The Black, the Blue and the Green: Norway’s Energy Dilemmas

[Photo by Marc Lanteigne]

by Marc Lanteigne

Less than two years ago, speculation was swirling around the possibility of a dramatic shift in Norwegian energy policy, as the fossil fuel-rich nation appeared poised to downgrade its oil and gas development projects in favour of concentrating on renewable energy alternatives. The runup to the country’s parliamentary elections in September 2021 was dominated by questions about what would happen should the then-opposition Labour Party (Arbeiderpartiet) be required to share power with the Norwegian Green Party (Miljøpartiet De Grønne) and the Socialist Left (Sosialistisk Venstreparti). Such a coalition would likely have resulted in an attempt to reconfigure the Norwegian economy more definitively away from fossil fuels, especially since the Greens had called for an immediate halt to further oil exploration, and the termination of petroleum development in the country by 2035. 

The 2021 election was held during a period of growing evidence of climate change in the Arctic as well as a report [pdf] published earlier that year by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) which included warnings about the precarious state of Arctic sea ice and warming temperatures in the far north. Over the past few years, Oslo had been chided by both domestic and international actors for not doing enough to address climate change pressures, including in the Arctic, and for advocating green policies while maintaining a robust oil and gas industry. 

However, after the parliamentary vote, neither the Greens, which fell short of the expected number of seats, nor the Socialist Left were invited into the new Labour-led coalition. Instead, the Labour government of Prime Minister Jonas Gahr Støre joined with the moderate Centre Party (Senterpartiet) to form a minority government in parliament, (unlike in other parliamentary systems, minority governments in Norway are commonplace, as well as traditionally stable). 

Discussion of a short-term move away from oil and gas in Norway initially became more muted after the new government took office, and the spike in post-pandemic oil prices further quieted any discussion of  a ‘green wave’ in Norwegian energy policy. Despite ongoing unease in some parts of the country over the incompatibility of Norwegian energy policies with global climate change commitments, the Støre government announced plans in March of last year to release new drilling licenses in Arctic waters, and Oslo declined to support a call by the European Union in late 2021 to implement a moratorium on Arctic fossil fuel extraction. 

The February 2022 Russian invasion of Ukraine, and the scramble by many European economies to implement trade sanctions and to sever fossil fuel trade with the Vladimir Putin regime, changed the game again. As a result, Russia has been diverting much of its Arctic oil trade since last year to both China and India, at reduced prices. (China has also been a major buyer of Russian liquified natural gas, or LNG, as European markets were cut off). In September 2022, the abrupt shutdown, widely blamed on sabotage, of the Nord Stream natural gas pipelines connecting Germany and Russia in the Baltic Sea further raised the alarm about the dangers of European dependence upon Russian supplies.


[Photo by Anita Starzycka via Pixabay]

Europe’s search for alternative energy suppliers served to push Norway further into the region’s energy spotlight. Oslo has been called upon to expand both its oil and gas production for sale to European markets, which has not only raised new questions about environmental impacts but has also at times complicated relations between Norway and European energy purchasers. 

It was announced this month that Norway’s oil and gas profits reached record levels during 2022, with a recent report noting the country’s state energy concern, Equinor, made US$24.3 billion just in the period between July and September last year. Norway’s Government Pension Fund- Global (Statens pensjonsfond Utland), based on the country’s fossil fuel trade, now stands at about 12.88 trillion NoK (US$1.28 trillion). 

Since last year, the Støre government has been attempting to deflect criticisms that Norway has been profiting unfairly from the energy crunch elsewhere in Europe. Debates about how to use these additional funds for the benefit of Ukraine, and Europe as a whole, have persisted, and the announcement last October by the Støre administration that Norway would be cutting its aid budget in 2023 from one percent of annual national income to 0.75% did little to silence criticism. Polish Prime Minister Mateusz Morawiecki was especially direct on the subject in May last year, when he called upon the Norwegian government to ‘share excess profits’ made through its fossil fuel sales. Oslo has also declined to implement a pricing cap on exported Norwegian natural gas, but did agree to levying a windfall tax on its oil and gas firms.

However, pressures on natural gas prices eased somewhat at the beginning of 2023 in both North America and Europe, due to conservation efforts, a collective desire to prevent Russia from weaponising fossil fuel prices against the West, and a so-far warmer than expected winter in many parts of the northern hemisphere.

