You are on page 1of 14

Balancing Economic Growth and Environmental

Concerns: An Analysis of Greenland’s Resource


Extraction Policies
Background:
While climate change poses many risks to the livelihoods of those living in
Greenland, many Greenlanders also see it as a possible opportunity for economic
development, and financial independence from Denmark (Boersma and Foley,
2016). Greenland is believed to have ample natural resources that have yet to be
explored, including oil and mineral resources. However, explorations of these
industries pose serious environmental risk, and are also carbon intensive to
extract, especially in Greenland’s harsh and difficult climate (Boersma and Foley,
2016). These ventures furthermore pose a troubling conflict for Greenland, as
these enterprises provide potential economic growth, but also contribute to
climate change that is simultaneously harming the country’s ecosystems and
Inuit traditional culture (Pedersen, 2012). Because of this complex relationship, it
is necessary that Greenland develop regulatory policy that attempts to consider
both Greenland’s need for economic growth and development, as well as it’s
need to protect the country socially and ecologically from some of the
devastating effects of climate change.

Photo: Icebergs near Illulissat, West Greenland. Source: Lela Cooper


Cooper 2

Lela Cooper
Honors 391
Dr. Pavia
03/20/2019

Balancing Economic Growth and Environmental Concerns: An Analysis of


Greenland’s Resource Extraction Policies

Greenlandic-Danish Policy regarding Natural Resources

Among many environmental changes, Greenland is also facing serious political changes

that impact both its potential economic development and future environmental stewardship.

Greenland has been gaining political autonomy from Denmark, and was granted self-rule in

2009, through the Self Government Act (Denmark, Parliament, Statsministret, 2009). However,

the implications of this legislation are rather complex, because despite Greenland’s increased

political power, it remains to be overseen by Denmark in many regards, and is dependent on

Denmark financially (Denmark,

Parliament, Statsministret, 2009). The

Self-Government Act explicitly

references future mineral exploration

in Greenland, and states in Chapter 3,

Section 7, Subsection 1, “Revenue

from mineral resource activities in

Greenland shall accrue to the

Greenland Self-Government

authorities” (Denmark, Parliament,

Statsministret, 2009).

Figure 1: A map outlining some of Greenland's natural resources, and


existing exploration sites with international investment. Source:
Greenland Bureau of Minerals and Petroleum.
Cooper 3

The Greenland Self Government Authorities are defined as Inatsisartut (Greenland’s

Parliament), Naalakkersuisut (Executive Power), and the Greenlandic court system. Currently,

the Greenland Self Government Authorities receive over 3.4 billion DKK in annual subsidies

(approximately 516 million USD) from the Danish Government (Denmark, Parliament,

Statsministret, 2009). However, The Self-Government Act continues to outline that any earnings

from natural resource ventures with revenue over 75 DKK will result in a decrease of half the

revenue amount from the annual subsidy (Denmark, Parliament, Statsministret, 2009). In the

long run, this could potentially mean that Greenland no longer receives any subsidy from

Denmark, thanks to natural resource exploration.

While the Self-Government Act does provide Greenland the potential to begin extensive

exploration of valuable natural resources, the act further continues by explaining that the Danish

Government retains the responsibility of managing international affairs in Greenland by working

with Naalakkersuisut, if these matters concern interests of the Danish realm as a whole

(Denmark, Parliament, Statsministret, 2009). This has resulted in a strong Danish influence

regarding foreign investment ventures in Greenland, as development and foreign interest in the

Arctic is often considered to be relevant to Danish security policy interests (Figure 1). Denmark

has more recently realized the security value from their position in the Arctic through Greenland.

Consequentially, natural resource extraction, while seemingly mostly concerned with the

interests of Greenland, often sees great supervision from Denmark, and these ventures have

grown slowly as a result (Boersma and Foley, 2016).

Greenlandic Environmental Policy

While Greenland continues to receive heavy influence from Denmark regarding

economic and international policy, Greenland is not overseen by Denmark’s environmental


Cooper 4

standards, and maintains their own regulatory policy regarding natural resource extraction.

