CLIMATE CHANGE AND THE
LIMITS FOR THE
DEVELOPMENT AND
COOPERATION IN THE ARCTIC
Ilya Stepanov,Center for Comprehensive European and International Studies,
Laboratory for Economics of Climate Change, HSE University

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

SCOPE AND OBJECTIVE• Revise the role of climate change in the future development of the Arctic region,cooperation between main actors and the perspectives of implementing domesticand foreign Arctic policy of Russia• IN FOCUS: Climate change itself vs. global reaction to climate change, i.e. lowcarbon transition as one of the main drivers for rethinking Arctic development
prospects
Presentation partly based on the results of the report by HSE University “Russian Policy in the Arctic: InternationalAspects” by Daria S. Boklan, Vasilii B. Kashin, Anastasia B. Likhacheva (main author), Igor A. Makarov, Ilya A. Stepanov(main author), Dmitry V. Suslov (main author)[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

UPSIDE OF THE WARMING ARCTIC• The rise of the Arctic surface temperature has
been twice as fast as the world average• The area of the September ice has been
decreasing at a rate of 13% per decade and has
decreased by almost half compared with the1980s• Increased transport potential of the Arctic (e.g.
the Northern Sea Route), extension of thenavigation period (from July to October)• Increased accessibility of the Arctic resources• The most promising Arctic areas for economic
development: the Barents Sea, the Beaufort andthe Kara Sea, the eastern and western coasts ofGreenland (Kjartan et al. 2017)

Source: NASA’s Scientific Visualization Studio, Key And
Title
ByUploader(EricFisk).
URL:
Https://Data.Giss.Nasa.Gov/Gistemp/Maps/Index_v4.Html(Accessed: 23.07.2021)

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

DOWNSIDE OF THE WARMING ARCTIC
Climate-related environmental and economic security risks:•••••

forest fires
adverse changes in the habitat of animals and plants
coastal erosion
the world Ocean level increases -> a threat to the livelihood of millions of people across the globe
thawing of permafrost - > destruction of housing, transport and energy infrastructure, critical damage to ecosystems;
formation of methane funnels and natural emissions of the methane -> boost in global climate change

Risks of increased economic activity:

•••
•
•
•

pollution of soils, groundwater, rivers and seas with heavy metals, petroleum hydrocarbons, other toxic substances
the disruption of the habitat and migration of birds and ungulates, etc.
adverse effects for the Arctic indigenous populationdisruption of the marine animals’ habitat
risks of liquid hydrocarbon spills
emissions of toxic pollutants from the fossil fuels combustion

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

POLITICAL IMPLICATIONS OF THE ARCTIC“OPENING”• Increasing accessibility of the Arctic, as well as the dependence of the whole world on climatic processes in theregion, are used by non-Arctic countries to get involved in the Arctic agenda (growing number of the ACobservers, Chinese White Book, Arctic strategies of the EU countries, etc.)• Formation of new international institutions in the Arctic (the Polar Code 2017, International Governmental
Scientific Forum of 20 Countries Interested in Arctic Research 2016, the Agreement on the Prevention of
Unregulated Fishing on the High Seas in the Central Arctic Ocean 2018)• Intensification of the “spillover” of the rivalry between the United States and Russia and the United States andChina to the Arctic: erosion of legal regime of the Arctic
Growing institutional, security and military risks of the warming Arctic

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

GLOBAL LOW CARBON TRANSITION• The Paris Agreement, adopted in 2015 and ratified by 197 countries, - the commitment of theglobal community to reduce greenhouse gas emissions and implement climate change adaptation
programs• The decarbonization of the world economy becomes self-replicating, and government climate
policies are complemented by a growing number of corporate climate change mitigation initiatives• Targets to achieve carbon neutrality by 2050 have already been outlined by such largest
economies as the EU, USA, UK, Japan, Republic of Korea, Canada, Mexico, and South Africa.
China is planning to achieve carbon neutrality by 2060

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

DEMAND FOR HYDROCARBONS - 1• Slowing growth of demand for fossil energy sources (and the reduction of the energy demand indeveloped countries) given growing competitiveness of carbon-free or low-carbon energy sources.
While in the 2000s the global demand for fossil fuels grew at an average rate of 2.4% per year, in2010-2018 1.3% per year, in the period 2019-2040 it will grow at a rate of 0.5-0.9% per year
Mtoe (% intotalconsumtion)
Coal
OilNatural Gas
NuclearRenewable
Total
Mtoe (% intotalconsumtion)
Coal
OilNatural Gas
NuclearRenewable
Total