The potential contradictions between demands for Norwegian oil and gas and the country’s commitment to protect the Arctic environment have also been illuminated via an announcement last month that Equinor would invest NoK 13.2 billion (US$1.3 billion) in upgrading LNG facilities in the far northern town of Hammerfest to not only boost production but also to reduce greenhouse gas emissions via upgrades to the facilities’ electrical systems. 

As well, despite ongoing differences over Norwegian fossil fuel policies, the Støre government has nonetheless sought to burnish its environmental credentials in other ways, especially as Oslo has pledged ‘net zero’ carbon emissions policies by 2050. Wind power has become a subject of greater interest, and Norway continues to situate itself as a leader in the sale of electric vehicles (EVs). 

Hydrogen discharge tube [Image via Wikimedia Commons]

This month, it was announced via a joint statement that Norway would be cooperating with Germany to develop hydrogen gas power infrastructure by 2030. This construction would facilitate the transfer of ‘blue hydrogen’, with an eye to eventually shifting to ‘green hydrogen’ capabilities between the two states. Blue hydrogen refers to hydrogen created by the burning of natural gas and using carbon capture and storage. Green hydrogen, which at present is considered too costly to develop on a grand scale, is created via consumption of renewable energy. Hydrogen (H2) has long been considered a promising, and more environmentally friendly, (as its waste product is water vapour), potential successor to fossil fuels. 

Under the agreement, Equinor and German energy firm RWE would build hydrogen-ready power plants as well as a pipeline connecting the two countries. If successful, the enterprise would serve to further diversify European energy supplies while further shielding the region from Russian energy pressures. However, there were initial concerns about cost, as the pipeline alone was reported as having a provisional price tag of NoK 32 billion (US$3.2 billion), as well as over the timetable as to when the project could successfully shift from blue to green hydrogen development, as Germany is especially interested in making that transition as soon as possible. 

In many ways, Norway is still facing the same energy dilemma it had before the start of the pandemic and the invasion of Ukraine, namely how best to address geopolitical and economic needs on one hand while honouring its environmental commitments on the other. Climate change pressures continue to be observed in the Arctic this winter, but these concerns are now more commonly overshadowed by European insecurities, including access to energy, fostered by Moscow’s belligerence. 

Happy Holidays from Over the Circle!

[Photo by Marc Lanteigne]

by the OtC Staff

On behalf of the editors, writers and contributors to Over the Circle, (and also Móri!), we wish everyone a very Happy Holidays, and a peaceful, safe and prosperous 2023!

As the far north continues to grow in local and global importance, OtC looks forward to continuing our reporting on the Arctic in all of its different dimensions.

Arctic Circle 2022: The Outside World Keeps Walking In

[Photo by Marc Lanteigne]

by Marc Lanteigne

This year’s Arctic Circle Assembly was a near-return to normal operations following previous postponements and restrictions due to the coronavirus pandemic. Yet the event could hardly be called ‘business-as-usual’, in the penumbra of the Russian invasion of Ukraine and its global effects, including in the far north. Russian participation in the conference this year was almost non-existent, while military security concerns in the Arctic were a common theme amongst many panels as the overall shape of Arctic security continues to be redefined. 

During a speech by Admiral Robert Bauer, Chair of NATO’s Military Committee, in one of the final plenaries of the event, the Ukraine conflict was directly connected to the Arctic, especially as Finland and Sweden were preparing to join the alliance. ‘And soon,’ the Admiral concluded [video], ‘with seven out of eight Arctic states being part of this great alliance, we will do everything we can to make sure the Arctic remains free and open’. In fact, the current geostrategic situation in the far north is now at high risk of going in the opposite direction.

Two inconvenient truths about the current political state of the Arctic which were reflected in the conference this year. First, any vestiges of ‘exceptionalism’ in the region, meaning the Arctic could be effectively separated from outside security concerns, had entirely vanished. Second, the definition of ‘Arctic security’ continues to become more multifaceted in light of the Ukraine conflict, with Russian and NATO interests resulting in more direct policy conflicts in northerly latitudes. 

The hardening of security interests in the Arctic had been reflected earlier this month in Washington’s regional policy paper, ‘National Strategy for the Arctic Region’ [pdf], which sought to rebalance American Arctic policies following the aggressively one-dimensional approach to the region pursued by President Joe Biden’s immediate predecessor. 

