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Greenland island infrastructures – energy challenges to the fishing industry
Hendriksen, Kåre
Publication date:
2016
Document Version
Final published version
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Citation (APA):
Hendriksen, K. (2016). Greenland island infrastructures – energy challenges to the fishing industry. Paper
presented at Arctic Circle Conference, Reykjavik, Iceland.
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1
Greenlandislandinfrastructures–energychallengestothefishing
industry
Themostimportantexportindustryin
Greenlandarefisheries-theycontribute
90%ofthetotalexportvalue.Thelocal
tradingandprocessingischallengedby
thefactthatGreenlandlargelydependson
islandoperation,whichcomplicatesand
limitstheinfrastructure.Forthefishing
industry,powerandwatersupplyposea
considerablechallenge,wheretheprize
determinationisacontributingreasonfor
thereducedlocalprocessingandthereby
thereducedoccupation.Adevelopment,
whichchallengesthelivelihoodofseveral
localcommunities.(Seeinsertforthe
Greenlandiccontext)
TheGreenlandiccontext
Withits2,146,000km 2andalengthof2.670km,
Greenlandisthelargestislandintheworld.The
lengthofGreenlandisthesameasthedistancefrom
centralNorwaytoGibraltar,andinarea,Greenland
wouldcovermostofcentralEurope.
Theislandoperationchallenges
EventhoughGreenlandistheworld’slargest
island,whenitcomestopopulationitisa
microstate.Oneofthelargestchallengesis
theislandoperation.
Inpractice,Greenlanddoesnotworkasone,
butas75independentislands.Withafew
exceptions,therearenosettlementsthathas
roadsoranyotheroverlandtransportations
connectionswithothersettlements.All
person-andgoodstransportationbetween
thedifferentsettlementsarebyplane,
helicopter,ships,dinghiesordogsleds.That
involvesthattherearenoplaceswhereitis
possibletocommuteonadailybasis.
Asothermicrostates,Greenlandhasalargely
monoeconomicdependence,wherefishand
shellfishaccountsfor90%oftheexport
value.Atthesametime,Greenlandhasalarge
importandanincreasingtradedeficit,
becausethemarketistoosmalltosecure
markedconditionsforcompetitionand
therebyabaseforamarketthatisself-
ToillustratethedimensionsofGreenlandontopof
Europe.(HenrikForsberg,EquivalentProjectionmap
basedondatafromOpenStreetMap.org)
TheGreenlandicicecapandsmallerglaciers
covers88%oftheisland,andbyfarthelargest
amountoftheice-freeareaalongthecoasts,are
alpinemountains.Generallyitisestimatedthatless
than3%oftheislandisfitforhumanhabitation.
ThePolarStreamwhichrunssouthalongtheeast
coast,transportsenormousamountofseaicefrom
theNorthPoleaswellasGreenlandicicebergsalong
theeastcoastandaroundthemostsouthernpointof
Greenland,CapeFarewell.Thatmeansthatitisonly
possibletosailalongtheeastcoastinshorterperiods,
inthelatesummerandfall,andthatSouthGreenland
periodicisclosedinbehindtheseaice.
Alongthesouthernpartofthewestcoast,thesea
2
sufficientonseveralvitalareasfrom
productiontoservices.
500
Greenland’stradebalancein
constant1979prices
0
-500
-1.000
-1.500
-2.000
-2.500
BasedonStatisticGreenland
Theisland-infrastructurealsoimpliesthat
therealmostisnocommercebetweenthe
settlements.Forexample,only15%ofsea
freightisbetweenthesettlements;therest
85%isdirectlybetweenDenmarkandthe
individualsettlement.
isice-freetheentireyear,butfurthernorththeseais
closedforsailingduringthewinter,becauseofthesea
ice.Themostnorthernregion,Qaanaaqcanonlybe
navigatedinJulyandAugust.
Onthisenormousisland,thereonlylives56,000
peopleandtherebyGreenlandisoneofthemost
sparselypopulatedareasintheworld.Themajorityof
thepopulation(approximately48,000)are
descendantsfromtheInuit’s,thatthroughthelast
millenniumgraduallyimmigratedfromCanada
crossingtheseaice,whilethelastapproximately
8,000peopleprimarilycomesfromDenmarkandare
oftenworkinginGreenlandforashorterperiod.
Thepopulationhasalwaysbeendependentonthe
livingresourcesfromtheseaandthereforprimarily
arespreadalongthewestcoast.
Todaythereare75differentsettlementsin
Greenland,allreachingfrom20inhabitantsto17,000
inhabitantsinthecapitalNuuk.
GreenlandisapartoftheDanishRealm(The
KingdomofDenmark)withextendedselfgovernment.
