Arctic natural gas has the potential to meet North American energy needs while reducing greenhouse gas emissions, maintained The Honorable Robert McLeod, Minister of Industry, Tourism, and Investment for the Northwest Territories. Nevertheless, efforts to limit energy exploration in the Arctic and the listing of the polar bear as a threatened species by the U.S. Department of the Interior raise environmental questions about developing natural gas from the Arctic. On June 25, 2008, the Canada Institute and the Global Energy Initiative hosted McLeod for a timely discussion of his government's argument for increasing the development of northern gas in a manner that balances environmental and economic aims.

Climate Change and the Arctic

McLeod began his presentation by stating that the U.S. Department of Interior's recent decision to list the polar bear as a threatened species risks destroying the Northwest Territories' (NWT) sports hunting industry. He maintained that the hunt claims a small number of polar bears annually (between 25 and 40) and shutting down the hunting industry would mean a $1.6 million blow to an economy that has limited opportunities for expansion and growth. North America's focus should be to address climate change, said McLeod, noting that melting ice caps pose a far greater threat to the polar bear than Arctic sports hunting.

The effects of climate change are more pronounced in the Arctic than anywhere else in North America. McLeod noted that rising temperatures have not only had a grave impact on Arctic wildlife, but also the NWT economy. He noted that a considerable amount of NWT's infrastructure has been constructed on permafrost, which provides strong support for the construction of buildings, roads, and airport runways. Rising temperatures have continued to melt the permafrost, which not only results in cracks and damage to existing infrastructure but also makes new construction projects more difficult. In addition, the NWT relies heavily on ice roads to connect remote regions. Warming temperatures have resulted in shorter winter road seasons, affecting the means and cost of transportation of supplies and disrupting the lives of those living in the Arctic.

Making the Case for Arctic Natural Gas

McLeod stressed that the threats posed by climate change is a continental dilemma that will require collaborative action between Canada, the United States, and Mexico to address. One avenue to reduce North America's rising emissions is to reduce the continent's reliance on coal and increase production of cleaner-burning natural gas. He noted that development projects currently underway in the Beaufort Sea and the Mackenzie Valley could place the NWT in a prime position to supply North America with a secure and steady source of natural gas for decades to come. In addition to providing North America with improved energy security, Arctic gas also has noteworthy environmental benefits, said McLeod. He supported this claim by citing a recent study conducted by the Arlington, Virginia based consulting firm Energy and Environmental Analysis Inc. The study concluded that in the absence of Northern natural gas during the period of 2014-2025, emissions from the power sector in the United States, which still relies heavily on coal in many states, would increase by 258 million tons. In Ontario, the projected increase was stated to be 23 million tons. The study also revealed that failure to develop and utilize Arctic gas over the same eleven year period of time would force Canadian and American consumers to pay approximately $340 billion more for natural gas.

Despite the projected environmental and economic benefits of developing Arctic gas, environmental groups continue to seek a halt to Arctic oil and gas exploration "under the guise" of saving the polar bear and seals, said McLeod. Such a position fails to recognize the role Arctic gas can play in reducing the affects of climate change, which still remains the most prominent threat to Arctic wildlife. He alluded to the recently negotiated $585 million Beaufort Sea exploration project with ExxonMobil Canada and Imperial Oil Ltd., as a sign of the vast economic potential of Canada's North. McLeod maintained that Arctic gas exploration and development projects should be viewed as a means of funding NWT's much needed infrastructure and economic development, with the potential of fueling North America with a clean and stable source of energy that could help the continent drastically reduce its greenhouse gas emissions.

Drafted by Ken Crist
Program Associate, Canada Institute