By Ashley Chappo
Climate change is not always seen as a negative, at least if you listen to some increasingly animated venture capitalists weighing in over the melting of the Northern sea ice.
In February 2015, the maximum annual Arctic sea ice extent measured just 5.61 million square miles during its winter peak, the lowest level ever captured by a NASA satellite according to the National Snow and Ice Data Center at the University of Colorado, Boulder, which began keeping records in 1979. This is roughly 425,000 square miles lower than the 1979 to 2000 average of 6.12 million square miles. The satellite reading not only confirms the rapid thawing that has climate experts so up in arms, but it also represents the shift in global attention to the planet’s last oceanic frontier.
The Arctic Ocean may be the world’s smallest ocean, but the emerging gateway to its untapped treasures has wet the lips of international investors, including Big Oil, commercial fishing industries, and foreign governments, who see economic opportunity measuring in the billions of dollars. While devastating to the long-term health of the planet, melting Arctic ice means the opening of shipping routes and increased access to remote Arctic regions previously insulated from the rest of the world. What this may suggest is the advent of a new Arctic gold rush. Inevitably, rapid economic change and the accompanying challenges in the world’s next frontier have become one of the hottest debates of the Arctic region.
But can the international community unlock the treasures of the final frontier without laying waste to the Arctic environment and local indigenous peoples of the North?
The World Economic Forum has attempted to address the growing concern for the future of the region by convening the Global Agenda Council on the Arctic. To create a better framework for international business in the Arctic at the advent of a potential developmental boon, the 22-member team unveiled last Thursday a new six-point protocol that lays out a set of principles for sustainable business practices in the region.
The aptly named Arctic Economic Protocol received its first official endorsement from Guggenheim Partners, a Chicago and New York-based global investment company with a reported $240 billion in assets.
However, the question remains whether other financial firms, industries, and foreign governments will also get on board with this sustainable investment initiative. Certainly, widespread cooperation in protecting the Arctic is desired, especially when considering the precedent set by the 2015 Paris Climate Conference, COP21, in which nearly 200 countries came to an agreement on the reduction of climate change, showing historic solidarity on the issue. The Paris Agreement will become legally binding if joined by at least 55 countries and at least 55 percent of global emissions are eliminated. That likely means that the biggest greenhouse gas emitters—China, the United States and India—will need to sign on for the agreement to go into force.
But even if consensus can be reached like that of the Paris Agreement, the guidelines of the Arctic Economic Protocol remain voluntary, drawing attention to potential fallible aspects of the initiative. Like the December climate agreement, which left certain emission targets nonbinding, the Arctic Economic Protocol has yet to lay out a specific contractual blueprint for how to direct future investment. Instead, it relies on cooperation and offers six foundational principles for the development of responsible business, governmental, and environmental practice in the region.
“The Arctic Investment Protocol is an important step forward and a solid foundation upon which to build for the future,” said Scott Minerd, Guggenheim Partners’ Global Chief Investment Officer and one of 22 members of the Global Agenda Council on the Arctic, in a statement. “It sets a higher standard and allows further advancement of sound practices for sustainable development.”
These new principles were drafted with input from scientific and environmental sources, as well as non-political actors such as the Arctic Business Council. The six guidelines include building resilient societies through economic development, respecting and including local indigenous communities, pursuing measures to protect the Arctic environment, practicing responsible business methods, consulting scientific and ecological knowledge, and strengthening pan-Arctic collaboration.
But building a sustainable future requires long-term capital, capital that would total an estimated $1 trillion in order to fund much-needed infrastructure projects in the North over the next 15 years, according to Guggenheim Partners. There is a devastating lack of infrastructure in the Arctic due to stymied investment in the region, meaning basic human necessities such as telecommunications, transportation, housing, education, and medical services remain deficient.
The unveiling of the development protocols is timely given the upcoming biennial Arctic Business conference to be held in Bodø, Norway in May 2016. In partnership with the Norwegian Shipowners’ Association, DNV GL, Kongsberg, and Statoil, the Arctic Business Council will convene this event to coordinate conversation on the Arctic’s future. The goal of the inventory and the new WEF protocols is essentially to answer the Arctic’s needs and promote investment without destroying the region’s environment, as has so often occurred during rapid economic development in the past. Guggenheim Partners is currently in the process of assembling an Arctic Infrastructure Inventory based on scientific research that will direct priority to infrastructure needs that are socially and environmentally sound for investment and opportunity.
Yet, even though the Global Agenda Council’s protocols are ambitious and well intentioned from an investment standpoint, there are critics of the protocol. One concern is the new framework may be in direct competition with the previously adopted and newly formed Arctic Economic Forum, created during the Canadian chairmanship of the Arctic Council.
Environmentalists, including activists from Greenpeace, have also expressed concern about the lack of specific environmental regulations in the Council’s framework and the foundational illegality of an Arctic gold rush. Greenpeace, among other NGOs, has promised court action to block future investors from receiving licenses for new development opportunities in the region.
With so many conflicting opinions and undecided questions, the protocol may represent just another bid to create order in what some may see as the Arctic quagmire. In this instance, we all should hope that history is not bound to repeat itself, and that the world will do right by its newest and ultimate oceanic frontier.
Ashley Chappo is an editorial assistant at World Policy Journal.
[Photo Courtesy of U.S. Geological Survey]
This article first appeared on the World Policy Institute website.