Arctic sustainable solutions gaining in popularity amongst investors

As more experts envisage over-exploitation of resources (and some of them predict their exhaustion by mid-century), business and investors are looking for more opportunities to expand access to commodities without compromising on the ESG agenda. According to various researches, the Arctic may be one of such regions with untapped natural resources, food reserves, and energy.

In a 2019 study, experts from Guggenheim Investments estimated that economic activities across the Arctic has already exceeded $500 billion a year, a figure that is only expected to grow over the coming decades. However, today any investor or business that is focused on long-term commitment in the region, has no choice but to look at their business goals through the prism of sustainability. While it is almost impossible to ignore the sustainable agenda for the public companies, other types of company can hardly overlook it today as green financing, public image, consumers’ awareness and other factors play a big role in the success of corporate business.

Finally, development of the new regions should be aligned with the lives of the local communities, whose interests are high stake when it comes to investment in the Arctic. Green loans are also strengthening the role local communities play in the decision-making process. Whether at public councils, company hearings, or Arctic forums, indigenous voices resonant strongly to keep companies accountable. In other words, to get financing today, businesses have to go an extra mile and prove not only their project’s eco-friendliness, but also may need to demonstrate its benefit to the local community.

Urge for infrastructural development

According to some studies, the Arctic has become “a leading region for biotechnology, cutting-edge scientific research, and meaningful and measurable success in sustainability for the entire planet.” The Arctic Economic Council’s October 2022 report on “Sustainable investment opportunities in the Arctic” showcases twenty-two key sustainable projects in the Arctic in categories ranging from technology to tourism.

Yet, none of these projects are possible without significant investments in infrastructure. It has a tangible impact on the quality of life of individuals in any given region, and helps bring to life any ambitious project of every scale.

Investments in infrastructural projects are also crucial for another reason - it spurs long-time economic stability and create conditions for more investments and improved life of the local communities. According to the International Monetary Fund, a 1 percentage point of GDP increase in infrastructure spending leads to an estimated 1.5 percent increase in GDP within four years.

Today, infrastructure development is amongst the most in-demand business activities in the Arctic, with countless projects at various stages of implementation – from those already commissioned and operational to those only just attracting investors. In this article, we explore several such sustainable infrastructure solutions and why they promise to set the region up for impressive long-term growth.

Roads to improve the lives of indigenous peoples

A prime example of a sustainable infrastructure project in the Arctic is the $185 million 97-kilometre Tłıchǫ All-Season Road (TASR; officially called the Northwest Territories Highway 9). It was opened to traffic in November 2021 to replace an ice road that was only accessible in winter. Today, this all-weather road connects the Tłı̨chǫ First Nations community of Whatì to the Yellowknife Highway symbolizes new economic opportunities to this part of northwestern Canada. A year-round road means year-round access to basic goods and services and a higher standard of living for the locals. Furthermore, improved accessibility opens the door to tourism and, therefore, to more employment opportunities.

As the road was built through untouched, forest-covered land, the project necessitated the development of an indigenous knowledge-based wildlife monitoring programme. A special committee of indigenous elders was also created to transmit knowledge of the region’s nature.

Implemented through a public-private partnership, which means that the project was realized through the joint efforts of the regional government and private companies, Tłıchǫ All-Season Road attracted local labour during its construction and will continue to be maintained by locals in the years ahead. Northstar Infrastructure, a partnership between the Tłı̨chǫ Investment Corporation and Kiewit Canada Development, was contracted for the road’s construction, while Hatch Corp. and Thurber Engineering Ltd. were responsible for the road’s design.

Ports to strengthen economic sovereignty

In the harsh climate and delicate landscapes that constitute the Arctic, it is often more efficient to travel and transport goods by water than it is to do so by land. Ports, just like roads, open access to resources, services, and a higher standard of living for locals. For this reason, port infrastructure is of great importance to all Arctic countries.

Though 40 percent of Canada’s coastline runs along Nunavut, the region has no federal ports and only one harbour in Pangnirtung to accommodate small ships.

In August 2021, it was announced that the hamlet of Qikiqtarjuaq in Canada’s Nunavut region would be getting a deepwater port – a dream come true after decades of lobbying the federal government. The $40 million port will lie at the entrance to the Northwest Passage, which is expected to see increased shipping over the coming years. Construction will be paid for with funds from the federal budget.

The port is expected to have a wide range of benefits, such as improving traffic safety and strengthening various industries, from fishing to tourism. Currently, local fishermen travel to Newfoundland and Labrador to offload shrimp and turbot catches, but the new port will enable them to do so locally, suggested the then Qikiqtani Inuit Association president Pauloosie Jamesie Akeeagok in an August 2021 interview with Nunatsiaq News. The port will also facilitate search and rescue operations and create new jobs for the local community.

Sea routes to improve logistics infrastructure

According to the Arctic Economic Council, “almost 90% of all goods traded today are transported by sea, and the Arctic connects more than 80% of the world’s economy with increasingly accessible shipping channels”. The ongoing development of the Northern Sea Route (NSR) would play a crucial role in creating new business opportunities. For one, the route, at some estimates, can cut the travel time between Europe and Asia by up to 40 percent.

