The race for resources in the Arctic

There have been several bits of disastrous news in the energy area in the past few days. Firstly, a Greenpeace report saying that global coal and natural-gas extraction threatens to increase fossil-fuel emissions by a fifth by 2020, jeopardizing efforts to stem rising temperatures; secondly, that an Australian company is claiming a find of large quantities of shale oil in NW Australia; thirdly, that the Russians are entering the race for shale oil; a finally, that an oil-hungry China is entering the race for hydrocarbons in the Arctic.

This, absolutely confirms that conventional production of oil has, or is, peaking and that countries are having to opt for secondary sources that have have such a poor energy return that they will never be financially viable – and ruinous for the economy.

That humanity is having to opt for sources of energy that are so filthy that they will add hugely to greenhouse gas emissions, is testament to a worldwide race to extinction.

As Guy McPherson says so eloquently: “hooray ... we're fucked, again!”

The Resource Race:

China Dips Toes in Arctic Waters

China is hungry for natural resources, and the Arctic is home to a wealth of them. Growing alarm about its ambitions has led Beijing to take a softer approach, stressing exploration and research over exploitation

Christoph Seidler

Spiegel,

25 January, 2013

You didn't hear much Chinese spoken on the Mackenzie River until the summer of 1999. But then excitement swept through the sleepy Tuktoyaktuk settlement in Canada's Northwest Territories, when a vast ship with a crew from the Asia-Pacific unexpectedly docked in the port. Local authorities were caught off-guard by the arrival of the research icebreaker Xue Long, which means "snow dragon." The vessel -- 170 meters (550 feet) long and weighing 21,000 metric tons -- had in fact informed faraway Ottawa of its intention to sail into Canada's arctic waters, but the message hadn't been passed on.

Today, such an incident probably wouldn't happen. States around the North Pole keep careful and regular watch on visitors from China. Its "growing interest in the region raises concern -- even alarm -- in the international community," the Stockholm International Peace Research Institute (SIPRI) recently wrote. And this despite the fact that "the Arctic is not a foreign policy priority" for Beijing.

The equation seems simple. China is hungry for natural resources, and the Arctic is rich in natural resources. What could be more straightforward? But Beijing insists that its interest in the region is first and foremost for research purposes, that the Arctic can help shed light on climate change, that it offers useful shipping routes, and so on and so forth.

Indeed, for now, the Chinese government has no official Arctic strategy. And it doesn't say much at all about natural resources in the region, especially because the economic superpower can -- for the time being, at least -- get what it needs elsewhere, such as in Africa.

But this is also because it has realized that it needs to be subtle about its interest in the polar North and not upset Arctic nations any more than it already has. "Currently, China has not carried out any exploration activities in the Arctic," said Zhao Yun, Beijing's ambassador to Norway, on Monday at the Arctic Frontiers Conference in Tromsø. China is more interested in joining forces with other states to study "trans-regional issues," he stressed.

Demonstrating great diplomatic finesse, Zhao insisted that Beijing was keen to communicate and cooperate with all relevant parties, including, of course, the indigenous population. It would also welcome a chance to be granted observer status on the Arctic Council. So far, so friendly.

A Careful Message

Even though China is trying to avoid being overbearing, it can't hide its growing interest in the region. "They are extremely careful about what message they send," says Leiv Lunde, director of the Fridtjof Nansen Institute, and independent foundation concerned with environmental, energy and resource-management policies based in Lysaker, Norway. Lunde recently returned from a trip to China, where he had delivered a 90-minute speech at the Beijing Energy Club. Afterwards, he spent over two hours fielding questions from government officials, researchers and executives from raw-material companies.

Still, Lunde believes that Chinese companies have understood that although oil and gas from the Arctic could make a long-term contribution to the country's energy supply, it won't come cheap. China will have to "play by the rules of capitalism," Lunde says. Right now, for example, the China National Offshore Oil Corporation (CNOOC) wants to acquire its Canadian competitor Nexen, but the deal first has to be approved by US authorities.

Beijing's raw-materials managers are also eyeing Greenland. Just outside the capital, Nuuk, a British company has teamed up with Chinese financiers to develop a giant iron ore mine. Over 2,300 Chinese workers will be employed here, boosting the island's population by 4 percent. The total investment will be around €1.7 billion.

Greenland needs it -- at least if it is ever to make its dream of independence come true. Sara Olsvig is a member of the Danish parliament who represents a separatist party in Greenland. She points out that, as of 2040, Greenland's state coffers will be seeing a shortfall of some €134 million a year. "We are interested in securing additional income," she says. "And where should we look for that if not in the fastest-growing nations of the world?"

So far, Olsvig says, no decisions have been made, but Chinese investment in Greenland's mining sector would be as welcome as investment from any other country. "China is all over the world. It is no surprise that they are also interested in Greenland's resources," she says. The iron ore mine project is, however, not uncontroversial in Greenland. Among other things, critics are unhappy about the prospect of China bringing low-cost labor to the island.

Long-Term Planning

Traditionally, China has upheld the principle of non-intervention. Accordingly, at the conference in Tromsø, the Chinese ambassador to Norway resorted to a linguistic slight of hand to justify his country's focus on the Artic region: Northeastern China, Zhao explained, stretches almost to 50 degrees north latitude, making his country what he called "a near-Arctic state." According to that logic, the German island of Sylt, which lies at 54 degrees north latitude, could also be described as "near-Arctic" -- but no one would.

"China's arctic research is still at the starting stage," Zhao said. In 2004, China -- like many other countries, including Germany -- set up a research station on the Norwegian island of Spitsbergen. Meanwhile, the Polar Research Institute in Shanghai trains scientists specialized in the region, while another 120-meter-long icebreaker is currently being built with Finnish help.

The Xue Long has now made five trips to the Arctic. The last was in the summer of 2012, when it traveled from Iceland via the North Pole to the Bering Strait. As it entered the waters off Spitsbergen, the Norwegian coast guard was there in an instant -- in stark contrast to Canada's casual response back in 1999.

"China spends much more on research in the Antarctic than the Arctic," cautions Lunde, from the Fridtjof Nansen Institute. For now, using Antarctica's natural resources is prohibited by the Antarctic Treaty System. But that ban might be lifted in the decades to come. "Maybe they are just preparing themselves," says Lunde. "China is very good at long-term thinking."