Thelimitedandcost-intensivetransport
infrastructuremeansthatallsettlements
needstohavelargestoragecapacityforfuel,foods,clothandotherretailgoodsaswellasbuilding
materials,fishinggear,etc.Especiallyinthepartsofthecountry,whichisnotreachableallyear
becauseoftheseaice,itisnecessarytohavelargetankinstallations,packing,andfreezingstores.The
periodwithwinterseaicemeansthatfishfactoriesseveralplacesinGreenlandhastohavemassive
freezercapacity,sothefishandshellfishwhichiscaughtduringthewinter,canbestoreduntilthefirst
shiparrive.
Thecombinationofislandoperation,monoeconomicdependenceofthelivingresourcesfromthesea,
microstatecharacteristicsandtinysettlementsmeansthateachsettlementischallengedforits
employmentandexistence.Thethreattothesmallsettlementscanbefromtheirresourcebase
disappearingornotutilizedbecausetheprocessingclosesandmovestootherplaces.(Hendriksen
2013)
Powersupplywithisland-infrastructure
ThepublicpowerandwaterutilitycompanyNukissiorfiitisobligatedtosupplyallsettlementsin
Greenland.Nukissiorfiitisforcedtosustainindependentpowersupplyforallsettlementsbecauseof
thelackofanationalgridduetoislandoperationscausedbygeography,climateandthelong
distances.Eventhough60%ofthetotalelectricityconsumptiontodayisproducedbyhydropower,the
island-infrastructuremeansthatthepowersupplyof70outoftheislands75societiesisbasedon
dieselgenerators.(Nukissiorfiit2016)
Thecombinationofpoorinfrastructureandthedependenceoncontinuouspowersupply,fortheheat
cablesonthewater-andsewerlines,freezingstoresandheatingofhomesdemandsonacertaintythat
thepowersupplyarenotcutoff.
Ifithappens,onlyforafewhours,duringthewinter,waterpipeswillbeginfreezingandburstingand
entiresettlementswillhavetobeevacuated,untilthedamageshasbeenfixed.Therefore,allsocieties
haveabackupandoftentwobackupsfortheirpowerplants.
Theeconomicconsequences
AllinalltheclimaticconditionsandtheislandoperationmakesGreenlandaveryexpensiveand
complicatedcountry,somethingthattoahighextendchallengestheGreenlandiceconomy.Asabase,
everyproductionforthedomesticmarketorexporthassomebasiccostsassociatedwiththeclimatic
conditionsortheislandoperation,whichmakesitdifficultforGreenlandtocompetewithmultiple
othercountriesandgeographicareas.Besidesthat,thewagelevel,becauseofthecloseassociation
withDenmark,iscompatiblewithWesternEurope,whichtoafurtherextendchallengesthe
competitiveconditions.
Thefisheryandfishrefinement
Fishandshellfishaccountsfor90%ofthetotalGreenlandicexportincome.Themostimportant
speciesareshrimps,whichaccountsfor42%ofthetotalvalueandGreenlandichalibut,which
accountsfor29%ofthetotalvalue(StatisticsGreenland2014).Amongotherimportantspeciesare
mackerel,codandredfish.
RoughlyspeakingtheGreenlandicfisherycanbedividedintotwogroups;fisheryinthedeepoceans
andcoastalfishery.Thecoastalfisheryisinparticulardependentonthelocallandingfactories,
thereforetodaytherearetradingpostand/orfishfactoriesinmorethan50%ofthe75settlementsin
Greenland,wherealmost50%ofthem,tradeGreenlandichalibutastheonlyspeciesorastheprimary
species(StatisticGreenland2014).
Fortheshrimppart,almosthalfiscaughtbylargefactorytrawlersintheseasaroundGreenland.For
thosetrawlersitismoreprofitabletotradetheircatchinthecountrywhereitareconsumedorina
countrynearbytheconsumermarket,forwhichreasontheyonlytradetheamountoftheircatchin
Greenland,whichisbyregulationrequiredtosecureemployment.Onthecontraryalmostallofthe
shrimpfishermen,whofishalongthecoastline,tradetheircatchinoneofthefourremainingshrimp
factoriesinGreenland.In1995,Greenlandhad16shrimpfactories,butduetoimprovedproduction
technology,outsourcingoftheprocessingtolow-paidcountriesandachangeinthedemand,60%of
theshrimpsarebeingexportedascookedshrimpswithshells.
ConcerningtheGreenlandichalibut,thecoastalfishinginNorthGreenland’sdeepfjords,nearbythe
icecap,accountsfor60%oftheyearlycatch.Uptherealargepartofthecatchiscaughtwithtrotline
bysmalldinghiesorfromtheseaiceinthewinter–ahardanddangerousjob.
