Arctic Shipping Could Increase CO2 Emissions

Increased use of the Northern Sea Route is expected to slightly increase CO2 emissions. Although the much shorter shipping distances will reduce the emissions associated with water transportation, these gains are offset by a combination of higher trade volumes and a shift to emission-intensive production in Northeast Asia.

That’s one of the predictions made in the report Melting Ice Caps and the Economic Impact of Opening the Northern Sea Route released by the CPB Netherlands Bureau for Economic Policy Analysis.

The report authors predict an increase in global emissions of 14.2 million MT CO2 – an amount comparable to the annual emissions of a small country such as Latvia or Lithuania.

The report predicts that the shorter shipping distances offered by the Northern Sea Route (NSR) could be associated with substantial reductions in trade costs between two major economic regions: Northeast Asia and Northwestern Europe. As a result an increase the trade flows between both regions could increase by around 10 percent, making the NSR into one of the busiest global trading routes.

Roughly eight percent of world trade is transported through the Suez Canal and the report authors estimate that two-thirds of this volume will be re-routed over the shorter Arctic route. The NSR also implies a large volume of trade diversion that will have a negative economic impact on South and East Europe, states the report.

The report forecasts a remarkable shift of bilateral trade flows between Asia and Europe, diversion of trade within Europe, heavy shipping traffic in the Arctic and a substantial drop in traffic through Suez. 

The estimated redirection of trade has also major geopolitical implications: the reorganisation of global supply chains within Europe and between Europe and Asia and the highlighted political interest and environmental pressure on the Arctic.

The report is available here.