RE-ARCTIC: promoting renewable energy,
eliminating fossil fuel subsidies and
benefitting communities in the North
Background note for the presentation by IISD at the meeting of the Sustainable Development Working
Group of the Arctic Council, 1 March 2015, Whitehorse, Yukon, Canada
Lack of access to reliable, affordable and sustainable energy in the Arctic1 hampers social and economic
development in the region, especially in Canada, Russia and the U.S.A. In these three countries at present energy
in the Arctic comes predominantly from fossil fuels, is very expensive, and heavily subsidized by governments.
However, in many cases renewable energy (RE) sources can be cost-competitive with, or cheaper than fossil fuel
energy in the Arctic even at the present low world price of oil (USD 50-60 per barrel). This is especially valid if
we take into account the true – social – cost of emissions from subsidized diesel and fuel oil in the North in
terms of black carbon and its effect on climate change, other pollution, and opportunity cost.
Like in many other parts of the globe, promotion of renewable energy and phase-out of fossil fuel subsidies go
hand in hand and will open opportunities for improved energy access in the North. There are three
straightforward reasons why now is the perfect time for these reforms that will also bring about GHG emissions
reductions:
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The world oil price is low, which means looking beyond extractives is needed for economic development
and benefitting communities of the region. Low oil prices also mean a window of opportunity for reforming
diesel and fuel oil subsidies (see below);
More and more organisations are taking interest in the subject, with critical mass of grass-root initiatives,
technological expertise (functioning RE projects in the Arctic) and political vision gathering across the Arctic;
Now is the time of the forthcoming U.S. Presidency of the Arctic Council, with a priority focus on change
mitigation and reduction of black carbon emissions in the Arctic (with a logical handover to Finland on this
topic).
1
IISD follows the broad definition of the Arctic used in the Arctic Human Development Report (2004, pp. 17 - 18) for the Arctic Council
which “encompasses all of Alaska, Canada North of 60°N together with northern Quebec and Labrador, all of Greenland, the Faroe
Islands, and Iceland, and the northernmost counties of Norway, Sweden and Finland. The situation in Russia is harder to describe in
simple terms. The area included, as demarcated by our demographers, encompasses the Murmansk Oblast, the Nenets, Yamalo-Nenets,
Taimyr, and Chukotka autonomus okrugs, Vorkuta City in the Komi Republic, Norilsk and Igsrka in Krasnoyarsky Kray, and those parts of
the Sakha Republic whose boundaries lie closest to the Arctic Circle”.
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How RE-ARCTIC will make a difference
Above-mentioned are the three present “natural” enabling conditions for transition to a lower-carbon, and
ultimately lower-cost energy solutions in the Arctic. However, other countries’ experience (see Text Box) and
IISD’s extensive research signals the importance of four more required enabling conditions that will not emerge
“by themselves”:
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An ambitious and integrated political vision RE Trailblazers: these countries have mostly reformed
and commitment2 to renewable energy fossil-fuel subsidies, set clear policy targets and
development across the Arctic. At present arranged dedicated funding for RE. They mostly have
the Arctic is a patchwork of ambitious grid solutions, but off-grid successes are also part of
commitments,
somewhat
ambitious the results below.
commitments, and non-commitments;
Electricity from renewables today:
Public
private
partnerships
and
• Iceland, Tokelau – 100%
establishment of dedicated funding
• Norway – 98%
mechanisms for renewables3 such carbon
• Paraguay – 90%
• Greenland – 70-75%
tax, pollution tax, recycling of revenues from
• Canada – 63%
extractives, Arctic Development Bank, etc.;
Fossil fuel subsidy reform4. All Arctic
Aiming to have 100% electricity from renewables:
countries have a commitment “to phase out,
• Costa Rica by 2016
over medium-term, fossil fuel subsidies that
• Tuvalu, Cook Islands, Scotland, Cape Verde by
encourage wasteful consumption” either via
2020
•
The Philippines by 2023
G-20 (2009 Pittsburgh Summit) or Joint
• Greenland by 2024, Denmark by 2050
Statement of the Nordics and the USA (Sept.
2013 in Stockholm). Low price of oil is always
an opportunity to phase out fossil-fuel subsidies with minimum negative impact on the economy5.
However, pricing mechanisms to address oil price volatility and safety nets and mitigation measures should
be put in place to prepare for the times when oil price can go up again. These measures, including targeted
cash transfers, energy audits and trainings, are especially important for the groups that heavily depend on
subsidized diesel for power generation and fuel oil for heating. Further, savings from fossil-fuel subsidy
reform can be used to further support renewables;
2
As discussed in the Renewable Readiness Assessment Methodology developed by IISD for IRENA. See first publication at
http://www.irena.org/menu/index.aspx?mnu=Subcat&PriMenuID=36&CatID=141&SubcatID=278 .
3
For more detail see IISD’s paper “Green Revenues for Green Energy” summarizing lessons learned from around the world.
