Adaptation Actions for a Changing Arctic: Perspectives from the Barents Area

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Chapter 4 · Physical and socio-economic environment

4.5.6 A more multipolar world with complex systems of governance The catch-up process among the developing nations alters the patterns of global integration and political influence. Throughout history, political and military power has always been linked to economic power, and there will be a power shift as countries such as China and India increase their share of global economic output, trade and investment, combined with a rapid increase in educational achievement. The USA will still be a superpower but the country will be challenged by more actors. No single country or region will dominate world affairs. Multinational companies and other non- government organizations will also play a more prominent role.The global arena is shaped by issues, actor constellations, resources and definitions of interests, and the governance system comprises nested sets of institutions. Within this framework there will be shifting alliances and lines of conflict. The growing number and diversity of participants will make it harder to coordinate global activities and respond to complex challenges (EEA, 2015). During the ColdWar, the geopolitical landscape in the Arctic was shaped by the rivalry between the USA and Russia. This relationship remains important. However, the rules of the game are largely defined by international law. The UN Convention on the Law of the Sea (UNCLOS) provides the basic legal framework for managing all marine activities in the Arctic. Several other international treaties and conventions also apply to the Arctic, from those concerning international trade and polar shipping to the rights of indigenous peoples (see Bankes and Koivurova, 2014). In the years ahead, a salient issue will be the commitments made under the UN Framework Convention on Climate Change (UNFCCC) to reduce GHG emissions and the steps taken to limit global temperature increase. Since the end of the Cold War, the Arctic states have been eager to promote peace, stability and socio-economic development in the Arctic region. New regional governance frameworks have been introduced such as the Arctic Council, the Barents Euro-Arctic Council and the EU’s Northern Dimension, and international law has been supplemented by bilateral and multilateral regional agreements. The Barents area is currently witnessing a more strained East-West relationship. Several factors may undermine the close cooperation established by the Arctic states in recent decades. There are fears that greater marine access could trigger a race for resources and shipping routes, that China’s increasing financial and physical presence in the region could create new tensions, and that there could be a spillover from geopolitical changes beyond the Arctic, with consequences for the stability and prosperity of the Barents area. With heightened tension and an increased lack of trust, security issues and military priorities tend to dominate, whereas less tension and a higher level of trust mean more resources and efforts can be directed to industrial development, trade, resource management, and social welfare. Despite concern, the countries in the Barents Region have demonstrated their willingness to shield Arctic cooperation, to abide by international legal frameworks and to develop new joint rules and regulations. In the Ilulissat Declaration (2008),

The Barents Region countries vary in terms of energy production and consumption, energy efficiency, resource use, and environmental conservation. Before the 2015 Paris Climate Conference (COP 21), all four countries submitted their intended nationally determined contributions (INDCs) to GHG reduction. However, all four have also been eager to exploit the natural resources of theArctic.Although theirArctic strategies and policy statements emphasize that this must take place in a sustainable manner, their visions include large-scale oil and gas development, newmining, and the promotion of the Northern Sea Route (the sea lane between the ports of Dudinka andMurmansk) as a major transcontinental shipping lane.The importance of the Arctic for Russia’s economic development is underlined in several strategic communications.According to the Foundation of the State Policy of the Russian Federation in the Arctic up to and beyond 2020 , the main objective is to transform the Arctic into Russia’s ‘foremost strategic base for natural resources’. The Russian Energy Strategy up to 2030 (signed in 2009) defines theArctic region as one of the key areas for future extraction of oil and gas, and in the Russian Energy Strategy up to 2035 (signed 2014) it is stated that by 2035, Arctic offshore resources should account for 5% of total oil production and 10%of total gas production in the Russian Federation.Similarly, the Norwegian government expects the Barents Sea - Lofoten area to hold the largest undiscovered reserves of oil and gas on the Norwegian Continental Shelf.Over recent years, several new licenses have been awarded on both sides of the maritime boundary established in 2010 between Norway and Russia in the Barents Sea and Arctic Ocean. Future development of mineral and hydrocarbon extraction in the North will largely depend on world market prices and general resource demand, which will be affected by the underlying energy mix. New technology renders exploitation possible in previously inaccessible areas, and strategic considerations with regard to energy security, state revenue and employment always play an important role.The Barents area becomes relatively more attractive if alternative reserves are geographically concentrated in politically unstable regions and there is uncertainty regarding access to essential raw materials. Some technologies, such as carbon capture and storage (CCS), may allow significant resource exploitation while maintaining lower global temperature change.However, prices must be high enough to justify huge investments in a region with a harsh climate, lack of infrastructure, and large distances to market (Harsem et al., 2011; Lindholt and Glomsrød, 2012). The US shale production boom, the weakening of OPEC, and the end of the great commodities boom that prevailed from 2000 to 2014, driven by rising demand from China, has changed the outlook. China is now shifting to a growth model more driven by services and domestic consumption, and this will make the economy less dependent on energy and raw materials. Studies also indicate that in the coming decades, the Northern Sea Route will hardly be able to compete with the Suez Canal Route due to its short and unpredictable navigation season, particularly for container shipment. Internal and destinational traffic will still dominate Arctic shipping (Buixadé Farré et al., 2014; Ørts Hansen et al., 2016; Sander et al., 2016).