Northern Sea Route's viability appears to have found a role based on global CO2 curbs and the use of LNG
After the America's bureaucracy successfully counter-attacked and dislodged the de-regulating Trump administration, little stands in its way. With its ever-leftward march with a de facto majority in the US Senate and a solid majority in House of Representatives, it can do much as it pleases. Only a slew of liberty-loving judicial appointments and increasingly lonely Brexiteers oppose the radical rhetoric of the world's parliamentary left as it spurns traditional values and even questions the significance of gender and even rationality itself.
With global warming again on the front burner and the never-ending Covid crisis confining all but the elites and their favoured causes to virtual house arrest, there is a renewed interest in the Northern Sea Route over Russia. This has been brought about by global fuel emission restrictions necessitating the use of liquefied natural gas (LNG), which would be otherwise economically inaccessible in the Russian Arctic were it not illegal to buy and burn cheaper and more plentiful fuels.
All of which has brought on a regulatory bonanza for bureaucrats who can raise battalions of inspectors, increase their budgets and salaries as the number of person years in their departments grows and grows and people are taxed more and more. State-assisted quangos (quasi-autonomous non-government organisations) and NGOs (non-government organisations) also grow to press government departments to go in directions they are already pre-disposed to go.
For instance, the EU is now urged to act on commitments to extend its Emissions Trading Scheme (ETS) to cover the maritime sector. "Not surprisingly," says one NGO, "much of the shipping industry is trying to prevent this by stoking trade tensions and raising international legal questions." This typical view is expressed by the Transport & Environment, a clean mobility campaign group and green lobby, the Environmental Defence Fund, writing in the Brussels-based publication, Euractiv.
Then there's an article in London's Tanker Operator harping on about shipping companies having responsibility to remove organisms from ballast water before discharging it. "Just buying and installing a type approved ballast water system may not be enough to guarantee regulatory compliance, says London area Chelsea Technologies that sells gear to gladden the hearts of Port State inspectors worldwide.
Whether shipping companies can fend off emissions trading schemes, on top of the fuel restrictions they already face, it seems the Northern Sea Route has proved itself to be something more than a pipedream it seemed to be. Granted, the technological upgrades in ice-strengthened vessels, as evidenced by the vastly increased iron ore exports from Canada's Baffin Island, have more to do with these developments than global warming, cheerfully heralded with mock dread from re-invigorated green lobbies.
But what makes the Russian Sea North Route more promising today is the demand for liquefied natural gas as the super clean fuel of the future that bureaucrats, greenies and even the shipping giants love. While LNG is cheap enough, harvesting it, holding it, pipelining it and shipping it, is expensive. Though less so - far less so - once the front-end infrastructure costs have been met.
This suits bureaucrats as it involves hiring many more inspectors, not for the LNG users but those smaller companies who cannot afford the start-up costs, This suits the shipping giants because only they have the heft to finance this, leaving them to absorb the market share of smaller players that cannot keep up with compliance costs. Greenies, of course, are pleased that everything is greener.
Thus, the vast LNG reserves found in Russia's Yamal Peninsula on the western border of Siberia, have proven economically viable and traditional fuel use have been banned by regulators, enthusiastically cheered on by the anti-capitalist pro-statist media and the global professorial corps.
According to the High North News, of Bodo, Norway, an ardent environmentalist journal, "The melting of sea ice is quickly transforming the Arctic Ocean into a navigable sea. Groundbreaking winter transits, deemed technically and economically impossible as recently as a decade ago, now hold promise for year-round shipping along Russia’s Northern Sea Route.
"There are few places in the world where the impact of climate change is more tangible than the Arctic. The melting of sea ice is quickly transforming the Arctic Ocean into a navigable sea. Groundbreaking winter transits, deemed technically and economically impossible as recently as a decade ago, now hold promise for year-round shipping along Russia’s Northern Sea Route.
"The ability to ship LNG to Asia is an essential part of the long-term business plan of extracting natural gas in the Arctic, liquefying it into LNG, and using ice-capable tankers to deliver it to wherever it can achieve the highest price, primarily in Asia. In fact, spot prices in the region are so high that Novatek plans to send LNG tankers to Japan, albeit with the assistance of nuclear icebreakers.
"Even with Arctic sea ice melting at record levels, travelling along the route is no easy task. According to industry experts, the winter transits of the 96,779-dwt Christophe de Margerie, the 96,821-dwt Nikolay Yevgenov and the 96,865-dwt Nikolay Zubov would have been planned for weeks if not months," said the High North News.
Said Martech Polar Consulting's David Snider: “Considerable effort goes into planning and execution. We can assume that the same rigor taken for other voyages was ramped up even more, ensuring the best possible ice information was available on an ongoing basis. It doesn’t pay to have such a high value cargo trapped. No one onboard or ashore wants negative publicity. They have very likely made every effort to ensure risks are low."
Even with ideal conditions the crews of the three vessels are still faced with 24 hours of darkness and Arctic weather conditions.
“It is more stressful for the crew and the ship due to the polar night and very low temperatures. The ship and its equipment are designed to work in these harsh winter conditions; the tankers are certified to 52 below Celsius explains Herve Baudu, professor of maritime education at the French Maritime Academy.
Of course, tankers are not liners and do not keep to fixed schedules, but linger hopefully with cargo stowed awaiting orders to go where it will be sold. That's one of the reasons why these low and slow ships fall prey to pirates.
Of course, highly specialised LNG tankers are not like that at all. They are at risk of being stranded in the icepacks and they know where they are going once they clear the ice bound Arctic. Despite the great advances in ice-strengthened ships, they still have to be pulled out of ice jams and rescued by icebreakers from time to time making what the carry more expensive still. Normally, such extra burdens would price such cargo out of the market - but not when bureaucratic elites insist one buys only that which they approve.
But with enough political pressure in Russia to make the Yamal Peninsula LNG wells produce within manageable costs, in terms of revenues and subsidies, and the Arctic does not turn cold again and the regulatory star remains ascendant, LNG will be forced on all - like it or not.
But the Northern Sea Route is far from being an alternative to the Suez Canal. It does not even dent the Suez's 983-million tonne annual throughput with its paltry 32 million tonnes with nearly all of it heading for Asia. But it does show how the regulatory world can warp the free market when it sets its mind to it.