Elena Kutepova (Higher School of Economics)
PEEER workshop, Moscow, September 2009:
«Towards Environmental Governance in the Arctic»
(preliminary presentation overview)
What is the impact of Arctic governance on Europe-Russia relations?
1. Introducion: Arctic governance – the common information

What is governance

What is environmental governance

Governance of marine Arctic ecosystems includes a complex array of
international treaties and programmes, bilateral agreements, national and sub-national laws, and
non-governmental and governmental initiatives.
The main problems relating to Arctic governance include the fragmentation of the legal
framework, the lack of effective instruments, the absence of an overall policy-setting process and
gaps in participation, implementation and geographic scope.

The UN Law of the Sea Convention (UNCLOS)
The Arctic marine area includes nation-state territories (Canada, Denmark (Greenland
and the Faroe Islands), Finland, Iceland, Norway, Sweden, The Russian Federation and the
United States of America (Alaska)) and also international space, which is legally beyond
national jurisdiction according to the UN Law of the Sea Convention (UNCLOS). UNCLOS is
the basis upon which all countries rely in order to assert a raft of maritime claims over the
territorial sea, exclusive economic zone, and the continental shelf. UNCLOS governs all aspects
of ocean space, such as delimitation, marine scientific research, economic activities and the
settlement of disputes relating to ocean matters. However, UNCLOS sets out only minimum
standards for the protection of the marine environment and encourages states to agree on detailed
rules for such protection on the regional basis.
The borders of territorial waters are still to be clarified in some cases (e.g. Norway and
Russia), and many countries outside the Arctic have strong interests in the region (e.g. China, EU
and Japan).
2. Why the issue is new?
Long neglected in terms of international governance and management, the Arctic is
attracting greater attention as a region in need of an effective regime.
 Resources
The Arctic region contains some 20 to 25 percent of the world’s untapped oil and gas
reserves located in an important and fragile environment.
The Arctic is experiencing fast-paced and far-reaching changes associated both with the
effects of climate change and with the impacts of global economic forces.

Environmental changes
Environmental changes triggered by the climate change, such as the melting of the ice
caps are increasing the geo-strategic importance of the Arctic, which might lead to potential
consequences for international stability and Europe’s security.
In spite of harsh conditions, melting of ice and new technologies will gradually increase
access to Arctic living and non-living resources as well as to new navigation routes. Although
the Arctic remains one of the most pristine areas on Earth, it will be increasingly at risk from the
combined effects of climate change and increased human activity.
Governance of the marine ecosystems within the Arctic is a critical issue, due to the
growing pressure of activities like marine shipping, offshore oil and gas development,
commercial fishing, and eco-tourism in areas that have been inhospitable to such activities until
recently.

Economic reasons
Europe’s dependency on foreign oil and gas threatens Europe’s energy security, and for
that reason EU has been looking to the Arctic as the new source for a secure energy supply.
3. Interests for European Union and Russian Federation
1) Russia

The Arctic is the source of about 10% of the world’s oil production and 25% of its
gas production. Most of the Arctic receding ice is taking place in Russia’s territorial waters.
Geographically speaking, almost 20 percent of Russian territory is considered to be Arctic or
subArctic.

Why is the Arctic region so important for Russia? There are three main reasons.
The first one is that it is a future economic and energy resource engine. In 2008 the US
Geological Survey assessed undiscovered Arctic energy riches as the geographically largest
unexplored prospective area for petroleum remaining on Earth. Russia’s Ministry of Natural
Resources estimates the country’s Arctic shelf at 25% of the world’s hydrocarbon. Moreover,
Russia’s strategy on continental shelf development aims to increase the offshore share in
domestic gas and oil output by 20% by 2020. However, some experts doubt whether the country
has a real capacity to do so due to the country’s lack of adequate technology in accessing the
Arctic resources, poor industrial equipment, absence of viable regional infrastructure and
insufficient investment.

The second reason is that the Northern Sea Route, a route between the North
Atlantic Ocean and the Pacific Ocean along the Russian coasts of the Far East and Siberia, is a
transport corridor, which promises to be one of the more important transit routes in the future.
Russian experts estimate that the traffic passing through their waters is likely to be around 10–15
million tons in 2015–2020.

