Without wishing to offer anything as tangible as hope at this stage, I do want to suggest the possibility that natural events and human economics may be conspiring to make an international agreement to protect the central Arctic Ocean from the extractors and exploiters, more doable than most are currently daring, or fearing, to acknowledge.
So, while simply waiting and hoping such an agreement becomes ever more possible is no strategy, it might provide encouragement for those parties interested in protecting the Arctic Ocean to believe the odds could be slowly, behind-the-scenes, starting to move in the protectors’ favour, at least with respect to the hydrocarbon extractors.
For the hydrocarbon extractors, the envisaged emerging scenario revolves around the global investment community’s ‘take’ on which energy infrastructure investment opportunities – hydrocarbon or renewables – will deliver the best financial returns, which ultimately turns on the community’s assessment of the risks.
I was recently invited to a high level UK gathering of Arctic-interested parties – science, technology, business, and government ministries and agencies. Its purpose was to discuss the future UK government strategy regarding our interaction with the Arctic nation states (represented collectively by the Arctic Council), and the ever more accessible Arctic Ocean itself (due to the sea ice receding) and the natural resources it holds, notably hydrocarbons and marine life*.
My interpretation of the background mood music at this meeting is that the UK government is not inclined to commit its multi-agency resources at the necessary scale to be a major player in the unfolding international strategising and positioning phase focused on the central Arctic Ocean that is seeing diplomatic power, natural resources, energy security, and economic wealth being lined up by other nation states. Very considerable resources are being deployed by the latter now for an anticipated financial benefit in the future.
For example, while the UK government agonises about the wisdom and possibility of ‘investing’ in say science at the level of tens of millions of dollars per year into the Arctic, other non-Arctic Council states (e.g. South Korea and China) are already making public their ongoing annual investment of tens of billions of dollars per year … and even individual companies like Royal Dutch Shell are investing at the scale of billions (e.g. Shell this Autumn wrote off US$6 billion when it abandoned its oil exploration effort in the Chukchi Sea/Arctic Ocean).
So, it looks like it’s going to take a monumentally collaborative, high-powered, well-conceived, and unusually focused effort to create any effective long term protection of the central Arctic Ocean from the extractors whose primary aim (legally, as per any business) is to generate profits for investors.
I think if the protectors had driven through a ‘global commons’-based international agreement over the last 25 years, it would have been far less difficult.
But now that some of the world’s most powerful businesses and nations (e.g. USA, Canada, Norway and Russia, South Korea, China, Japan, India and Germany) have realised the possible commercial and strategic value of access to the Arctic Ocean (and both extractor businesses and nation states plan for decades-to-century time-frames), the time-window is much tighter for the protectors, and the possibility of progress more difficult, as vested interests rapidly seek to establish themselves in the area. And once extractors are in an area, their extraction from an area is almost impossible.
Not much money (relatively) is being made there yet, but clearly the extractors believe world hydrocarbon demand and prices may change this status at some point. So they are getting as many of their ducks in a row as possible, given, for example, that the sea ice cover is forecast, by the likes of the Met Office, to cease to be present over a 90% of the Arctic Ocean’s area for 60 summer days annually by 2040-2060. In my view it’s ironic and unfortunate that much of the biological, geophysical and meteorological science research being done is actually arming, for free, all these extractors with the knowledge they need to make their planning decisions.
But I have news: An informal conversation with high level City banker, who specialises in raising funds from the biggest global investors for the hydrocarbon extractors, revealed a growing, and in his view, likely irreversible, realisation is taking a hold within global financing.
What he reported is that it’s getting increasingly hard to raise the scale of capital required to build the massively expensive infra-structures that support new, remote, pioneering, complex and hazardous oil and gas operations. This is because the pay-back time-frame for investors is so long for such high cost projects (i.e. decades) AND the investors’ confidence is diminishing that the demand for oil (and to a lesser extent gas) will be high enough over the relevant time-frame because the renewables market is already weakening, and will inevitably ever more weaken, the demand for hydrocarbons.
I might add that, in my opinion, if the public were more fully aware of the hitherto largely unseen, reliably provided, exceptionally complex system of subsidies provided by governments to the hydrocarbon businesses (using tax payers’ money), then the investment reality over the long term would become as clear to the public as it is now becoming to the sophisticated investors, with all their financial research resources to analyse these complexities.
I suspect that, slowly but surely, over decades, these subsidies will be withdrawn from the hydrocarbon industries for social reasons as the global implications of rising CO2 levels escalate driving such troubling global-to-local issues as the growing mass human migration movements to escape water scarcity. This notion of subsidy withdrawal will already be amplifying the anxieties of today’s investors because the extractors’ profitability will be going down as a result … meanwhile, the renewables market can only be looking more profitable as a consequence.
The renewable energy businesses are becoming more attractive to investors because renewable energy infrastructures are so much less expensive and so much quicker to install, and thus the investors’ pay-back is faster and greater for renewables. They offer lower risk investments and faster profits and ultimately greater profits in the long term.
The broader global community’s growing concern about its response to the effects of increasing carbon dioxide levels etc indicates the long term direction of travel for renewables v hydrocarbons. Both renewables and hydrocarbons need capital, but the capital will flow in the direction of the assessed risk v reward by investors.
It’s looking likely that the fundamental question is: where can the investors make the most money? And the writing is emerging on the wall for expensive hydrocarbon extraction operations such as those contemplated in the Arctic Ocean.
So, maybe those interested in protecting the Arctic Ocean should arm themselves with this possibility: maybe the sea ice has held on just long enough, both to deny the extractors (who are the ‘suppliers’ to our ‘addiction’, let’s not forget) the supplies that lie beneath, while simultaneously giving us all the ultimate warning signal that we so urgently need to grasp in the nick of time: that the natural world cannot cope with our blind disregard, and it’s time for us to actively respect, understand and manage our planet’s finite resources and ecosystems.
Perhaps we have been granted a second and final chance, thanks to a freak of timing by the natural world, upon which we entirely depend for our continued existence, let’s not forget.
I would like to see the UK government, over the coming years, employ its hard-won soft diplomatic power to represent the innate desire of every nation, through its Observer Status on the Arctic Council, to bring about an international agreement that protects as a ‘global commons’ from all extractors and exploiters in perpetuity, the central Arctic Ocean region (i.e. a sea area north of the Arctic Council nations’ Extended Economic Zones).
It might be called the North Pole Reserve.
In many ways similar to the Antartic Treaty, it would be a global symbol of progress and hope to us all that together we can look after the only planet we have.
* The unimaginably destructive power of industrial-scale, relatively indiscriminate, trawling for marine life (aka ‘fish stock’) faces the different and emerging management controls made possible by the satellite tracking of vessels coupled with the engagement of local enforcement agencies – the new 320,000 square mile Pitcairn global marine reserve, administered by the UK government, providing a relevant beacon of hope.