Thawing Planet: Climate Change, Resources and Managing the Arctic

Chech against delivery

Introduction

• Pleasure to be back at this prestigious institution to address this international audience.
• Have been to the LSE twice before as foreign minister – but was also enrolled in the School’s PhD programme some 25 years ago.
• I ended up not joining the LSE at the time, but many Norwegians have, both before and since – and many of my staff are former LSE students. Few institutions in the academic world are more respected, for your history – but not least for your will to explore new topics, new horizons. Today – when most eyes in London are fixed on developments in the South and East – I would like to give some perspectives on the horizon to our north: on Norway’s High North policy, on energy security and on the challenge of climate change.
• My departure point: Norway as a major energy and climate player in the High North, which is starting to become a new geopolitical centre of gravity.
• Energy and climate change important parameters in European and global geopolitical discourse.
• Why did we make the High North a priority for our foreign policy? I have touched on this in my previous addresses here at LSE, but let me repeat:

Three drivers of change: Russia – Climate Change – Resources

• What Norway brings to the table: energy resources, climate ideas/concepts, a High North/ Arctic perspective, and a foreign policy that integrates these dimensions.

I    The High North/Arctic perspective

• What characterises the High North/the Arctic today? Rapidly growing foreign policy and economic/commercial role/impact; Arctic Council, energy exploration, opening of sea routes, new players on the block.
• Legal framework: The Law of the Sea provides the legal framework for all activities in the Arctic Ocean, which is an ocean surrounded by land under national jurisdiction.
• In the Ilulissat Declaration (28 May 2008 in Greenland) the five coastal states bordering on the Arctic Ocean – the US, Russia, Canada, Norway and Denmark/Greenland – stated their continued commitment to the legal framework in the Arctic Ocean and  to the orderly settlement of possible overlapping claims.
• The majority of the resources in the Arctic are to be found within areas of national jurisdiction, within the 200-mile economic zones and the continental shelves of the coastal states.  
• Norwegian policies and principles for responsible management of Arctic resources command strong support.
• Two weeks ago I presented my Government’s white paper on our High North policies.
• I often raise this polemic question: Why did thousands of Norwegians leave their country 100 years ago when there were oil and gas under the seabed, opportunities for fish farming in the fjords, and promising marine bio prospecting activities?
• The answer is obvious today: They did not know. They lacked the knowledge. That is why Knowledge is at the heart of our High North policy. Close cooperation and interaction with the scientific community is key to reaching our overarching goals for the High North.
• Let me present to you 7 visions and trends that we believe will form the future in the High North/the Arctic in the next 20 years:

1. A new energy province in Europe.
2. A new industrial age in the north. (Many strategically important minerals found in the North).
3. Pioneering work on integrated marine management. (Northeast Arctic cod best kept fish stock in the world. Norwegian–Russian ecosystem-based fishery management in the Barents Sea.)
4. The growing attraction of the Arctic Ocean. (40% reduction in sailing time from Yokohama to Rotterdam compared to Suez route. Increased number of sailings – 34 this year.)  
5. Global source of knowledge about the environment and climate change.
6. Close and innovative cooperation in the High North. (Arctic Council. UK permanent observer. Agenda setting body. SAR, oil spill response, knowledge about climate change – “front row seats”). For example, the signing of an MoU on closer cooperation on polar science with my British colleague William Hague.
7. New geopolitical centre of gravity in the High North. (From Cold War logic and inaccessibility to extensive international cooperation and accessibility to resources and shipping routes. Still military strategic interest and military exercise. Russian fleet. NATO presence. Core areas. UK–Norway partnership. Aim: High North – low tension).

• Today I will both i) outline how the High North, including the Barents Sea, could contribute to improved energy security in Europe, and ii) show how the Arctic can provide knowledge about the environment and climate change that has important implications for the rest of the world.