Mining policy in Greenland is overseen by the Mineral Resources Act of 2010 (MRA), which

comprehensively covers matters including licensing, exports, land rights and environmental

concerns (Sandroos, 2019). This act explains that the Greenlandic Government has a

commitment to follow both the ‘Best Environmental Practices’ (BEP) and the ‘Best Available

Techniques’ (BAT) for any mining sites (Sandroos, 2019). This entails that mining and

extraction license seekers must follow environmental compliance guidelines for sites, including

preventative measures such as environmental impact assessments (EIAs), social impact

assessments, and environmental risk management (Sandroos, 2019). The EIA process is central

to the MRA, and provides the bulk of environmental regulation on any extraction sites. The

process appears to be in depth, and is heavily outlined in the MRA, and is supposed to be

performed by any potential exploration site licensees (Sandroos, 2019). The EIA process

explicitly references climate concerns of any potential sites, however the defined standards are

rather vague, and possibly up for interpretation regarding the given site. Because of this, while

the MRA and it’s associated EIA process cover site-specific environmental impacts, and point

source pollution, Greenland’s regulation of the long-term climate impacts of mining, and on site

carbon intensity is much less formally regulated, and consequentially overlooks many lasting

climate concerns.

The Greenlandic government has stated several national commitments to greenhouse gas

reductions, and has more specific commitments for industrial sites, power plants, and similar

ventures. Greenland’s carbon emission standards often follow short-term goals, and the country

has goals to reorganize the nation’s fisheries economy for greater efficiency, and is currently

rapidly expanding its hydroelectric plants, along with investing in climate friendly housing
Cooper 5

developments (Pedersen, 2012). The Mineral Resources Authority monitors greenhouse gas

emissions (GHGs) related to mineral exploration in Greenland. As part of the EIA process,

exploration sites must comply with EU emissions standards, and emissions from associated

transport and machinery of production must follow emissions guidelines on either EU or Danish

standards (“Guidelines for Preparing an Environmental Impact Assessment”). The EU emissions

guidelines follow an “integrated approach” which is outlined in the Industrial Emissions

Directive (2010/75/EU). The integrated approach entails all emissions related to the production

process of extraction sites, including waste production, noise pollution, and energy efficiency

must be considered and accounted for when determining the environmental risks of a particular

site (“Industrial Emissions”). These policies also require the use of BAT guidelines. Subsection

55 of the MRA also specifically cites a list of guidelines for climate protection. The MRA

explicitly states that this section attempts to “prevent, limit and combat pollution and other

impacts on the climate from activities that may directly or indirectly: Endanger human health,

Damage animal or plant life… obstruct the rightful utilization of … natural resources, impair

human conditions of life, or impair recreational values” (“Unofficial Consolidation of the

Mineral Resources Act”). However, the MRA does not have any specific definitions for any of

these hazards, so the significance/risk of a site’s potential harm appear to be determined on a

case-by-case basis.

Role of the Mineral Resources Act (MRA) and EIAs in managing GHG emissions

While the MRA outlines a specific environmental compliance guideline for exploration sites to

abide by, although often loosely defined, the actual emissions standards sites must follow, is far

less distinct, especially as GHG emissions are difficult to pinpoint to specific sites, have many

more discrete emission costs embedded in the creation of their plants, and do not necessarily
Cooper 6

provide direct, significant, and tangible harm to local residents or ecosystems. For example,

Greenland is believed to have high deposits of uranium, and the Kvanefjeld site in Southwest

Greenland has had a long history of mineral exploration and is especially seen as a valuable site

for it’s potential to disrupt the global dependency on Chinese uranium exports (Gunter, 2015).

Greenland is expected to be rich in rare earth elements, but their extraction has been highly

contested due to the potential environmental costs of their extraction. Uranium specifically, is

incredibly complex to

determine the lifecycle carbon

intensity of production, from

mining, to its eventual use in

nuclear power plants, not

including it’s many potential

environmental concerns. Figure 2: Protestors in Nuuk, with signs stating “Uranium? No thanks”.
Uranium mining in Greenland is heavily contested for its environmental
and human health concerns. Source: Arctic Today.
However, the general carbon https://www.arctictoday.com/greenland-nears-uranium-decision-
opponents-fear-public-wont-heard/
intensity of the uranium mining

process itself has been shown to be relatively low (Parker et al., 2016). Regardless, uranium

mining in the proposed Kjanefjeld site poses serious environmental and human health concerns,

including the possibility of heavy metal pollution in nearby groundwater, and potential

disruption of ecosystems (Gunter, 2015). Under these threats, while the mining of uranium

specifically may not be threatening to global climate concerns, it does pose very serious

environmental and human health concerns, that could potentially violate the conditions proposed

by Section 55 of the MRA, despite its potential to help stimulate the Greenlandic economy

(“Unofficial Consolidation of the Mineral Resources Act”). This instance helps to prove the
Cooper 7

complexity of the MRA, and its corresponding EIA system, and how often climate concerns,

economic needs, and environmental risk are at odds in Greenland.

Another resource to be extracted, with a much

more significant GHG life cycle intensity is crude oil.