Admiral Robert Bauer, Chair of the NATO Military Committee – Military Committee in Chiefs of Defence Session – 19 May 2022 – NATO Headquarters, Brussels [Photo courtesy of NATO]

The strategy consisted of four pillars in defining US Arctic diplomacy, namely security, (protection of the United States and its allies in the Arctic), addressing climate change (with extensive participation from Alaska in developing strategies for mitigation and resilience), sustainable development, (including regional infrastructure and services), and international cooperation and governance, (working with the Arctic Council and ‘Arctic Allies’ to maintain regional regimes). In August this year, the Biden administration also confirmed its interest in appointing an Arctic Ambassador-at-Large. These policy shifts, including the four pillars and how they may fit into larger questions of Arctic cooperation and strategies, were also discussed at length during the Arctic Circle.

One common theme expressed by the panels was that while the Arctic Council is still officially ‘on pause’, work by the membership, minus Russia, was continuing. Yet it remains to be seen whether critical work on addressing the main security challenge in the far north, namely climate change, could effectively continue under current circumstances. Moreover, there was much side discussion about the future of Arctic governance should the divide between the ‘Russian’ and ‘Western’ Arctics drift towards permanence. 

Although Russia’s attack on Ukraine did cast a shadow on the Arctic Circle’s deliberations, several other themes were front and centre at the event, including Indigenous concerns. In her first speech to the assembly, Mary Simon, Governor-General of Canada, from Kangiqsualujjuaq, Québec, and the first Indigenous person to hold that office, discussed [video] the challenges of creating ties amongst Arctic communities and the effects of warming conditions in the north. As well, she spoke about the ongoing campaign by Arctic peoples to ‘advocate for the space and autonomy they need to claim and revitalise culture, language, and knowledge systems’, including in the Canadian North. 

H.E. Rt Hon. Mary Simon, Governor General of Canada [Photo via the Arctic Circle]

Greenland’s Prime Minister, Múte B. Egede, struck a similar tone, as he spoke about ongoing Greenlandic interests in greater international visibility, but that also any dialogue about Greenland must be on Greenlandic terms: ‘nothing about us, without us’ [video]. This stance reflected the fact that Greenland continues to be courted by international actors, especially as interest in the island’s rare earths continues, and that Nuuk remains committed to expanding its foreign policy footprint as it moves towards potential independence from the Kingdom of Denmark. 

Another question about the near-future of the Arctic which generated attention at the conference concerned the ever-complicated relationship between Arctic governments and the growing list of non-Arctic states and organisations seeking a more robust participation in far northern policymaking. The Arctic Circle had frequently served as a showcase for actual and potential observer countries to showcase their regional interests, and on occasion release new policy documents and strategies. This year was no exception, but with the Arctic Council still in abeyance, questions about of the role of observers, (and whether there were any means of appointing new ones to the Council next year), were thrown into much sharper relief. 

Amongst the current observer governments in the Council, China by far continues to receive the most global attention due to its size, economic weight, and ongoing debates over how the country’s interests in the Arctic are evolving in light of vastly more difficult strategic conditions in the region compared with nearly five years ago when Beijing published its own White Paper on governmental Arctic policy. 

Participation by Chinese officials and specialists was more visible at the conference this year, although some presentations were virtual in light of ongoing travel restrictions related to Beijing’s ‘zero-Covid’ policies. The PRC Foreign Ministry’s Special Representative for Arctic Affairs, Gao Feng, spoke [video] in person about his country’s ongoing interests in the far north, but his speech received additional attention as he deferred the question of whether China would continue to engage the Arctic Council if Moscow remained excluded from its deliberations. He also gave a candid response [video] to a question about whether the Chinese People’s Liberation Army had any role in the Arctic. The response was ‘in theory, yes’, given that China was also a member of the United Nations Security Council, but he also stressed that there were no PLA forces currently in the Arctic, rumours notwithstanding. 

After Admiral Bauer completed his speech, he was challenged [video] in the question period by Chinese Ambassador to Iceland He Rulong, who took exception to the NATO official’s remarks on how China along with Russia had become anathemas to the ‘rules-based international order’ in the Arctic. The room became even more animated as the Admiral then directly asked the Ambassador to explain why Beijing had yet to condemn Russia’s invasion of Ukraine. Not only was the exchange an example of competing narratives, but it also illustrated another inconvenient truth: that worsened relations between America and China were spilling over into matters of Arctic governance, whether the Arctic itself wished it or not. 

In a way, the arrival of Sino-American competition into the Arctic echoes similar concerns raised earlier this year in the Pacific Islands, namely that great power politics may soon overshadow environmental security threats seen as far more pressing to local communities. 

