Due to melting sea ice, Arctic waters are opening for more business, including in the cargo shipping, tourism, and fishing sectors. But that’s a double-edged sword: Busier maritime activity could bolster economies but threaten ecosystems by amplifying emissions. To sustainably capitalize on their maritime potential, Arctic states should invest in electrified, green ports that achieve carbon neutrality. Doing so would enable countries to capture the greater marine access of the melting Arctic while mitigating future emissions and climate impact.
To start, the transition towards greener ports is not a path that the Arctic must forge alone; in fact, there already exists plenty of work on the matter. In 2017, the World Ports Sustainability Program formed through partnerships between global port associations — including throughout the Americas and Europe — with the founding principle to enhance the 17 UN Sustainable Development Goals. WSPS builds upon the Paris Agreement, committed to keeping global temperature increase under 2 degrees Celsius. As Christiana Figueres, former Executive Secretary of the UN Framework Convention on Climate Change, points out, “Ports are the connecting nodes of global trade and world economy. There is no way we can move this world towards sustainability without ports.”
In the grand scheme, the emissions from ships far exceed ports; however, electrified ports would catalyze the greening of global shipping by supporting electric ships, a technology already benefiting from innovation. Norway has invested in ferries that conduct short trips entirely on renewable energy. Finland recently built the first ever LNG powered icebreaker, making it the world’s most environmentally friendly icebreaker — and it can even clean up oil spills. Some cruise ships have installed batteries that can lower emissions by 20 percent.
While WSPS works to establish best practices regarding resilient infrastructure and clean energy, Arctic states can also look to a neighbor for a leading example. Rotterdam, Netherlands, houses the largest port in Europe and announced a three-part energy transition to become carbon neutral. First, the port will enact various energy efficiency measures to reduce fuel consumption. Second, Rotterdam will pursue a large-scale electrification of port infrastructure and transition to renewable energy, such as wind turbines which have potential throughout the Arctic. Third, the port will strive to adopt a circular system that views, recycles, and reuses materials differently to eliminate waste.
From a financial standpoint, green ports require massive expenditure, presenting a significant challenge; however, melting sea ice makes them an attractive business opportunity. According to the Protection of the Marine Environment working group of the Arctic Council, the number of ships in the Arctic increased 25 percent between 2013 and 2019, and the distance traveled by 75 percent. The increase spans across all marine activities, including cargo shipping, tourism, and fishing. For example, Iceland has experienced incredible growth in visitors, and Norway saw the largest single year increase between 2015 and 2016, welcoming 32 percent more foreign visitors than the previous year. More traffic will bring greater revenue through port fees, and higher fees could be charged based on ships’ emissions.
Though the financing required to build new ports is enormous, the business case is strengthening as marine traffic increases. True, major increases in Arctic shipping may take years or decades, but so will building infrastructure, so it is imperative to begin discussing these opportunities now. From an economic perspective, port electrification would support development across industries: Jobs would be created locally through construction and maintenance, ecotourism would grow, and all marine activity could increase. From an environmental lens, the electrification of ports would incentivize investment in green shipping technology by providing clean refueling opportunities along routes, lowering a barrier to operations.
Green ports offer an opportunity that would attract both public and private investors. Many Arctic states have devoted resources for climate friendly investments — not to mention the economic development benefits of ports: Finland’s Vake Climate Fund, the Danish Maritime Investment Fund, Norway’s Enova Climate Development Agency. The WSPS has also set aside €5 million to invest in green port technology. These public funds aim to invest in sustainable development, which green ports embody by both reducing emissions and bolstering economies.
The potential for high financial returns would excite private investors. Growth in any single sector is difficult to predict, but ports can cater to several: tourism, long-haul cargo, short-distance shipping, and fishing. As sea ice melts, the likelihood for overall maritime growth is high, even if uncertain in any single sector. This possibility for big wins with cushioned losses would perform well in financial models
Already, private investors have revealed interest in Arctic infrastructure. Guggenheim Partners helped develop the Arctic Investment Protocol within the World Economic Council. To secure capital from Guggenheim Partners and other green-minded investors, countries could build upon the AIP to incentivize investment in green ports.
The Arctic Economic Council should advocate for Arctic-wide collaboration on green ports, which embody the AIP principles of environmental and economic sustainability. The AEC should push Arctic countries with existing port infrastructure (Russia and Scandinavia) to commit to electrification, and encourage others (the United States, Canada, Greenland) mobilize to build new, green ports. Broad efforts to protect the Arctic while supporting marine activity will bolster economic prospects, attract more investors, and correspondingly lower the cost of financing.
Global shipping as an industry contributes widely to climate change through emissions, but the Arctic has an opportunity to turn a loss into a winning strategy. Embodying the AIP through coordinating efforts towards green ports is a surefire investment to mitigate climate change and the melting of sea ice.
Kevin Bain is a graduate of the Harvard Kennedy School with a Master in Public Policy, having concentrated in Economic Development. He focuses on infrastructure finance and climate resilience.
This piece is one of a series of op-eds written by the student-scholars of the Arctic Innovators Program at the Harvard Kennedy School’s Arctic Initiative. You can read the full series on this site.
The views expressed here are the writer’s and are not necessarily endorsed by the Arctic Initiative or ArcticToday, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary (at) arctictoday.com.