A new energy province in Europe

• The Arctic as an area with major energy and other natural resources – key source of future European energy security. The US Geological Survey suggests that as much as 22% of the world’s undiscovered petroleum resources could be found in the Arctic.
• The Barents Sea seems likely to become an important European energy province. How rapidly it develops will depend on market conditions, technological developments, the size of any commercially viable discoveries of oil and gas, and how fast renewable energy sources are developed.
• Energy and geopolitics in the north in the interface between Europe, Russia and Asia. Foreign policy implications.
• The Norwegian oil and gas industry is moving northwards. New discoveries in the Barents Sea in 2011 (Skrugard and Norvarg). There are great opportunities to still find large petroleum resources in the Barents Sea. There is vast acreage waiting to be explored.
• New discoveries and technology can lead to the development of new infrastructure in the future. The resources available and commercial considerations will be decisive.
• Increased oil and gas activities in the Arctic must also be weighed against considerations of other industries and interests within the framework of integrated, ecosystem-based management.
• Potential for renewable energy developments, hydropower, wind and wave. Long distances, market-related issues, need for new infrastructure and environmental and safety factors pose challenges.
• Energy dimension will be most important driver of increased interest in the High North in both political and business circles globally.
• Reason to believe that the volume of shipping will increase.
• Need to keep sharp focus on environmental requirements – and to continue technological innovation to limit/eliminate emissions – CCS

Arcitc: Important source of knowledge about the environment and climate change

• Knowledge about the Arctic climate is important for global climate policy and for taking the decisions needed to prevent global warming.
• Knowledge gained in the Arctic increases understanding of how the climate system works at global as well as regional level. That is why studying the effects of climate change in the Arctic is so important – not only for this region, but because it can also help explain why Lake Chad, in the middle of Africa, is drying up and why we see similar patterns throughout the world.
• Because there is no doubt that dramatic changes in the Arctic are having important global effects, although scientists disagree on how strong the linkages are.
• But we do know that the melting of the polar ice cap, including the vast Greenland ice sheet, will lead to a rise in sea levels. In addition, the loss of sea ice will accelerate global warming.
• The environment of the High North is very vulnerable. Serious problems related to inputs of long-range pollutants and to hazardous waste, including nuclear waste, on the Russian side of the border. The situation has improved through international cooperation, but strong focus on these problems must be maintained to ensure economic and industrial activities are within safe ecological limits.

II      Meeting the climate challenge

• How should the UK and Norway as climate conscious energy producers act at time of urgent need for more and greener energy?
• The International Energy Agency’s World Energy Outlook 2011 states that CO2 emissions have reached a record high, global energy efficiency has worsened for the 2nd year, and spending on oil imports is near record highs. Coal has been the winner in the last decade, accounting for almost half the increase in global energy. Newspapers report that China and India are opening a new coal power plant every second day. Does it matter what we do?  
• According to IEA, global energy demand will increase by one-third from 2010 to 2035, with China and India accounting for 50% of the growth.
• Looks less and less likely that we will reach the two-degree goal unless there is a change in direction soon.
• We face a dilemma: How can we – as producers of fossil fuel – also contribute to the fight against climate change?
• Less carbon intensive production. High standards in place. If we do not develop new fields in the Barents Sea for instance, pressure will increase on more carbon intensive production elsewhere in the world.         
• Norwegian perspectives on Durban and beyond – the significance of a global climate accord and the importance of being able to act in the (likely) absence of such an agreement.
• COP 17 started this Monday: the stakes are high - but expectations are low.
• How can Norway and the UK cooperate in the ambitious integration of energy and climate change policies (natural gas, interconnection, and renewables)?
• First, the sale of more natural gas to the UK will contribute to a greener energy mix in the future. Gas is the cleanest of the fossil energy sources and CO2 emissions can be significantly reduced by replacing coal with natural gas.
• Norway is a reliable and long term supplier of natural gas. New discoveries in the Norwegian continental shelf (Aldous/Avaldsnes in the North Sea and Skrugard in the Barents Sea) bode well for the future.
• Secondly, we need to develop CCS and increase its use. Yes there are obvious challenges (technological, financing, “NIMBY” – not in my back yard), but I am an optimist and believe that our UK–Norway partnership will be central in bringing this forward. 
• Thirdly, what we call interconnectors. There is an extensive grid of gas pipelines from the North Sea and the Norwegian Sea to the UK today. Then you have the interconnectors linked to renewables, which provide energy to supplement intermittent renewable energy in Europe. Norwegian hydropower can contribute to balancing other energy resources. As it looks today it will probably only account for a small proportion of the total amount needed in the UK and Europe – but things can shift rapidly.
• Fourthly, but not least: renewables. Strengthening the share of renewables in the energy mix is vital in order to reduce CO2 emissions. Our two countries have common interests in this respect. I believe that the best way this issue can be brought forward is by keeping it high on the agenda in our bilateral energy dialogue. The Dogger Bank project – a gigantic offshore windmill project in the North Sea; Statoil as a leading partner, but Statkraft (another Norwegian company) also has a stake. Potential renewable energy to account for a considerable portion of the future energy mix.
• The EU dimension – Norwegian support for promising EU efforts to integrate energy and climate futures (Energy Roadmap 2050). Norway can contribute through exports of natural gas (to replace coal) and renewable energy. The so-called green certificate market with Sweden will be launched on 1 January 2012. 

