Climate change (although some argue with that) is something, that we should really be focusing on. In June and July, the temperatures in Arctic Russia hit levels that have never been seen and recorded before. This raises the prospect that soon the NSR (Northern Sea Route) could become navigable for the ships. But this also could mean an ecological disaster for the whole region.
Arctic temperatures are rising almost twice as fast as they do (on average) in other parts of the world. In late June, Yakutia recorded an all-time-high temperature of 31 degrees Celsius. The city is behind an Arctic circle and is more than 2,500 miles northeast of the capital of Russia, Moscow.
The Suez Canal comparison
And while the ecologists are ringing for an alarm, Russian officials have been touting the Northern Sea Route as a cheaper and faster way between Asia and Europe when compared to the Suez Canal. Only in 5 years’ time, the cargo traffic on NSR has grown more than fivefold and currently sits at around 33 million tons. OECD (standing for Organization for Economic Co-operation and Development) believes that the ‘fully-opened’ Route will allow the transportation to travel from Europe to the Pacific by as much as 40% faster. When in 1869 the Suez Canal was opened, the achieved time savings were estimated to be around 23%.
Paradoxically, the NSR got a publicity boost when in March 2021 the Suez Canal was blocked for 6 days, causing a 12% drop in the world’s trades. The blockage has been calculated by Lloyd’s List, and apparently, it cost $400 million per hour.
The ripples caused by the blockage were felt all around the globe, as the logistics services and shipping industries were impatiently waiting for the Suez Canal to unclog. Berkley Research Group LLS’s Harry G. Broadman believes that it stirred some discussions about the possible alternatives, and the NSR seems like a very tempting option. But in order for the Route to be fully functional, further climate damages must be suffered, which can be good for nobody.
OECD’s paper argues with the thesis that NSR could become an actual alternative in some markets. The Suez Canal offers some advantages that are not present while using NSR, such as a terminal network or the possibility to reach the deeper areas of the land. These features are impossible to replicate in the Arctic, as there are almost no roads or harbors. The estimations are that only a margin from Suez Canal transports will be moved to the Arctic. In fact, only in 2070, the significant bulk volumes of transport will be using the Northern Sea Route.
How could this affect the environment?
Siberia is already suffering a lot from climate change. To add to that, oil and gas plants are being built there, strongly frustrating the environment, and even adding up to the pollutions. The lack of resources will only further destabilize the Arctic region.
Russian political elites are happy with the fact that NSR may become profitable soon. They are still not convinced of the whole idea of dangers coming from the climate changes in the far north. In fact, the last geological exploration of those lands took place in 1987, even before the fall of the Soviet Union. Only as much as 2% of the region has been explored properly. And the experts do not believe that Russia will be eager to invest major financial resources so that this research could be done.
Without it, we cannot even be sure what are the risks for the environment. The problem could only be quantified after the proper fieldwork has been done. And for it to take place, months (if not years) are needed. In the meantime, rising temperatures will literally melt the Arctic, thus the conditions will change in real-time. This makes the works a lot more difficult.
In order to fully understand the problem, we advise you to visit the Disruption Banking page, where you will find a brilliant piece written by David Whitehouse. It’s a great case study, so it’s really worth reading: https://disruptionbanking.com/2021/07/22/russian-northern-sea-route-opening-raises-dangers-of-arctic-environment-disaster/.
