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The Chilling Future of Oil in the Arctic

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In resource-rich countries, achieving substantive environmental reform can be incompatible with the potential profits of oil and natural gas corporations. This is especially true in Canada and Russia, two of the largest suppliers of oil and natural gas in the world. As the surface of the Earth warms up, ice caps are melting to reveal huge reservoirs of untapped oil and natural gas. Countries with access to these reserves are forced to grapple with the economic and environmental consequences of drilling. As they do so, they must prioritize the devastating effects of increased carbon emissions over potential profitability, especially because economic gains from these projects are not predicted to be especially large. The exploration of Arctic oil reservoirs must not continue. 

Canada and Russia are both notorious for their failed commitments to climate change reform. Canada has a stated 1.5℃ target, but the country’s policies to achieve that target are ranked as “highly insufficient”:  Its current trajectory is headed toward 4℃ by 2030. Similarly, Russia is ranked “critically insufficient,” as it has taken minimal efforts toward financing environmental reform and the 1.5°C target. In comparison, a country like the United States, which is not known for having strong climate change policies, ranks as merely “insufficient.” 

Russia’s climate policies illustrate no desire to move away from a fossil fuel economy; its plan for net zero emissions by 2060 is contingent on increasing forest sizes rather than decreasing carbon emissions. This proposal lacks a scientific basis and reflects Russia’s desire to evade its commitments rather than tackle actionable climate change policies. In fact, the 2035 Energy Strategy, adopted by the Russian government in 2021, promotes fossil fuel extraction, consumption, and export. This plan makes it clear that Russia intends to pursue profitable energy policies, even at the cost of its commitment to the 1.5℃ limit on global warming.

A country like Canada, which is generally known for its progressive public policy, is more surprising in its “insufficiency” than Russia. As the fourth-largest producer of oil in the world, Canada’s efforts to curb the use of fossil fuels fall quite short of what the 2015 Paris Climate Accords deem necessary. Moreover, the significant discrepancy between the ambitious climate policies described by Canadian leaders and their continued approval of pipeline and drilling projects essentially fictionalizes their plan for net zero emissions by 2050. As a result of the Russian invasion of Ukraine, European nations have turned to Canada for safe and reliable energy sources, bringing Canadian drilling up by almost 14 percent this year. With this increase in production, investment in oil and gas in Canada is predicted to hit a record high in 2023. Oil and gas exploration investments are now worth $40 billion, clearly illustrating that fossil fuels are one of the most lucrative industries in the Great White North. This is especially true in particular regions. For example, in Newfoundland, where the government recently approved a $16 billion offshore oil project, the oil industry accounted for one-third of the province’s total GDP in 2021. 

In Russia, it is even harder to divorce oil and gas from the economy. In 2022, oil and gas exports made up 18 percent of the country’s total GDP, constituting almost 50 percent of total export earnings. Even in the aftermath of heavy sanctions placed on Russia after the invasion of Ukraine, the country’s economy did not collapse as predicted because of continued Western reliance on the country’s oil and gas reserves for their own economies.

If the current discordance between profits and climate reform is bleak, the future seems only more chilling. The warming of the Earth’s surface is leading to massive melting of polar ice caps across the Arctic, uncovering previously inaccessible oil reserves and shipping routes. When Donald Trump attempted to purchase Greenland in 2019, the majority of Americans laughed in his face. However, his plan did have some economic merit. Trump recognized the opportunity for profitable investment in the Arctic. In just a few decades, the global resource markets may be effectively transformed as a result of new resources surfacing in previously inaccessible Arctic reserves. For a country like Canada, this newfound wealth provides an opportunity to grab power—if it is willing to take it.

For a country like Russia, which already has an iron grip on the oil industry, this might be the final nail in the coffin for its near-monopoly. Expanded access to natural reservoirs gives the country a competitive edge in pricing and selling oil. The Russian state-owned energy corporation Gazprom has already begun to drill for oil in the ocean north of Russia. In 2022, another Russian energy company started construction of what will become Russia’s largest oil reservoir in the Arctic Ocean. Western powers are also attempting to extract resources from their northern reaches. President Biden decided to approve a major oil project in northern Alaska in March. Canadian officials have set a moratorium on offshore drilling in their Arctic territory, but pressure from competing oil companies and residents to overturn this law is only increasing. Somewhat ironically, the effects of global warming have only led us to uncover more fossil fuels. 

What might be the greatest irony of them all is that oil drilling in the Arctic seems to be unnecessary. In the time it would take to build drilling infrastructure, the demand for oil is predicted to decrease by almost half. Unfortunately, this decrease would still demand 50 million barrels of oil per day in 2035, leaving the globe still majorly dependent on fossil fuel energies. Nevertheless, the cost of investment into building whole new drilling outposts is not sustainable, considering the depreciating value of oil and gas. It would be more economically sound to continue drilling in existing outposts while the price of oil and gas is still high. In areas of economic dependence on the oil labor industry, divestment in new oil rigs can reallocate money and jobs to clean energy plants. These are high-risk projects that are worth neither the investment nor the heavy cost of climate change. 

Just this week, Biden approved one of the country’s largest oil drilling projects in Alaska. This is not an issue to be put off until later. Government officials and constituents continue to push for drilling projects further north. The motivation for this is two-fold. First, the economies of rural regions are almost entirely dependent on natural resource extraction. Moreover, no matter the predictions, there seems to be widespread consensus that for as long as industry is fossil fuel dependent, there will be profit in oil and gas. In order to advance towards an environmentally and economically sustainable future, northern resource-rich countries must not pursue oil extraction in the Arctic. The advent of re-nuclearization in Europe and the rising popularity of electric cars paints a hopeful picture for reduced dependence on oil and gas. Let us wrestle with the harmful effects of existing oil reservoirs without creating new ones.