Greenland has already began to expand its standing

in off shore drilling, and while utilizing oil for fuel

directly releases GHGs into the atmosphere, it’s

production process is carbon dependent as well.

These embedded carbon emissions of crude oil are

even greater in Greenland where the climate is harsh

and is difficult to forecast the climate’s impact on

long-term oil exploration sites. While Greenlandic

state owned oil company, Nunaoil has been


Figure 3: Oil exploration license map as of 2013, more
exploration is currently underway. Most exploration is
in West Greenland, also where most Greenlanders live. exploring oil in the region since the 1970s, the
Source: The Arctic Institute.
https://www.thearcticinstitute.org/dimensions-oil- building of an extensive offshore oil drilling system
gas-development-greenland/

would need to be built essentially from scratch,

increasing the carbon intensity of such sites (Boersma and Foley, 2016). Crude oil production

alone is also believed to globally equate to approximately 5% of all emissions associated with

fuel combustion annually (Masnadi et al., 2018). Considering the transportation of oil, and

processing crude oil into fuels, the carbon intensity of production increases to approximately 15-

40% of fuels, dependent on such factors such as the type of oil drilling techniques utilized, and

location of drilling sites (Masnadi et al., 2018). Greenland is notably isolated from many major

fossil fuel dependent economies, and while a warming Arctic can make offshore drilling more
Cooper 8

accessible, the presence of icebergs in West Greenland has proven costly for current oil drilling

sites, in some cases forcing oil rigs to be moved entirely (Boersma and Foley, 2016). Inevitably,

these challenges prove to be a hurdle for investors, but also for the total life cycle carbon

emissions of fuels extracted from crude oil in Greenland, and have slowed recent oil exploration

ventures. However, oil drilling is likely still a profitable endeavor in Greenland, and commercial

oil exploration could undoubtedly expand in the next decade (Boersma and Foley, 2016).

Despite offshore oil drilling’s heavy hidden social carbon costs, offshore drilling provides

a great deal of environmental risks as well, that pose risks to local ecosystems, human health,

and recreation values (particularly through the risk of marine oil spills), as also overseen by the

MRA. While the MRA does consider all of these factors in its EIA process, the actual

implementation of such precautions are far less regulated. The EIA process has proven to be

inconsistent, and there is a lack of clarity as to who decides whether an exploration site license

holder needs an EIA, and less strict standards have been used on current sites, compared to what

the MRA suggests for all EIAs (Boermsa and Foley, 2016). For these reasons, the MRA could be

improved upon for future mineral and oil exploration, as much of Greenland’s resources have yet

to be explored, and will be taking place under different climate and environmental scenarios in

the next several decades. While natural resource exploration will likely be necessary to propel

Greenland’s economy, as the country currently relies heavily on the export of seafood, it remains

important that Greenland build upon the mining and extraction policies outlined in the MRA in

order to address future climate concerns, alongside local environmental concerns as well.

Overview of Economic and Social Costs of Climate Change in Greenland

Climate change in Greenland is thought to bring both positive and negative economic and

social impacts. Many in Greenland see climate change as an economic opportunity, specifically
Cooper 9

for it’s potential to make natural resource extraction easier, as well as possibly bringing new

marine species to the area, but it also has negative impacts on many of the nation’s small

subsistence based villages and corresponding cultural practices. With Greenland’s recent

increase in self-government, climate policy has become increasingly less concerned with impacts

on small subsistence economies, and as a result has produced many conflicts over resource

extraction and local customs and livelihoods (Ford and Goldhar, 2012). Climate change also

proves threats to Greenland’s social infrastructure, as melting permafrost poses risks to towns’

building and road systems, and recently in 2017, Greenland saw it’s largest wildfire ever

recorded, on Disko Island, amplified by melting permafrost, that caused the fire to burn among

dry peat (Kahn, 2017). Aside from these concerns, melting permafrost and warming

temperatures as a whole are also known to potentially have dangerous human health impacts,

including a risk of sanitation concerns, and a possible increase in vector borne diseases (Dudley

et al., 2015). These are only some of the concerns regarding climate change in Greenland, and

the benefits and costs from potential increased economic activity are incredibly complex. To

alleviate many of these potential societal costs would also require a great deal of financial and

human capital, and could possibly diminish many of the potential benefits climate change brings

to Greenland economically. However, despite these complex hurdles, Greenland’s mineral

extraction policy can be improved upon to better consider both economic interests, and broader

societal concerns regarding climate change, by focusing more on long-term societal investments

and solutions.

