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Executive Summary for March 25th

In this weekly roundup, we review and analyze the latest news and key developments in the Arctic, including Arctic shipping disasters on the rise in 2015 and a Canadian budget that earmarks millions for affordable housing, telecommunications infrastructure and renewable energy projects.

Published on March 25, 2016 Read time Approx. 4 minutes

Arctic Shipping Disasters on the Rise

Arctic shipping disasters rose in 2015, according to Allianz Global Corporate & Specialty’s fourth annual Safety and Shipping Review. More than 70 shipping incidents occurred in Arctic Circle waters in 2015, a nearly 30 percent rise over last year.

Nearly two-thirds of the incidents were caused by machinery damage or failure due to the inhospitable environmental conditions. According to the report, 45 percent of the incidents occurred in January and February. Almost 40 percent of the incidents involved fishing vessels.

In the past decade, there have been 415 shipping incidents in waters above the Arctic Circle.

Commercial shipping activity along the Northern Sea Route has been in steep decline since 2013. But with bunker fuel roughly a third of the price it was two years ago, shorter sailing routes are less alluring.

In the report, Captain Andrew Kinsey, a senior marine risk consultant at Allianz Global Corporate & Specialty, says he believes shipping in Arctic waters will increase when oil prices recover. “When we look at the Arctic we really can’t wait until the last minute to ensure safe operations,” warns Kinsey.

Globally, shipping losses remained stable compared to last year and have declined 45 percent over the past decade.

Federal Budget Eyes Canadian North

Canada’s new Liberal government released its first federal budget on Tuesday, announcing more money for northerners and infrastructure spending, but also forecasts big deficits.

Natan Obed, president of the Inuit Tapiriit Kanatami (ITK), the organization that represents 55,000 Inuit in Canada, called the 2016 budget a promising first step in renewing the relationship between Inuit and the federal government. “It is a positive change to see Inuit as well as specific Inuit regions recognized in the budget text,” Obed said.

The budget earmarked C$170 million ($129 million) to build affordable housing in Nunavut, Nunavik, Nunatsiavut and the Inuvialuit Settlement Region. However, the allocation will cover less than 10 percent of the estimated 3,000 social housing units required, according to the ITK.

The Government of Nunavut had requested $525 million over five years for its social housing plan, CBC News reported. Keith Peterson, the territory’s finance minister, said he hoped to see additional funding supplied in subsequent budgets.

The Nutrition North food subsidy program also received a $64.5 million boost and additional funding to expand its reach. There are also funds targeting broadband internet access, power plant replacements and renewable energy projects in indigenous and northern communities.

However, the budget did not specify funding for mental health or suicide prevention for Inuit. Since mid-December five youths in Kuujjuaq, the largest community (2,500 residents) in Nunavik, a large territory in northern Quebec, have died by suicide. The mayor has said that Kuujjuaq needs more health and social services support.

Spending on Arctic environmental research also got a boost. The budget allocates $19 million over five years to researchers and Inuit communities to collate information about the Arctic environment and fill information gaps with new research. The work will focus on assessing the environmental impacts of future oil and gas activity in three Arctic regions, including the Beaufort Sea, Baffin Bay and Davis Strait, to determine if oil and gas exploration should go forward.

Barents Sea Drilling Risks Manageable

As climate change alters conditions in the Barents Sea, some fear that the oil blocks Norway will release in the 23rd licensing round may be too risky. Environmental groups and government opposition parties say unpredictable ice conditions could lead to oil spills close to the edge of the Arctic sea ice, according to Bloomberg.

But the oil companies say any risks associated with drilling in Norway’s Arctic Barents Sea can be mitigated. Statoil ASA and other companies undertook a series of studies looking at whether ice, temperatures and the vulnerability of the environment would pose health, environmental or safety challenges to oil drilling operations.

Norway has been offering new blocks for oil exploration to boost its crude production. Oil output, which is half what it was in 2000, according to Bloomberg, and the low price of oil have hit Norway’s economy hard. Investments in oil and gas are down 11.8 percent year over year, according to a report released by the government this week, UPI reported.

“The situation for the Norwegian economy as a whole is serious, but not critical,” the government’s report read. Norway’s gross domestic product increased 1 percent last year, the weakest growth since the 2009 financial crisis. For the first time, the government is dipping into its $830-billion wealth fund as it boosts spending and cuts taxes.

Recommended Reads

Top image: Although shipping disasters, like the grounding of the Hoegh Osaka near Southhampton, U.K. on Jan. 4, 2015, are in decline globally, they’re on the rise in the Arctic. (AP Photo/ Francis Bigg Photography)

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