Arctic colours at Harpa, Reykjavík [Photo by Marc Lanteigne]

Several other non-Arctic states were also visible during the assembly’s events, including science panels organised by specialists in Estonia and Ireland, two states which are currently seeking formal observer status in the Council. Estonian president Alar Karis was also a keynote speaker [video] at the event, reflecting on the indistinct lines between Arctic and ‘Arctic-adjacent’ states. The president, noting that Estonia’s status as the ‘northernmost capital below the Arctic Circle’ spoke about three key factors of the region which are also relevant to Estonian interests: human security and the environment in the wake of climate change, the specific contributions which Estonia can make to the Arctic, (including the country’s long history of polar research, specially in environmental studies including in Svalbard, and approaches to sustainable development), and the effects of ‘hard security’ and the war in Ukraine on the far north. 

Representatives from Japan were also involved in discussions about scientific diplomacy in the Arctic, and during the assembly it was formally announced [video] that the Arctic Circle Forum in Tokyo would take place in March of next year, (another forum, to be held in Abu Dhabi on the ‘Third Pole’ and Himalayan geographical studies in relation to the Arctic, is also in preparation, and a forum in Berlin was also confirmed for 2025). Representatives from India also used the assembly as a stage to introduce their own recently published Arctic policy paper [pdf]. 

Singapore, which has often been an active participant in Arctic Track II events despite its decidedly non-polar geography, was discussed [video] during the opening plenaries by the country’s Senior Minister of State – Ministries of Foreign Affairs and National Development, Sim Ann. She explained her country’s expanding Arctic interests as being defined byconcerns over Arctic climate change and the effects of sea level rise on the low-lying island nation, as well as the potential for scientific and technological cooperation between Singapore and Arctic states. In taking questions [video], the Senior Minister added that Singapore’s role as an observer remained crucial despite the pause, given continuing climate change threats, and expressed hopes that dialogue on environmental challenges could be maintained and that a balance could be struck between the global and local aspects of the region.

Sim Ann, Senior Minister of State in the Ministry of Foreign Affairs and the Ministry of National Development, Singapore takes questions with Arctic Circle Chair Ólafur Ragnar Grímsson [Photo via the Arctic Circle]

As is now tradition at the assembly, awards were presented near the conclusion of the event, with this year’s Frederik Paulsen Arctic Academic Action Award being given [video] to Professor Hanne H. Christiansen and Associate Professor Marius Jonassen of the Svalbard-based PermaMeteoCommunity project which has sought to build an advanced system to monitor climate chance and permafrost conditions in the far north. The Arctic Circle Prize, which had previously been awarded to former UN Secretary-General Ban Ki-moon (2016) and former US Secretary of State John Kerry (2019), was presented this year to representatives of the German Alfred Wegener Institute for their launch of the MOSAiC Expedition in the Arctic by the research vessel RV Polarstern during 2019-20. 

This year’s assembly was estimated to have welcomed over two thousand participants, reflecting ongoing regional and international interest in the Arctic. Discussion about the far north, however, continues to enter new and unexpected territories as external political and security interests attempt to side-door their way into the region. To reverse an often-quoted phrase at the event, what happens outside of the Arctic no longer stays outside of the Arctic. 

[Addendum 5 November 2022 – Additional links to speeches at the Arctic Circle have been added.]

New Article: ‘The Rise (and Fall?) of the Polar Silk Road’

[Photo by Kristaps Grundsteins via Unsplash]

Although the Polar Silk Road (bingshang sichou zhilu 冰上丝绸之路), which has been in development since 2017 and has since been incorporated into the China’s greater Belt and Road Initiative, continues to be perceived as a challenge to the Arctic, in fact the PSR has experienced several obstacles in recent years.

In a new comment in The Diplomat by OtC editor Marc Lanteigne, it’s argued that due to a combination of Arctic regional politics and economic constraints, as well as additional pressures caused by the global pandemic and the Russian invasion of Ukraine, the Polar Silk Road finds itself in uncertain times, and much more limited in scope than previous predictions suggested. Therefore, any discussion of China’s emerging Arctic interests must first take into account what the PSR has and has not accomplished at present.

The Rise (and Fall?) of the Polar Silk Road, by Marc Lanteigne, The Diplomat, 29 August 2022.

