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New study reveals the hidden costs of large-scale commercial shipping in the Arctic

Arctic shipping

06 July 2017

New research from Lancaster University and economic research consultancy firm Ecorys reveals the impact of a rise in commercial shipping in Arctic waters.

The increase, triggered by climate change, risks trillions of dollars in environmental costs over the next two centuries – with Africa and South Asia bearing the brunt.

Climate change has contributed to a rapid retreat of Arctic sea ice in recent years, and the trend is likely to continue over the coming decades, even under the most ambitious plans to slow global warming. This provides opportunities for commercial shipping in the Arctic due to shorter travel distances of up to 40% between Asia and Europe via the Northern Sea Route (NSR) passing along the Siberian north coast. However, these opportunities come with an environmental price, says a team of researchers who explored the ‘hidden’ climatic costs of Arctic shipping by using specialised models for climate and sea ice, atmospheric chemistry, international trade, business operations for shipping companies, as well as an integrated assessment model for the costs of climate change.

The new scientific study published in the journal Climatic Change found:

  • Large-scale commercial shipping through the NSR is unlikely going to be possible until mid-2030s for small bulk carriers and until around 2050 for small container ships due to business restrictions facing shipping operators in the Arctic (limited navigation seasons, need for ice-strengthening vessels, increased risks and high insurance costs);
  • Current forecasts of economic benefits of the NSR do not account for the acceleration of climate change caused by Arctic shipping; 
  • This acceleration, driven by ‘shifting’ of emissions to the sensitive Arctic environment, reduction in cooling from sulphate aerosols and by the additional economic growth enabled by the shorter route, could add up to $2 trillion to the global cost of climate change, spread over the next two centuries;
  • Europe and East Asia are expected to benefit from reduced trade costs associated with the shorter route, whilst Africa and South Asia will bear most of the climate-related costs due to the resulting changes in emissions;
  • Put in a global perspective, this climatic cost can offset 25 to 33% of the projected trade-driven economic gains from Arctic shipping growth under medium to high climate change scenarios;
  • Failure to limit the extent of climate change globally – for example if the Paris Agreement fails – will mean less sea ice and more trade via the NSR, with bigger economic benefits in Europe and East Asia. However, the environmental impact of NSR is set to increase even faster than the expected trade-driven economic benefits.

The study was co-led by Dr Dmitry Yumashev (Pentland Centre for Sustainability in Business) and Karel van Hussen (Ecorys) as part of the EU-funded ICE-ARC project.

They said: “Before jumping to the conclusion that Arctic shipping is only going to have economic benefits, it is important to consider its likely detrimental environmental impacts.”

“In addition to potential oil spills, air pollution and noise pollution, which could all affect fragile Arctic ecosystems as well as local communities, large-scale shipping operations between Europe and East Asia via the Northern Sea Route could increase impacts of climate change globally. The reason behind this is global redistribution of emissions of short-lived pollutants such as black carbon and sulphate aerosols, as well as CO2 and non-CO2 emissions driven by the additional economic growth in Europe and East Asia enabled by the shorter shipping route.”

The researchers recommend a number of mitigating strategies that could mitigate climatic impacts, including: regulating emission levels, imposing obligatory slow steaming areas, taxing emissions or incentivising cleaner shipping.

About ICE-ARC

ICE-ARC (Ice, Climate, Economics – Arctic Research on Change) is a programme funded by the European Union’s 7th Framework Programme (ECGA 603887). It is a 4 year project that started on the 1st January 2014, and will look into the current and future changes in Arctic sea ice – both from changing atmospheric and oceanic conditions. We will also investigate in a robust way, the consequences of these changes both on the economics of the area, and social aspects such as on indigenous peoples. www.ice-arc.eu.