Policy Suggestions to Better Protect Greenland’s Climate Interests in the Future

While the MRA provides a good baseline for environmental and climate protection in

Greenland, the act still prioritizes economic development, and overlooks many long-term social
Cooper 10

costs of mining and drilling. In order to preserve Greenland’s climate interests, it is first and

foremost necessary that the EIA process better regulate climate concerns, as well as threats to the

local environment. As the climate scenario and environmental outlook of Greenland is also

difficult to forecast, it is valuable for the government to correspondingly consider policy that

invests into other aspects of the Greenland economy or future green development. It is also

necessary that Greenland diversify its economy, as the nation is highly dependent on seafood

exports, and has been greatly hurt by fisheries collapses in the past (Hamilton, 2003). Even the

forecasted market demand of rare earth minerals and oil is contested, and it is pertinent that

Greenland does not make policy decisions on the assumption that specific minerals will be as

valuable, or more valuable than they are today. Just as previous fisheries collapses have had long

lasting social and economic costs in Greenland, it is necessary that these scenarios don’t occur

again with natural resource extraction, if Greenland wants to maintain economic stability and

financial independence. For these reasons, Greenland should consider implementing policy that

proactively considers environmental risks, better regulates climate concerns, and balances long-

term economic goals and the central need to create a further diversified economy.

As much of Greenland’s economy relies on seafood exports, it is necessary that the

country’s interests in expanded oil drilling do not hurt its marine resources. While the MRA

requires consideration of marine ecosystem impacts, it overlooks the long-term risks of potential

oil spills. These concerns could be addressed by the creation of large public funds, perhaps

partially funded by oil or resource extraction revenue, that are specifically designated to go

towards potential spills, or future issues of environmental degradation associated with natural

resource extraction. This is a strategy that has been implemented by other Arctic states, and is
Cooper 11

something Greenland could look towards as an approach to gain the greatest long-term benefit

from natural resource extraction (Huntington, 2007).

Climate concerns appear to be relatively unregulated regarding mining and drilling sites,

aside from the limited consideration given by EIAs. While oil drilling would indirectly create a

large amount of GHG emissions through crude oil’s final usage as fuel, and is generally

unavoidable, Greenland can work to use any potential drilling sites as long-term investment tools

that help push the country towards more environmentally sustainable industries. Similarly to the

public funds mentioned earlier to help address potential environmental degradation, another fund

could be created from natural resource extraction revenue that designates finances specifically

for either climate adaptation needs in some of the country’s most impacted towns, or for

investments in green infrastructure and increases in Greenland’s expanding hydropower network

(Doyle, 2016). Such investments would not only have the potential to further develop green

infrastructure, but they could also help Greenland to diversify its economy, and avoid being

essentially entirely dependent on drilling and mining.

Greenland could also consider a carbon tax, however, this could make Greenland’s

natural resource exports uncompetitive in a global market, especially considering the country’s

many current barriers to market entry, due to it’s lack of human and financial capital, and harsh,

troublesome climate (Boersma and Foley, 2016). Moreover, it would be more valuable if the

guidelines for both climate and general environmental concerns as expressed in the MRA were

further regulated, and gained stronger commitment from the Greenlandic Bureau of Minerals and

Petroleum. The MRA would greatly benefit from a stricter set of enforcement guidelines, or

concrete definitions for many of the terms mentioned in the document that often go under

regulated (i.e., “recreation values”, “right to utilization of natural resources”, “impair human
Cooper 12

conditions of life”). A more robust system of regulatory enforcement from The Bureau of

Minerals and Petroleum could help prevent a nearsighted interpretation of the climate standards

described in the EIA process. While further implementation of strict environmental guidelines

may pose difficulty to potential investors, the long-term benefits would have the potential to

outweigh any initial social costs (Huntington, 2007).

Conclusions

As warming in the Arctic is now considered unavoidable (Schoolmesester et al. 2019), it

is necessary that Greenland not only consider economic opportunities associated with warming,

but also adaptation and mitigation strategies. Greenland’s future remains uncertain, regarding

political relationships with Denmark, social costs of climate change, and potential economic

growth, so it is necessary that any mining and natural resource extraction strategy is conservative

in it’s valuation of future economic benefits, and is stringent concerning environmental and

climate regulations. Of course, balancing these concerns will likely be difficult, but Greenland’s

current MRA and EIA system likely will not adequately address the long-term, and distant,

expected investments in mining and drilling activities, and therefore does not fully consider the

lasting climate, and social impacts of such endeavors. Despite this, as Greenland is still only

recently becoming involved with commercial natural resource extraction, the country does have

the ability to take note from the hurdles and successes of other Arctic states. Moving forward,

Greenland has the chance to formulate a comprehensive, and environmentally responsible system

of resource extraction regulation that takes in account the nation’s dependency on a natural

resource economy, and needs for long-term sustainable economic and environmental growth.
Cooper 13

References

Boersma, Tim, and Kevin Foley. “The Greenland Gold Rush: Promise and Pitfalls of
Greenland's Energy and Mineral Resources.” Brookings.edu, The Brookings Institution,
29 July 2016, www.brookings.edu/research/the-greenland-gold-rush-promise-and-
pitfalls-of-greenlands-energy-and-mineral-resources/.