World

2019
3775 (26%)
4525(31%)3340 (23%)
727 (5%)2039 (22%)
14406 (100%)2019
302 (11%)992 (37%)905 (33%)251 (9%)254 (9%)2704 (100%)

2040: scenarios
Sustainable
Stated Policies
Development
3314 (19%)
1295 (10%)
4832 (28%)
3006 (23%)
4321 (25%)
2943 (23%)
896 (5%)1126 (9%)
3721 (22%)
4649 (36%)
17085 (100%)
13020 (100%)
North America
2040: scenarios
Sustainable
Stated Policies
Development
88 (3%)
29 (1%)
855 (33%)465 (24%)967 (38%)518 (27%)179 (7)215 (11%)483 (19%)722 (37%)2571 (100%)
1949 (100%)

Source: International Energy Agency. World Energy Outlook 2020

Europe2019271 (14%)617 (32%)495 (26%)
241 (12%)315 (16%)
1939 (100%)
20192894 (47%)
1542 (25%)
702 (11%)172 (3%)813 (13%)6123 (100%)

2040: scenarios
Sustainable
Stated Policies
Development
114 (7%)51 (4%)
406 (25%)218 (15%)438 (26%)271 (19%)182 (11%)219 (15%)534 (32%)682 (47%)
1674 (100%)
1441 (100%)
Asia Pacific2040: scenarios
Sustainable
Stated Policies
Development
2824 (36%)
1095 (18%)
1781 (23%)
1157 (19%)
1252 (16%)
1056 (18%)
416 (5%)533 (9%)1598 (20%)
2149 (36%)
7872 (100%)
5989 (100%)

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

DEMAND FOR HYDROCARBONS - 2• Tightening climate policy and green technologies development will have the mostdetrimental effect on coal consumption. Its share in the global energy balance willcontinue to decline rapidly.
• Unlike coal, the dynamics of oil demand is less sensitive to the tightening climate
policy. The oil demand is less elastic in price compared to the demand for othertypes of fossil fuels and is mainly determined by volumes of oil use in the transport
sector• Natural gas will be in the most demand among three types of fossil fuels – primarily
due to the increase in its consumption in developing countries.

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

CLIMATE-ENERGY TRENDS’ NEXUS: WHAT
DOES IT MEAN FOR THE ARCTIC?
• Global climate change does not turn the Arctic into a promising region for the extraction of energy resources andinternational transit contrary to the point of view prevailed in the 2000s.
• Decarbonization of global energy as a structural factor in the development of energy markets, restrains the long-tern
growth in the energy demand, the price level is unlikely to return to the values of the late 2010s.
Fears (or dreams) of high oil, gas, and coal prices are a thing of the past. The world has entered an era of broad
technological and inter-fuel competition. For all areas of consumption, there are many promising competing solutions thatare ready to offer an alternative promptly and win back the market when the prices of the dominant fuel increase” (Makarovet al. 2019).
• Demand for energy resources will continue to grow the fastest in Asia, but even there, energy consumption is to peak inthe coming decades• The transformation of global energy markets increasingly calls into question the feasibility of developing hydrocarbonsat the Arctic continental shelf. In the coming decades, the demand for gas in both Europe and Asia will be fully coveredby extraction from traditional, primarily gas, continental fields, developed, for example, within the framework of theRussian Yamal LNG and Arctic LNG-2 projects and may be few additional ones

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

CLIMATE-ENERGY TRENDS: WHAT DO THEYIT MEAN FOR ARCTIC SHIPPING• The prospects for the development of international shipping in the Arctic – through the Northern
Sea Route (NSR) that runs along the Russian coast – are also directly dependent on the ongoingtransformations in the global energy markets• The share of bunker fuel costs lies in the range from 36 to 57% of total transportation costs• The higher the price level for bunker fuel, which is directly related to oil prices, the higher is thecommercial attractiveness of the northern short transport routes compared to the longer southern
ones• The peak of transit traffic on the NSR was in 2013, when 71 vessels passed through the NSR
during the whole year. As a comparison, this is less than the number of ships passing through theSuez Canal daily

[Japan-Russia Scientific Forum] Online Workshop “Sustainable Regional Development,International Cooperation and the Protection of the Arctic Environment”, 14.09.2021

HIGHLIGHTS
1. Climate change and - more importantly - global reaction to climatechange alter patterts of developemnt and cooperation in the Arctic
2. Climate change trigger environmenral and economic risks together aswell as bring new isntitutional and military challenges
3. Contrary to the point of view which prevailed in 2000s, climate change
does not turn the Arctic into a promising region for producing energy
resources or international transit
4. Need to rethink Arctic development priorities in Russia. Plans for further
economic expansion in the region (extensive development) hardly meetthe objectives of sustainable development of the region.

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