III      European and UK energy security

• Let me now turn to the issue of energy security and how this is linked to the High North/the Arctic.
• The Fukushima accident in Japan, the German decision to close down all nuclear power plants by 2022, the shale gas revolution in the US, and Libya’s sudden stop in oil production earlier this year demonstrate that the energy picture can shift rapidly – and with immediate consequences globally. Point of departure – gas will still be needed to secure stable energy provision and as a stabilising energy source to support emerging sources of renewable energy.
• Oil and gas from this region can improve European energy security and make an important contribution to global energy supplies. This has important economic and foreign policy implications.
• Oil and gas from Norway’s continental shelf have been a cornerstone in Europe’s energy consumption for decades. Trend is clear: exploration and production have steadily moved northward. Expect this trend to continue. Witnessing same development on the Russian continental shelf.
• Ongoing work on opening up new areas for exploration and production both around the island of Jan Mayen north of Iceland and in the South East Barents Sea (Norwegian Sector). It will take some time before these processes are finalised. Collecting necessary information including conducting environmental and social impact assessments, etc.
• Energy supplies are being developed in peripheral areas of Europe under increasingly harsh climate conditions. Major geological, environmental, technical and climate-related challenges. Meeting them in a profitable and sustainable way will require knowledge, creativity and innovation.
• But what was once a frozen region in more than one sense is warming up to the prospects of reaping mutual benefits through cooperation based on agreements.
• After 40 years of negotiations, Norway and Russia agreed on the delimitation line in the Barents Sea and Arctic Ocean earlier this year. This will contribute to a more predictable and less politicised framework for further exploration of this energy rich region.
• Security of energy supply cannot be ensured by European countries alone. The financial crisis and high and volatile oil prices make this clear. We have seen increasing tension over energy resources in some regions, not least in the Mediterranean.
• The significance of strengthened energy diplomacy, infrastructure and transport routes – within Europe, between other energy regions and Europe, and globally – are topical foreign policy issues. A complex picture.
• To strike the right balance we must take into account the importance of diversification of energy supply, get the right energy mix (don’t put all eggs in one basket) and understand how energy interdependency between countries and regions works.
• This means that industries, politicians, governments and consumers must be up to speed with the flexibility, attitudes, skills and creativity to adapt to these challenges.
• Let me turn to our bilateral relations. Last week’s Statoil–Centrica deal on the delivery of natural gas to the UK from 2015 to 2025 – reflection of the energy interdependence between the UK and Norway and the role of natural gas in the UK’s future energy mix.
• We appreciate the presence of British companies on the Norwegian continental shelf and they are very welcome to participate in forthcoming licensing rounds in Norway. We believe that there are great opportunities to still find large petroleum resources in the Barents Sea. There is vast acreage waiting to be explored.
• We have a new comprehensive energy and climate dialogue with the UK.
• Our energy relations go far beyond gas sales. The potential for future cooperation in renewables is high on the agenda. The Dogger Bank project, the possibility of extending an electricity cable between Norway and the UK (balancing power), the North Sea Offshore Grid. Carbon Capture Storage (CCS) is another area where we have common interests, as is offshore safety.       
• Norway will continue to be a stable and predictable supplier of gas to Europe. The UK and Germany are our two most important markets.

Summary and conclusions

To sum up:

The High North/Arctic perspective

• Legal and political/institutional framework in place. No “race”. Foundation laid for increased economic activity in a sustainable manner.
• Norway as a leading and responsible actor in the High North. At forefront of knowledge and resource management.
• The High North/the Arctic as a region of resources and one of the most stable regions in the world. Can make important contributions to energy security in Europe and provide knowledge about global climate change.      

European and UK energy security

• Energy potential in the High North/the Arctic relevant for the UK and Europe.
• Complexity of the global energy picture. Interdependence.
• Strong energy ties and comprehensive dialogue between Norway and the UK. The UK and Germany our most important markets for natural gas. Norway will continue to be a stable and predictable supplier of gas to Europe. Statoil–Centrica deal.
• In Norway, 2011 is Nansen–Amundsen year. We are celebrating the 100th anniversary of Amundsen’s Antarctic expedition, the first to reach the South Pole as well as the 150th anniversary of the birth of Nansen. These polar heroes took part in building our nation. We must remember where we come from and how important the High North has been – and still is to Norway.