Some experts suggest NSR may become an alternative for cargoes travelling via the Suez Canal. While it would take time for infrastructure to build a similar capacity, according to some critics, the route can at least compliment the Suez Canal in logistics opportunities.

The project envisages the construction of two transport and logistics hubs - one in Russia’s Murmansk region and the other in the Primorsky Krai. It would also build up a fleet of Arctic-class container ships capable of travelling independently through polar waters for the longest length of time possible throughout the year and relying on icebreaker assistance only in zones with thick ice and during months of heavy freezing. Furthermore, with experts predicting ice-free summer by 2030-2040, NSR can play a crucial role in building a solid supply chain infrastructure.

With the scale of the investment, the project will also bring long- and short-term benefits for the economy, as it will create up to 6,000 working places, which will grow even after the completion of the construction stages.

The use of renewable energy adds to the importance of the project, as it has entailed the use of all-electric lifting equipment and electric port carriers as early as the design phase and minimised the use of combustion-fuelled equipment and technology. The development also foresees conditions for comprehensive scientific studies and both the surface and submarine environmental monitoring.

Russia’s nuclear energy operator Rosatom, which is also the operator of the NSR, anticipates spending nearly 1.5 trillion roubles (US $21.5 billion) on NSR infrastructure by 2030.

High-security CO2-free data centre

The Arctic is one of the best places in the world to work with polar orbiting satellites – a line of business that the regions of northern Sweden are actively developing. Arctic Space Technologies is building the corresponding infrastructure in the region and giving satellite operators the chance to install their antenna systems at the company’s sites. This US $2.2 million infrastructure will enable systems to achieve longer communication times than would be possible closer to the equator. What is more, near the antenna sites, customers can access a CO2-free data centre with the highest level of security of any cloud computing system on the market. Arctic Space Technologies works has teamed up with EcoDataCenter to provide sustainable and secure data centre services.

The IT sector is known to consume about 10 percent of the world’s electricity – most of this energy is never used, but is simply released into the atmosphere as heat, thereby contributing to global warming. In just five years, cumulative global data centre carbon dioxide emissions are expected to exceed those of the entire aviation industry.

The most distinguishing feature of the Arctic Space Technologies project is, therefore, the fact that it has a nearly non-existent carbon footprint thanks to the use of renewable energy sources, which has also helped reduced costs across its operations.

The centre already operates three sites, one of which is entirely powered by hydropower from a local river. What is more, the centre’s excess heat is harassed to heat other premises.

Connectivity in the Arctic

Connectivity in the Arctic – access to reliable, high-speed internet – is a question of equity and a fundamental facilitator of sustainable development. As a OneWeb white paper titled “Polar potential: The Arctic could exemplify sustainable development” astutely noted the following: “Seizing the opportunity and integrating local and indigenous knowledge into [future] development and regulatory processes ultimately depends upon providing access across the Arctic to affordable and reliable broadband ... Connecting the entire polar region will provide the critical missing link in the Arctic between growth and responsible regulation … Universal connectivity will make new regulations practically enforceable while also allowing socially and environmentally responsible behaviour to be remotely recognised and rewarded. Live data will for the first time be accessible from local people, sensors and scientists in any place at any time, giving indigenous communities and scientists an influential voice over decisions and democratising development.”

Unfortunately, internet connectivity has historically been a challenge in the Arctic, both because of how hard it is to lay fibre-optic cables through the tundra and, therefore, to install terrestrial high-bandwidth networks, and because of the intermittent reliability and speed of many current satellite-based networks in the region.

Nevertheless, there have been numerous examples of successful connectivity projects in the Arctic, from the fibre-optic cable lain by Russia’s mining giant Nornickel to provide high speed internet to Norilsk to the use of a 100 mbps satellite-based broadband connection from Kepler Communications to provide internet access to the German icebreaker Polarstern – a mobile lab for the MOSAiC research project, which seeks to understand how climate change is affecting the Arctic.

Just recently, in December 2022, it was announced that a 1.1-billion-euro ($1.15 billion) project – a joint venture between Finland’s Cinia, U.S.-based Far North Digital, and Japan’s Arteria Network – to build a submarine fibre-optic cable linking Europe to Japan along the Arctic seabed secured its first investment.

“This cable system is more than a way to speed and improve the security of telecommunications between nations, it is a bridge over the digital divide, providing Northern communities with better opportunities for sustainable self-determination through economic development, enhanced educational options, and improved access to healthcare,” said Far North Digital Chief Technical Officer Guy Houser in a December 2021 press release. “Furthermore, it will serve as a platform that offers science an unparalleled ability to conduct research into climate change.”

The Arctic is on its way to becoming a leader in sustainable solutions

A European Commission report published in early 2022 estimated the Arctic’s investment potential at around 150 billion euros by 2030, most of this as part of the green transition. Investors no longer see green spending as a fashion statement or a compromise with local populations. Today, sustainability, equity, and environmentalism – from energy sources used in implementation to a project’s ability to actively engage the local community – are core principles in business development. Locals are welcomed to participate in projects from the earliest stages, not only as members of the workforce, but as bearers of unique knowledge about local ecosystems and as future beneficiaries of the fruits of these projects’ operation. Such considerations are instrumental to changing the paradigm of “business of usual” and placing the Arctic well on track to become the world’s first region to completely transition to sustainable business solutions.