The World Has Discovered a $1 Trillion Ocean

[GennGreymane]

http://www.bloomberg.com/news/articl...trillion-ocean

As chairman of investments at Guggenheim Partners, Scott Minerd thought he had a realistic view on how big an economic challenge climate change poses.
Then, at a Hoover Institution conference almost three years ago, he met former U.S. Secretary of State George Shultz. Minerd recalled him saying: “Scott, imagine that you woke up tomorrow morning, and the headline on the newspapers was, 'The World Has Discovered a New Ocean.’” The opening of the Arctic, Shultz told him, may be one of the most important events since the end of the ice age, some 12,000 years ago.

Arctic Opportunity
And while Shultz’s spokesman couldn’t confirm the conversation, there’s no doubting the melting of the Arctic ice cap, and the unveiling of resources below, presents mind-boggling opportunities for energy, shipping, fishing, science, and military exploitation. Russia even planted its flag on the sea floor at the North Pole in 2007.
Energy and shipping have been first up. Norway made its national fortune drilling in northern waters, and Arctic fossil fuel exploration has become a more prominent part of U.S. energy policy. Melting ice means that in summer months, cargo can travel approximately 5,000 km from Korea to New York, rather than the 12,000 km it takes to pass through the Panama Canal. Warming waters also open up access to commercial fish stocks, making the Arctic a growing source of food.

Not long after that Hoover conference, Minerd joined a World Economic Forum advisory council. Its task? Develop guidelines for those nations looking to do business at the top of the world. That framework is to be released Thursday, in Davos.

“The history of economic development in regions of the world has really been fraught with a mass of mistakes,” said Minerd, who before Guggenheim worked at Credit Suisse and Morgan Stanley. “It really seems that someone needed to start developing a minimum standard, as a guide for economic development in the region.”

The Arctic Investment Protocol, developed by a 22-member WEF “global agenda council,” puts forward sustainability principles similar to initiatives developed for mature economies in recent years. The focus is long-term: tap the expertise of indigenous communities and treat them as commercial partners, protect ecosystems (even as rising temperatures change them before our eyes), and prevent corruption while encouraging international collaboration. The Arctic nations include Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the U.S., so there is a lot of collaboration to be had.

The WEF protocol seeks to address a region changing dramatically, and rapidly. Guggenheim, the first financial services firm to endorse the protocol, started its Arctic research about five years ago. That’s when Minerd made his first trip up north. Growing up in Pittsburgh, he saw first-hand how investment can help develop a community, and then just as quickly leave it to rust. The trick will be to avoid having the same thing happen to the Arctic.
Guggenheim has long provided infrastructure finance, because it’s an area that can offer long-term, stable returns. That’s partly why the firm was drawn to the Arctic. From there, researchers started looking into just what the region needed to become networked into the global economy.

The financial measure of opportunities available there is difficult to estimate, but $1 trillion may be a solid first-pass.

That’s the figure Guggenheim says may be needed to get the Arctic up and running in a manner that won’t deplete it in the long run. The figure is based on a list of public and private infrastructure projects already being planned. Not all of those efforts will even need outside investment, particularly in the energy sector.

The list isn’t meant to be an investment blueprint, but a research-driven assessment of what’s needed, Minerd said. Its purpose is to provoke discussion—and hopefully reasoned investment—in the region.

The Arctic guidelines are voluntary, like many other sustainable investment initiatives, including the Principles for Responsible Investment or even the WEF’s own work on “sustainable competitiveness.”

How does anyone expect to protect the Arctic environment in such a gold rush? The project is designed to complement the United Nations Sustainable Development Goals, and while the green earth is littered with do-good business pledges, the notion received a shot in the arm recently.
In December, almost 200 nations agreed in Paris to adhere to the first-ever universal climate goals. How nations contribute to progress toward them is their call, since there are no binding demands to cut greenhouse gas emissions. The Paris agreement will work—if it works at all—by relying on the soft power of international political consensus to encourage change, in business and government. Laying waste to the Arctic would seem to contradict that.
The next step for the protocol, Minerd said, is to encourage national and local governments, and financiers, to sign on. If those responsible for infrastructure-permitting and investment are on board, perhaps there’s a chance to develop the Arctic without destroying it.
Such an effort will require significant scientific observation, especially given how little data there is, and how few have ever lived north of 66 degrees.

Jan-Gunnar Withner, director of the Norwegian Polar Institute and a member of the WEF group, said increases in shipping, mining or other natural resource harvesting will be at the mercy of a fast melting ice cap. The retreat of ice sheets has created a shifting seascape of shipping channels. Melting glaciers are spawning more pesky icebergs that can wreak havoc on container ships and drilling platforms.
The Arctic is warming faster than any other part of the globe, Winther says: “These changes are like nothing we have seen. We don't have anything to compare with in history.”

