cryosphere in the Arctic by the Arctic Monitoring and Assessment Programme (AMAP) in Snow, Water, Ice and Permafrost in the Arctic (SWIPA) 2017, the fourth climate report by AMAP since 1998.

Key findings of the report show:

The Arctic’s climate is shifting to a new state

Rising concentrations of greenhouse gases are driving widespread changes in the Arctic’s sensitive climate, hydrological and ecological systems. Downward trends continue in the extent and thickness of sea ice, land ice volume, and spring snow cover extent and duration while near-surface permafrost continues to warm.

Climate change in the Arctic has continued at a rapid pace

Arctic air temperatures are rising faster than the global average. Sea temperatures are increasing. The frequency of extreme events is changing, with fewer days of extreme cold in both winter and summer and increases in extreme warm periods in some areas. Sea-ice thickness has decreased and older ice that has survived multiple summers is rapidly disappearing. The decline in sea-ice extent and thickness and the timing of ice melt are affecting marine ecosystems and biodiversity with an increase in the occurrence of algal blooms. These changes influence diet among marine mammals and alter predator-prey relationships and habitat uses. The occurrence of rain-on-snow events and winter thaw/refreezing affects grazing animals such as caribou, reindeer and muskox by creating an ice barrier over lichens and mosses.

Changes will continue through at least mid-century, due to warming already locked into the climate system

Warming trends will continue because increases are locked into the climate system by past emissions and ocean heat storage. These will still occur even if the world makes drastic cuts in emissions. Declines in snow and permafrost will continue. The Arctic Ocean could be largely free of sea ice in summer as early as the late 2030s. The melting of land ice, particularly from the Greenland ice sheet, will contribute significantly to sea-level rise. Many of the smallest glaciers in the Arctic will disappear by mid-century. The Arctic water cycle will intensify, with model-projected increases in cold season precipitation of 30-50% over the Arctic Ocean toward the end of this century; a greater proportion will fall as rain instead of snow.

There will be significant stresses on ecosystems. Changes in sea ice can be expected to affect populations of polar bears, ice-dependent species of seals and, in some areas, walrus which rely on sea ice for survival and reproduction. There will also be losses of ice-associated algae. An increasing frequency of wildfire and abrupt thawing of permafrost could accelerate ecological shifts, such as the expansion of tall shrubs and trees into tundra.

Substantial cuts in global greenhouse gas emissions now can stabilize impacts after mid-century

While the changes under way in the Arctic are expected to continue through to at least mid-century, substantial global reductions in net greenhouse gas emissions can begin to stabilize some trends, such as snow and permafrost loss, after that. Efforts to control greenhouse gas emissions would also reduce end-ofcentury sea-level rise. However, the Arctic of the near future will be a substantially different environment from that of today.

Adaptation policies can reduce vulnerabilities

There is an urgent need for local and regional adaptation strategies that can reduce vulnerabilities and build resilience, given the inevitability of accelerating impacts in the Arctic and globally.

Effective mitigation and adaptation policies require a solid understanding of Arctic climate change Better knowledge is needed to predict the course and effects of climate change in the Arctic and improve our ability to respond to current and future changes. Coordination across monitoring efforts, modeling studies and international assessments can facilitate information sharing and avoid duplication of effort.

Download the full scientific assessment report Snow, Water, Ice and Permafrost in the Arctic (SWIPA) 2017 and its Summary for policy-makers. Information relevant to the development of local and regional adaptation strategies is addressed in three Adaptation Actions for a Changing Arctic (AACA) regional reports, covering the Barents, Baffin Bay/Davis Strait, and Bering/Chukchi/Beaufort regions.

JANET PAWLAK is deputy executive secretary to the Arctic Monitoring and Assessment Programme (AMAP) Secretariat.