ThestructureofthecoastalfisheryofGreenlandichalibutwithdinghiesinthesummerandtrotline
fromtheseaiceinthewinter,withuseofdogsledsorsnowmobile,hasmaintainedadecentralized
fisherywherethepopulationissettledalongthecoastinsmallsettlementsnearbythefishingplaces.It
isintheseplacesthattheoccupationstilliscloselyrelatedtotheutilizationofthelivingresources
fromthesea.Itisalsothesesmallsettlements,whichpercapitacontributesthemosttoGreenland’s
exportincome(Hendriksen2013;HendriksenandJørgensen2015).Theparadoxinthiscaseisthat
thesedistrictsarealsoseriouslychallengedintermsofthesocialinfrastructure;anexampleofthisis
thepowersupply.
Theelectricitypricesandtheireffect
In2005thepowerandwaterprizesinthepublicutilitycompanyNukissiorfiitwerepartlyliberalized
basedon“costreal”prizes.Earlieron,Greenlandhadhadthesameprizeacrosstheentirecountry,
basedonaconsiderabledomesticcross-subsidycombinedwithpublicsubsidy.
ForanormalhouseholdthisdifferentialprizingmeansthatthecitizensoftheGreenlandiccapital
Nuuk,payshalfofwhatthecitizensinalmostalltheothersettlementpaysperkWh.
Thepowersupplyforthefishingindustryisdirectlysubsidizedbythepublic,atthesametimeprivate
usersalloverthecountry,contributeswithaconsiderablecross-subsidization,sothatallfishing
factoriesmaximalpays41.5%oftheproductioncostforpower(Nukissiorfiit2016).Despiteofthis,
therearesignificantdifferencesinthepowerprizesforthefishingindustryaroundthecountry.
FactoriesinsomeofthemostimportanttradingareasforGreenlandichalibut,codandother
importantspecies,paysasmuchasfivetimesmoreperkWh,thansomeofthecheapersettlements
whicharefarlessdependentonfisheryforemployment.
Thesamegoesforwater;factoriesinsomeofthemostimportantfishingsettlementspaysasmuchas
threetimesmoreforwaterthaninthelargersettlements.OneofthemanyparadoxesinGreenlandis
thattherearenotacloselinkbetweentheproductioncostsforpowerandwaterandprizesforthe
individualsettlement.
Thesettlementswiththemostexpensivepowerandwaterareoftentheonesthathavethehighest
infrastructure-relatedcostsonothervitalareas.Oftenthosesettlementsaretheonesthatareonly
reachableafewmonthsayear,whichmeansthattheyhavetohavelargefreezer-andstoragecapacity.Atthesametime,thesesmallsettlementsoftenneitherhavethelocalexpertisetorepair
freezers,productionmachinery,etc.,whichisanotherextracostwhensuchexpertisehastobe
broughtin.
Intotal,thismeansthatthefactorieshavetolowertheirtradingprizestowardsthelocalfishermen,to
leveltheiroveralleconomy.Atthesametime,thelocalprocessingisreducedbecauseofthehigh
productioncosts,whichamongotherthingsareduetothehighpowerandwaterprizes,servicecosts,
etc.ThereforetheGreenlandichalibutisexportedcomplete;withskin,headandtailorwithjustthe
headandtailcutoff.Thismeansthatthelocalemployment,whichthefactoriescreatedearlier,is
significantlyreduced.
Thisdevelopmentwithfallingtradingprizesandoutsourcedjobsinparticularhitsthesmall
settlements,wherethepopulationatthesametimehashighlivingcostsduetoincreasingprizeson
power,waterandretailgoods.Therebyaprizedeterminationonpowerandwaterisstimulatinga
centralizationofthepopulationinthelargersettlements,wheretheprizesarelowerandthematerial
livingstandardsarehigher.
However,oneoftheGreenlandicchallengesisthatthedevelopmentwherethepopulationis
centralizedinthelargersettlements,doesnotconsiderthatthereisnoemploymentforthenew
citizensinthecities,meanwhilethesmallersettlementswhichstillaccountsforthelargestpartofthe
exportincome,areslowlybeingdepopulatedandtheirlivingstandardsreduced.Thesechallenges
mustbeaddressedbytheGreenlandicgovernmentinthenearbyfuture.
References
Hendriksen,Kåre,2013;Grønlandsbygder–økonomiogudviklingsdynamik;INUSSUKArktisk
Forskningsjournal3;GovernmentofGreenland
Hendriksen,KåreandJørgensen,Ulrik2015;HuntingandfishingsettlementsinUpernavikdistrictof
NorthernGreenland:challengedbyclimate,centralizationandglobalization;PolarGeography.38,2,p.
123-145
Nukissiorfiit2016;www.nukissiorfiit.gl
StatisticGreenland2014;www.stat.gl