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[Grimbold21]

Profit from climate change huh?

[GennGreymane]

Profit from climate change huh?

Indeed. Lots of resources under the caps.

[TheramoreIsTheBomb]

I hope they name the Ocean after me

[GennGreymane]

I hope they name the Ocean after me

TheramoreIsTheBomb just rolls of the tongue.

[Sunseeker]

Profit from climate change huh?

Sounds brilliant, the faster we burn up the earth, the faster we get to all the goodies. It's like the age old question: How many licks does it take to get to the center of a tootsie-pop?" The answer: Who cares just smash it open and eat the good stuff!

[Primalthirst]

Perhaps there can be some sort of levy imposed on ships ising the new northern passage which is earmarked specifically for funding actions to combat climate change. Similarly for drilling or mining etc.

Obviously politically that would be hard to do, but it a trillion dollars can do a lot.

[xChurch]

Seems a tad overblown, especially since we still can't even figure out who owns what exactly yet.

[GennGreymane]

Seems a tad overblown, especially since we still can't even figure out who owns what exactly yet.

Not really. The south pole is a large continent and is 100% untapped potential. As for who owns it? That does not matter as companies will make bank operating in it.

But, we have the whole sea level... arid climate.... stuff like that to deal with too.

and dead penguins.

[Sunseeker]

and dead penguins.

Clearly, we need to uplift the penguins to work the as-of-yet-undiscovered Antarctic money mines!

[belfpala]

Seems a tad overblown, especially since we still can't even figure out who owns what exactly yet.

Seems pretty clear. Use the international rules we already have. So, mostly Canada, Russia, Norway, and the US gets to sneak in because Alaska.

Edit: oh, I forgot Greenland and Iceland. Hi Greenland and Iceland.

[Cthulhu 2020]

Profit from climate change huh?

And the devious ultimate plan of oil barons reveals itself!

[Deleted]

Not really. The south pole is a large continent and is 100% untapped potential. As for who owns it? That does not matter as companies will make bank operating in it.

But, we have the whole sea level... arid climate.... stuff like that to deal with too.

and dead penguins.

OFC it matters who owns it. Various countries have claims (to the point there is a treaty about those claims). It's gonna be a colonial race and colonial races tend to result in armed conflict.

Note the lack of official US, Russian and Chinese claims, and the multiple claims on the same areas. The only reason people play nice and let it be a "nature preserve for all of humanity" atm is because the goodies aren't economically viable to mine yet. No way thers not gonna be a war if theres serious money in the dirt there.

[Hooked]

We should start mining Antarctica and bottling that sweet undisturbed water in the frozen lakes.

[ringpriest]

OFC it matters who owns it. Various countries have claims (to the point there is a treaty about those claims). It's gonna be a colonial race and colonial races tend to result in armed conflict.

Note the lack of official US, Russian and Chinese claims, and the multiple claims on the same areas. The only reason people play nice and let it be a "nature preserve for all of humanity" atm is because the goodies aren't economically viable to mine yet. No way thers not gonna be a war if theres serious money in the dirt there.

Ah, France, and what a beautiful Southern Hemisphere country she is! Who could forget the majestic fjords and towering volcanoes of chilly France?

[Masark]

Seems pretty clear. Use the international rules we already have.

Or we break out the guns and settle it the old fashioned way.

[belfpala]

Or we break out the guns and settle it the old fashioned way.

Ice Wars! Coming to theaters near you!

[Shadowferal]

It just means the natives gets screwed again.

[Jessicka]

Not really. The south pole is a large continent and is 100% untapped potential. As for who owns it? That does not matter as companies will make bank operating in it.

But, we have the whole sea level... arid climate.... stuff like that to deal with too.

and dead penguins.

The Antarctic will still be fucking cold, and dark for 6 months of the year. Losing ice cover for a few of the light months isn't going to automatically mean it's instantly easily accessible. You ever tried to dig through permafrost? It's incredibly remote and the Southern Ocean is also the most dangerous on Earth. There are also several existing treaties regarding ownership, just as there are the Moon and Mars.

As for the Arctic, it's just about shipping lanes as you have the same problems as in the Antarctic, just under water as well.

It's a problem for 100 years+ in the future, no one is going to be physically able to fight over them for at least that long. Hopefully there'll be more collective sense in the world by then.

[Deleted]

Seems a tad overblown, especially since we still can't even figure out who owns what exactly yet.

I do! Pay up, now.