Investing in melting ice: how Russia and China are capitalising on global warming

London, 3 Oct. 2022 – By 2030 the Arctic route will be fully operative, and this thanks to the global warming. Cargos and tankers carrying LNG (Liquified Natural Gas) extracted in Russian territory boarding the Arctic Ocean, won’t need ice breakers anymore and shipments of gas, raw materials and commercial shipments, will easily flow halving time and costs.

Russia and China are partners in the exploitation of the Arctic through gas extraction and the intensification of the Northern Sea Route which cuts the 48 days shipments from China to Rotterdam via the Suez Canal by 20 days. Russian Arctic shipping route amounted to 32 million tons in 2020.

Arctic Polar Routes are three
1 Northeast passage around Eurasia

2 Northwest passage around North America
3 Central Arctic Ocean Route

The mandatory ‘phase down’ of carbon emissions is pushing China to increasingly invest in gas imports: Beijing is partner of the Russian Yamal LNG plant producing 17.4 million tons of liquid natural gas (LNG) per annum and operative since 2017.

Through the ‘Polar Silk Road’ China invested 9.9% share in the Russian Yamal LNG; in total Chinese firms hold 29.9% as the oil and gas company CNPC is a shareholder.

Geopolitical interests of Russia and China meet in the Arctic as the first is seeking independence from Western democracies’ sanctions as Kremlin looks East to sell its gas and the latter needs to diversify its energy imports and build new ‘shipment belts’ to stay at large from US Navy which controls nearly all naval routes.

That means China, practically the first world economic power, and Russia, an aggressive regime controlling a vast land rich of raw materials both invest de facto on global warming as melting ices will make of the Arctic route an easier, faster and cheaper road and will make unexplored oil and gas reserves increasingly accessible while permafrost is dangerously thawing, meaning the ice inside the permafrost is melting leaving behind water and soil.

The US Geological Survey reported that the North Pole has the largest oil and gas reserves of the planet, though it constitutes only 6% of its mainland: 13% of unexplored oil sources, 30% of natural gases and 20% of LNG of the total planet resources.

Currently environmental expert, organisations and activists are concerned of the consequences of the Arctic region exploitation and about the impact of future Arctic routes on CO2 emissions, life in the Arctic, pollution and risk of environmental disasters. WWF reports permafrost temperatures have increased to record levels in the past 30 years. As it thaws and degrades, the buildings, pipelines and airstrips that are built upon it can tilt and become unstable. Up to 50 per cent of Arctic infrastructure could be at risk of damage by 2050.

But there’s a more structural concern regarding the geopolitical interests of two regimes, Russia and China, eager to gain control of global sea routes and whose investments look at a future warmer planet: the disengagement of these two global giants in the development of green energy and reduction of CO2 emission will heavily impact the balance of the planet not just in terms of ecosystems.

The pursue of energy exploitation of the Arctic region and the infrastructural building of the new North Pole central route is giving way to a global competition in the region involving the US and the other states members of the Arctic Council: Canada, Denmark, Finland, Iceland, Norway, Sweden.

While China is maintaining strategic and diplomatic relations with North European partners: from 2000 and 2016 China invested 8.43 billion dollars in foreign investment to Finland and 7 billion dollars in Norway while Iceland and Greenland became the main destination of Chinese foreign capital investments.

The assertive Russia apparently active in the North European region where tensions are mounting with present and future NATO members over Ukraine and consequently over Nord Stream 1 and 2, will affect the Moscow-Beijing axis right where president Xi has built cautious relations and invested billions for the future of China. A long-term issue for Putin who desperate needs China as commercial partner for Russian hard sales of oil and gas.

Emy Muzzi