A local perspective on energy development in the high north

ALEKSANTERI INSIGHT 1/2017. To date, the impact of the federal energy policy on local sustainable development has not been systematically investigated, writes Daria Gritsenko.

During the past fifteen years, there has been a revival of Russia’s commercial activity in the Arctic. Rich natural resource deposits located on- and offshore, as well as the commercial potential of the Northern Sea Route, were declared in the Russian Arctic Strategy (2008) to be a guarantee of Russia’s future economic prosperity and influence in world affairs. The large-scale industrialisation of the Russian Arctic may have both positive and negative economic, social, cultural and environmental implications on local societies.

Yamal LNG is a flagship re-industrialisation project in the Russian Arctic. This industrial complex includes a large liquefied natural gas (LNG) production facility, an international airport and a port Sabetta constructed on the western shore of the Ob River estuary. President Vladimir Putin has endorsed the development of the project multiple times, becoming a ‘personal guarantor’ of its success.

Developed by Novatek, the second largest gas producer in Russia, in cooperation with Chinese and French partners, Yamal LNG will become the largest LNG production facility above the Arctic Circle, with an annual capacity of 16.5 MT. As Russia seeks to diversify gas exports and tap into new markets, LNG seems like a logical choice.

At the local level, the Yamal LNG project is expected to create a wide range of socioeconomic benefits: revitalising economic activity, attracting transhipment cargo, bringing jobs and tax revenue. At the same time, the indigenous peoples and their cultural heritage, as well as the environment, are likely to experience negative consequences of intensive industrialisation, including pollution, loss of habitats and the disruption of traditional livelihoods.

The local dimension is decisive for the success of Russia’s Arctic industrialisation. First, climate change in the Arctic is happening faster than in other regions, while its impacts on Arctic mega-projects are still ill-understood and adaptation strategies poorly developed. In addition, the expected increase in extreme weather events could make High North operation riskier than today and Arctic resources less, rather than more, accessible.

Second, the disruption of indigenous livelihoods combined with changing demographics could create social vulnerability, negatively affecting the industries in the long run. If many people move to small communities to take new jobs this could create social tension between newcomers and indigenous and non-indigenous locals, including land or resource use conflicts. The influx of a mainly male workforce can also provoke a gender imbalance.

To date, the impact of the federal energy policy on local sustainable development has not been systematically investigated. The extension of extractive frontiers has been primarily justified at the federal level. While the local government acknowledges the potential economic and technological benefits that the re-industrialisation of the Arctic brings, local activists emphasise that they want federal development policies to be aligned with the traditional lifestyle. Finding a balance between investments and income (economic sustainability), resource base and exploitation rate (environmental sustainability) and opportunities created and lost for the local population (social sustainability) requires a thorough assessment of the local effects of energy mega-projects.

If Arctic industrialisation plans do not take into consideration the long-term effects of energy projects on the local environment and population, there is a danger that Yamal LNG and other projects aimed at reviving Russia’s commercial activity in the Arctic will repeat the fate of the flagships of Soviet industrialisation, which caused longterm damage to local people, environments and economies and eventually suffered themselves from the damage they created.

Daria Gritsenko is a postdoctoral researcher at the Aleksanteri Institute and a Partner at the CoE Choices of Russian Modernisation.