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Breaking the Ice: Mapping a Changing Arctic

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Mapping A Changing Arctic

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Breaking the Ice: Mapping a Changing Arctic

The Arctic is changing. As retreating ice cover makes this region more accessible, nations with Arctic real estate are thinking of developing these subzero landscapes and the resources below.

As the Arctic evolves, a vast amount of resources will become more accessible and longer shipping seasons will improve Arctic logistics. But with a changing climate and increased public pressure to limit resource development in environmentally sensitive regions, the future of northern economic activity is far from certain.

This week’s Chart of the Week shows the location of major oil and gas fields in the Arctic and the possible new trade routes through this frontier.

A Final Frontier for Undiscovered Resources?

Underneath the Arctic Circle lies massive oil and natural gas formations. The United States Geological Survey estimates that the Arctic contains approximately 13% of the world’s undiscovered oil resources and about 30% of its undiscovered natural gas resources.

So far, most exploration in the Arctic has occurred on land. This work produced the Prudhoe Bay Oil Field in Alaska, the Tazovskoye Field in Russia, and hundreds of smaller fields, many of which are on Alaska’s North Slope, an area now under environmental protection.

Land accounts for about 1/3 of the Arctic’s area and is thought to hold about 16% of the Arctic’s remaining undiscovered oil and gas resources. A further 1/3 of the Arctic area is comprised of offshore continental shelves, which are thought to contain enormous amounts of resources but remain largely unexplored by geologists.

The remaining 1/3 of the Arctic is deep ocean waters measuring thousands of feet in depth.

The Arctic circle is about the same geographic size as the African continent─about 6% of Earth’s surface area─yet it holds an estimated 22% of Earth’s oil and natural gas resources. This paints a target on the Arctic for exploration and development, especially with shorter seasons of ice coverage improving ocean access.

Thawing Ice Cover: Improved Ocean Access, New Trading Routes

As Arctic ice melts, sea routes will stay navigable for longer periods, which could drastically change international trade and shipping. September ice coverage has decreased by more than 25% since 1979, although the area within the Arctic Circle is still almost entirely covered with ice from November to July.

RouteLengthIce-free Time
Northern Sea Route4,740 Nautical Miles6 weeks of open waters
Transpolar Sea Route4,179 Nautical Miles2 weeks of open waters
Northwest Passage5,225 Nautical MilesPeriodically ice-free
Arctic Bridge3,600 Nautical MilesIce-free

Typically shipping to Japan from Rotterdam would use the Suez Canal and take about 30 days, whereas a route from New York would use the Panama Canal and take about 25 days.

But if the Europe-Asia trip used the Northern Sea Route along the northern coast of Russia, the trip would last 18 days and the distance would shrink from ~11,500 nautical miles to ~6,900 nautical miles. For the U.S.-Asia trip through the Northwest Passage, it would take 21 days, rather than 25.

Control of these routes could bring significant advantages to countries and corporations looking for a competitive edge.

Competing Interests: Arctic Neighbors

Eight countries lay claim to land that lies within the Arctic Circle: Canada, Denmark (through its administration of Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States.

There is no consistent agreement among these nations regarding the claims to oil and gas beneath the Arctic Ocean seafloor. However, the United Nations Convention on the Law of the Sea provides each country an exclusive economic zone extending 200 miles out from its shoreline and up to 350 miles, under certain geological conditions.

Uncertain geology and politics has led to overlapping territorial disputes over how each nation defines and maps its claims based on the edge of continental margins. For example, Russia claims that their continental margin follows the Lomonosov Ridge all the way to the North Pole. In another, both the U.S. and Canada claim a portion of the Beaufort Sea, which is thought to contain significant oil and natural gas resources.

To Develop or Not to Develop

Just because the resources are there does not mean humans have to exploit them, especially given oil’s environmental impacts. Canada’s federal government has already returned security deposits that oil majors had paid to drill in Canadian Arctic waters, which are currently off limits until at least 2021.

In total, the Government of Canada returned US$327 million worth of security deposits, or 25% of the money oil companies pledged to spend on exploration in the Beaufort Sea. In addition, Goldman Sachs announced that it would not finance any projects in the U.S.’s Arctic National Wildlife Refuge.

The retreat of Western economic interests in the Arctic may leave the region to Russia and China, countries with less strict environmental regulations.

Russia has launched an ambitious plan to remilitarize the Arctic. Specifically, Russia is searching for evidence to prove its territorial claims to additional portions of the Arctic, so that it can move its Arctic borderline — which currently measures over 14,000 miles in length — further north.

In a changing Arctic, this potentially resource-rich region could become another venue for geopolitical tensions, again testing whether humans can be proper stewards of the natural world.

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Energy

Visualised: Europe’s Battery Recycling Challenge

In this graphic, Visual Capitalist partnered with Scottish Mortgage Investment Trust to explore how battery recycling could provide Europe with a steady stream of critical materials it needs to meet EV demands.

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Teaser image of a bar graph that shows the rising recyclable EV batteries within Europe.

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The following content is sponsored by Scottish Mortgage Investment Trust

Solving Europe’s Battery Recycling Puzzle

The demand for EVs in Europe is so high that by 2030, the region will demand 25% of the world’s annually produced battery-grade lithium, the critical element required to power these EVs. 

However, as the region produces only 1% of the world’s lithium, Europe must find a new way to meet this demand. 

In this graphic, sponsored by Scottish Mortgage, we will explore a solution to this puzzle—battery recycling.  

A Mountainous Problem

By 2030, over a million EV batteries will reach end-of-life in Europe. As you can see, the issue isn’t confined to 2030 alone:

YearNumber of EV Batteries Available for Recycling in the EU
20180.9K
20198.3K
202017.2K
202137.9K
202250.6K
2023P97.5K
2024P104.2K
2025P147.3K
2026P230.6K
2027P372.5K
2028P619.3K
2029P826.8K
2030P1,103.8K

A Clean Solution

Battery recycling offers a clean solution to the mountain of batteries Europe will use yearly, as it can recover as much as 95% of a battery’s lithium. 

Moreover, battery recycling keeps materials in a closed loop, allowing the region to avoid the environmental costs of mining and help prop up the dwindling lithium supply and taxed cobalt and nickel supply. 

However, Europe needs a plan to deal with this waste. With a current battery recycling capacity of only 40,000 tonnes per year, the volume of batteries reaching their end of life in Europe by 2030 will be over 25 times higher than its current recycling capacity. 

Enter Northvolt

Battery manufacturer Northvolt is tackling this challenge head-on by operating Northvolt Ett, Europe’s largest battery recycling plant in Skellefteå, Sweden, on the edge of the Arctic Circle. 

The Northvolt Ett plant boasts an impressive recycling capacity of 125 kilotonnes annually.

Meaning that when working at total capacity, it could increase Europe’s battery recycling capacity by nearly 50%, while still recycling 95% of lithium and 95% of other materials critical to battery production: nickel, manganese, and cobalt.

Northvolt is expanding its global operations by constructing four new factories. One is in Heide, Germany, and another is in Québec, Canada. The remaining two factories are under construction in Borlänge and Gothenburg, Sweden. The latter is a joint venture between Northvolt and Volvo.

Scottish Mortgage exposes investors to the growing battery recycling industry through companies like Northvolt. 

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Discover how to invest in some of the world’s most innovative companies with Scottish Mortgage today. 

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