Available at http://www.iisd.org/publications/green-revenues-green-energy-environmental-fiscal-reform-renewableenergy-technology
4
IISD’s 10-year record of analysis and recommendations on fossil-fuel subsidy reform is available at the website of IISD’s
Global Subsidies Initiative http://www.iisd.org/gsi/fossil-fuel-subsidies
5
For an overview of the latest reforms of subsidies in view of low world oil price see this article:
http://www.nytimes.com/2015/02/04/business/low-energy-prices-offer-opening-for-subsidycuts.html?partner=socialflow&smid=tw-nytimes&_r=1
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An integrated market for renewable energy solutions in the Arctic, which is needed to achieve economies
of scale and reduction of costs, especially for off-grid solutions.
Who will be in RE-ARCTIC
We need a broad coalition to make this change happen, bearing in mind that geographically the RE topic is most
important for Canada, Russia and Alaska. Broader, all Arctic nations are interested in climate change mitigation
in the Arctic, reduced black carbon emissions. The coalition will include:
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Transformative knowledge platforms, led by IISD with a big-picture understanding of what solutions
have worked for renewables, subsidy reform and local communities across the world 6. Other
transformative knowledge platforms can include Climate and Clean Air Coalition and “Many Strong
Voices” by GRID-Arendal. We are confident that, especially on the policy and communication side, many
solutions that have worked in remote communities in developing countries (including the “success
stories” in the Text Box), can work for the Arctic. And vice versa, the success of renewable energy in the
Arctic will pave a way for more low-carbon transitions in the rest of the world.
Inter-governmental organizations: Arctic Council (SDWG), potentially UN Sustainable Energy for
potentially Nordic Council of Ministers, potentially International Renewable Energy Agency (IRENA)
Permanent participants of the Arctic Council and other indigenous groups: confirmed interest of ICC
and AIA; RAIPON for Russia, potentially Saami Council; regional and local groups.
National government agencies: NRCan, CanNor, AANDC and Polar Commission in Canada, Minenergo
and Rosenergo in Russia, Department of State and Department of Energy in the U.S.A.
Regional and local governments, communities and municipalities: many communities are interested,
from Quebec to Yukon, from Alaska (Alaska Energy Authority, REAP) to Kamchatka.
Funders: Oak Foundation, WWF (confirmed interest), ISSC (proposal), need to find others.
Civil society and youth: WWF, Greenpeace, Arctic NGO Network and its members, Arctic Youth, grassroot NGOs
Polar research stations: they need renewable energy. E.g. CHARS in Canada.
Renewable Energy Businesses and Associations: e.g. Arctic Energy Alliance in NWT, Canada.
Hydropower companies: Manitoba Hydro, Quebec Hydro, Rushydro, etc.
Mining companies who often fund wind power in remote places on their own: e.g. Baffinland, Kinross
Financial institutions: venture capital, Arctic Development Bank under discussion, other.
6
When it comes to the Arctic, the other “region” of the world with very much replicable experience of fossil fuel subsidy
reform and renewables promotion are small island states with similar remote communities and high costs of fossil fuels.
On their experience of energy transitions, see a recent UN Office for Sustainable Development report at
http://www.unosd.org/index.php?page=view&type=12&nr=373&menu=240
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Timeline, approximate budget and deliverables of the RE-ARCTIC coalition:
The initiative will be undertaken in phases, with each phase preparing inclusion of new partners and activities
in the coalition.
Phase 1, first year, USD 150 thousand:
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Identification of more partners and opportunities for coalition development;
Interviews with key stakeholders and partners;
Inventory of working RE technologies that have proved reliable in different parts of the Arctic,
dismantling the myths that RE is not an option for the North;
A “Citizen’s Guide to Renewable Energy Policies” in the Arctic.
Phase 2, second year, USD 250 thousand:
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A handbook with comparable calculations of the costs of different renewable energy solutions for the
Arctic
A study modelling of a low-carbon vision for the Arctic, with assessment of benefits in terms of jobs,
local contracts and other social benefits compared to a business-as-usual scenario;
Development of policy recommendations for key jurisdictions;
Outreach (media coverage, sessions at key conferences) for the new vision of the Arctic.
Phase 3, third year, funding needs to be determined depending on demand from stake- and rights-holders:
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Engagement with communities and governments on demand to design and implement reform in terms of
fiscal and market regulations
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For further information:
Brochure of the IISD’s Arctic Initiative http://www.iisd.org/publications/arctic-initiative-brochure
Contact: Ivetta Gerasimchuk, PhD, Senior Researcher, email: [email protected]
About IISD
The International Institute for Sustainable Development (IISD) is a global think-tank. Its mission is to inspire
action that advances sustainability, social justice and well-being. IISD has chosen to focus on topics that are ripe
for transformation—where a shift in policy has the potential to snowball and, before too long, to change the
nature of the game. It is only through a focus on game-changers that we will make up the sustainability deficit
that has accumulated and move towards a better future.
Because we aim to make a difference in how policy is crafted and implemented, we translate the research insight
into practical, realistic and cost-effective policy options that can be taken up by policy-makers at all levels.
IISD currently works in 70 countries with priority focus on the Arctic, Canada and China but work encompassing
mostly developing economies. IISD has offices in Winnipeg, Ottawa, New York, Geneva, and Beijing. It is
registered as a charitable organization in Canada and has 501(c)(3) status in the United States.
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©2015 The International Institute for Sustainable Development