The Arctic in a Warming World

[Photo by Marc Lanteigne]

by Marc Lanteigne

The far north has long been considered a barometer for the measurement of global climate change, including via phenomenon such as higher average temperatures, wildfires at ever-higher latitudes, permafrost loss, and reduced ice coverage of the Arctic Ocean, as well as the melting ice sheet in Greenland.

This summer, however, has shaped up to be one of the most graphic illustrations to date about the effects of climate change around the world, starting with heat waves across East Asia (including China), EuropeNorth America, and South Asia. Record temperatures have placed strains on global energy grids as prices for fossil fuels have rebounded (albeit fitfully) due to post-pandemic demand and the effects of sanctions on Russia as a result of that country’s unlawful invasion of Ukraine. 

Conventional wisdom had long maintained that the Arctic was warming at two to three times the international norm, resulting in the effects described above. However, a new open access article in the Nature journal Communications Earth & Environment has concluded that the amplification process in the circumpolar north has resulted in warming rates four times that of the global average since 1979. Moreover, the report suggested that previous examples of climate modelling in the Arctic were not sufficient in describing the overall warming processes. 

The study comes on the heels of an article in another Nature publication, Scientific Reports, from this June which described the Barents region in the European Arctic as being especially affected by warming temperatures, potentially up to seven times that of the international average. 

Specific examples of this phenomenon in northern Europe include record melt rates in Svalbard, affected by warmer air currents from the south. The island group is said to be experiencing a shift away from Arctic weather patterns and towards those consistent with more southernly parts of the Atlantic Ocean. Norway’s Climate and Environment Minister, Espen Barth Eide, who visited Svalbard earlier this month, called these new figures ‘dramatic’ [in Norwegian], and representing further proof of the accelerating pace of climate change in the far north. 

Last month, it was also reported that Greenland experienced a spike in the loss of its own ice coverage, with eighteen tons of water spilling into the Atlantic-Arctic in the space of just three days. The island is finding itself back in the international spotlight as a result of climate change, as the loss of surrounding sea ice would make it easier for extractive industries to operate there. 

While the Greenlandic government of Prime Minister Múte Bourup Egede has placed environmental concerns high on the agenda, implementing green-friendly measures over the past year including suspending plans for a uranium and rare earths mine at Kuannersuit, and implementing a moratorium on oil and gas exploration, Greenland nonetheless remains attractive to outside actors for its mineral wealth. 

Display at Polaria, Tromsø [Photo by Marc Lanteigne]

The growing international demand for ‘critical minerals’, such as rare earths as well as cobaltlithium, and nickel, for green technologies like electric vehicles, has been coupled with concerns about the stability of future supply lines for these minerals. A survey plan, spearheaded by KoBold Metals and the UK’s Bluejay Mining and backed by billionaire CEOs including Amazon’s Jeff Bezos and Microsoft’s Bill Gates, has commenced in Greenland’s Disko Bay region in the hopes of finding rich deposits of these raw materials. 

Mining remains a difficult subject in Greenland political circles, as the island continues to contemplate eventual independence from the Kingdom of Denmark, which would require a more diversified economy including potentially in the extractive industries sectors. Yet at the same time the mounting evidence of the effects of global warming in Greenland has raised alarms about the potential damage these industries could cause. Environmental politics are also likely to be on the agenda at the next Arctic Circle Forum meeting, to be held later this month in Greenland’s capital, Nuuk. 

International cooperation on climate change, including in the Arctic, remains tenuous. The Arctic Council remains bifurcated with Russia’s ostracism from the organisation, and there is now discussion about about the other members of the organisation, now often called the ‘A-7‘, can continue to cooperate on environmental issues. As of yet, there is no announced plan to address the transfer of the chair position from Russia to Norway which is scheduled for May of next year.

After much delay, the United States belatedly passed sweeping legislation to address environmental concerns as part of the Inflation Reduction Act. Another US bill [pdf], recently organised by Senators Lisa Murkowski (R – Alaska) and Angus King (I – Maine) would specifically focus on American Arctic policies including an assessment of the country’s regional research programmes along with improving US security and shipping activities in the far north and commencing free trade talks with Iceland. 

However, despite the US’s attempts to return to global climate change dialogue, the suspension by Beijing this month of bilateral climate talks with Washington over Taiwan policies may create aftershocks in combatting environmental damage on the international level. 

The warning lights in the Arctic continue to grow in number as much of the northern hemisphere concludes what has been a summer of weather extremes. Climate change threats continue to be mixed in with politics within the Arctic and well beyond, but the amount of time required to best address said threats is showing every sign of dwindling.