Denmark, Parliament, Statsministret. Act on Greenland Self-Government.


http://www.stm.dk/_p_13090.html. Act 473, passed 12 June 2009.

Doyle, Alister. “At Ground Zero of Warming, Greenland Seeks to Unlock Frozen
Assets.” Reuters, Thomson Reuters, 19 Sept. 2016, www.reuters.com/article/us-
climatechange-greenland-idUSKCN0YZ1EM.

Dudley, Joseph P., et al. “Climate Change in the North American Arctic: A One Health
Perspective.” EcoHealth, vol. 12, no. 4, 2015, pp. 713–725., doi:10.1007/s10393-015-
1036-1.

Ford, James D., and Christina Goldhar. “Climate Change Vulnerability and Adaptation in
Resource Dependent Communities: a Case Study from West Greenland.” Climate
Research, vol. 54, no. 2, 2012, pp. 181–196. JSTOR, www.jstor.org/stable/24895232.

“Guidelines for Preparing an Environmental Impact Assessment (EIA) Report for Mineral
Exploitation in Greenland.” Guidelines for Preparing an Environmental Impact
Assessment (EIA) Report for Mineral Exploitation in Greenland, Naalakkersuisut, 2015,
govmin.gl/images/Documents/Terms_guidelines_minerals/Guidelines_for_preparing_an_
Environmental_Impact_Assessment_EIA_report_for_mineral_exploitation.pdf.

Gunter, Chelsea. “The Case for Uranium Mining in Greenland.” Cornell International Law
Journal, Cornell Law School, 2015,
www.lawschool.cornell.edu/research/ILJ/upload/Gunther-note-final.pdf.

Hamilton, Lawrence C., et al. “West Greenland's Cod-to-Shrimp Transition: Local Dimensions
of Climatic Change.” Arctic, vol. 56, no. 3, 2003, pp. 271–282. JSTOR,
www.jstor.org/stable/40512544.

Huntington, Henry P. “Arctic Oil and Gas 2007.” Arctic Monitoring and Assessment Programme
(AMAP), 2007.

“Industrial Emissions.” EUR-LEX, 2010, eur-lex.europa.eu/legal-


content/EN/TXT/?uri=LEGISSUM%3Aev0027.

Kahn, Brian. “Wildfire Burns across (Formerly) Icy Greenland.” Scientific American, 8 Aug.
2017, www.scientificamerican.com/article/wildfire-burns-across-formerly-icy-
greenland/.
Cooper 14

Masnadi, Mohammad S., et al. “Global Carbon Intensity of Crude Oil Production.” Science, vol.
361, no. 6405, 2018, pp. 851–853., doi:10.1126/science.aar6859.

Parker, David J, et al. “Life Cycle Greenhouse Gas Emissions from Uranium Mining and Milling
in Canada.” ACS Publications, 29 July 2016,
pubs.acs.org/doi/abs/10.1021/acs.est.5b06072?journalCode=esthag.

Pedersen, Per Vestergaard. “Regulation of Climate Matters in Greenland.” Carbon & Climate
Law Review, vol. 6, no. 1, 2012, pp. 47–62. JSTOR, www.jstor.org/stable/24324054.

Sandroos, Bo. “Mining Law 2019 | Laws and Regulations | Greenland.” ICLG International
Comparative Legal Guides, WSCO, 28 Sept. 2018, iclg.com/practice-areas/mining-laws-
and-regulations/greenland#chaptercontent8.

Schoolmeester, T., Gjerdi, H.L., Crump, J., Alfthan, B., Fabres, J., Johnsen, K., Puikkonen, L.,
Kurvits, T. and Baker, E., 2019. Global Linkages – A graphic look at the changing
Arctic. UN Environment and GRID- Arendal, Nairobi and Arendal. www.grida.no

“Unofficial Consolidation of the Mineral Resources Act.” The Mineral Resources Act,
Naalakkersuisut, 2009,
govmin.gl/images/Documents/Mineral_resource_act/Unofficial_translation_of_unofficial
_consolidation_of_the_Mineral_Resources_Act.pdf.