The third reason has to deal with its strategic location and security worth. From
this perspective, safeguarding the status quo in the Arctic area means ensuring national security
and sovereignty.
2)
European Union

Climate change with resulting meltdown of the Arctic ice together with increased
focus on energy security and new technology have contributed to an increase in the European
interest in the Arctic as an energy region. The European Union has a direct interest in the Arctic
because three of its 27 member states have land territories there: Denmark, which owns
Greenland, Finland and Sweden. Two other Arctic states — Iceland and Norway — are members
of the European Economic Area. Canada, Russia and the United States are strategic partners of
the EU. Admittedly, the European Union does not directly abut the Arctic Ocean since the entire
Scandinavian Arctic coast is Norwegian territory and Greenland, although it belongs to
Denmark, is not integrated in the European Union.
EU Interests:
1. Common heritage – world wide effects of melting ice and rising temperatures
2. Significant research spending in the Arctic
3. Leaders in clean and safe technologies – icebreakers, maritime engineering, polar
technologies
4. EU is champion for mitigation of climate change
In October 2008 the European Parliament called for “a standalone EU Arctic policy” and
suggested that the European Commission should “be prepared to pursue the opening of
international negotiations designed to lead to the adoption of an international treaty for the
protection the Arctic”. Soon thereafter, the EU Commission presented a Communication on the
Arctic region, highlighting environmental protection, sustainable resource use, and “enhanced
Arctic multilateral governance”.

According EU energy strategy by 2020 a series of binding targets should be met
by the 27 EU members. These include: 10 percent of automobiles to be powered by bio-fuel; 20
percent of all energy (including electricity, heating and transport fuel) produced from “carbonneutral” sources such as solar, wind and nuclear energy; the development of “carbon burying,”
involving reducing atmospheric carbon emissions from fossil fuel burning power stations. The
EU Commission’s plans are largely aimed at enabling Europe to reduce dependence on Middle
Eastern and Russian oil and gas.
=> The exploitation of hydrocarbons in the Arctic will lead to an increase in hydrocarbon export
to Europe that is not consistent with EU non-fossil strategy. Is there a need to develop
hydrocarbons?
4. Reasons for not developing Arctic hydrocarbons
The development of energy projects in the Arctic is impeded by a number of reasons.

Climate
The Arctic climate and weather conditions translate into a challenging physical
environment for exploration and development. Working conditions are difficult, access to
resources is sometimes restricted by weather, operating seasons are shorter, special equipment is
often required, and costs are correspondingly higher.

Infrastructure and regulations
The lack of infrastructure in the Arctic (roads, ports, pipelines, tanker facilities, etc.),
itself a function of the climate, is widely cited along with social and ecological risks as a major
impediment to development.

Economics
The economics of Arctic oil and gas development are defined principally by practical
infrastructure factors as well as by distance to markets. Oil basins with good access to markets
via pipelines and ice-free seas are relatively attractive investment projects.

Environment
The Arctic ecosystem is currently under enormous man-made impact. It is difficult to
predict just how badly the area would be affected because northern ecosystems are understudied. Opening the oil fields on the Arctic Shelf carries higher risks than drilling elsewhere
because of the complicated natural and climactic conditions which demand the use of unique
technical apparatus, an insufficient infrastructure, a lacking legislative basis for safety. Energy
projects and environmental changes will not only result in changes to the flora and fauna, but
will allow unprecedented access for shipping and exploitation of offshore hydrocarbon, thereby
possibly threatening migratory birds and mammals, as well as entire ecosystems, with significant
impacts on local people and their way of life. The development of oil and gas fields on the Arctic
shelf, including the surveying, extraction and transport of petroleum products represents a
multiphase, large-scale process which is accompanied by such negative influences on the
environment as: physical, chemical and biological disruptions in the open water, on the sea floor
and in the atmosphere. In this regard, practically all the chains in the marine and coastal
ecosystems are under serious threat.
5. Conclusions
 The growing importance of the Arctic requires a growing need for clear and respected
rules for its governance. An international treaty is needed nowadays balanced between
the respect for the environment and the use of natural resources.
 The exploitation of the Arctic’s resources will be costly process due to harsh conditions
and multiple environmental risks. The development of energy projects in the Arctic is
impeded by a great number of limits. If Russia develops hydrocarbons on the Arctic shelf,
will EU import it? Russia doesn’t need the development of oil and gas fields on the
Arctic shelf due to the economic and environmental benefits and uncertain political
situation.
Proposed questions for discussion:
What is the main interest for EU in the Arctic development?
Does Russia need to increase exports of hydrocarbons to Europe?
What has more benefits: developing or not developing the Arctic resources?
Do we need international Arctic governance? etc.