Connecting the Arctic
Chair, Arctic Economic Council
Tero Vauraste, chair of the Arctic Economic Council and CEO of Finland’s Arctia, explains how melting sea ice is transforming the Arctic and why the region needs sustainable development.
The following are excerpts from our interview.
The Arctic Economic Council has the first overarching theme as being market access and the freedom of trade.
Within the Arctic it’s being counted by the World Economic Forum that you have an investment potential of one trillion US dollars. There is a great investment power in the Asian countries including China, including Japan, including South Korea. And they have a great interest also in developing their transits on the northern sea route and er also the Northwest Passage.
Whatever we do in the Arctic must be done on very very secure sustainable and safe manner. So safety always comes first. But the main area is to work for the best of er Arctic sustainable businesses and make the Arctic to be a viable place for sustainable economical development.
The Northern Sea Route gives you an opportunity to diminish your travel time by 20 to 40% depending on which harbours you use - either in Asia or er in Europe.
This year we’ve had many many transits from the Northern Sea Route to and from China. So this is an area for... for potential increase.
But there is of course a cost benefit analysis which the shipping operators must make. If you’re able to reduce your travel time and other costs more, than which is the cost of an icebreaker then it becomes economically viable.
One of the key areas of future developments is of course energy. We’re all aware that the energy needs of the world keeps rising because the population keeps rising. Around 30% of the world’s undiscovered natural gas resources are considered to be in the Arctic and around 13% of the undiscovered oil resources are considered to be in the Arctic.
You hear some demands that oil and gas developments in the Arctic should be sort of banned totally, and the remaining oil and the remaining gas should be left where it is. But that is not a question of the Arctic. That is a question for the human population around the world. We need to go down on our energy consumption to be able to do that.
The Paris Agreement targets are challenging but as we’re aware for the moment it seems that we’re not meeting them either.
We consider that actually as a potential area for business as well - to create new types of technologies which are less energy consuming, making sure that we would be able to meet this target. For instance using wind power, using solar power and there’s a lot of light in the Arctic especially during summer periods.
Tidal energy, wave energy, these types of approaches are really giving an opportunity to the local energy solutions.
We have Indigenous peoples coming from Russia, coming from Canada, coming from US, coming from Greenland. And they have different types of interests, but of course the main interest which is common is that they are a part of the decision making.
We have to make sure that the local societies are deeply involved in each development, both regionally and then on state and international levels. Saving the nature is of high importance but also the people of the Arctic say that we’re not a museum that needs to be preserved. We are... we are a developing society.
Recently the AEC has welcomed a number of international shipping companies as non voting members, especially from Asia.
Business has no borders in a way. The organisations, the companies, they are multinational. Those great economies have to be on board, because you can also think that otherwise they might have their own ship going to the Arctic. So collaboration in the international level and the freedom of trade is for the best of sustainable development.
When they are coming to conduct business in the Arctic, they need knowhow, they need support, they need access to the governments to the Arctic which means that we can support them in those areas to work in the most sustainable manner.