Attempts to "green the economy" have become an important topic for stakeholders and decisionmakers in the circumpolar North. However it is difficult to predict how the future of Renewable Energy in the Arctic will be.
The growing interest in renewable energy and "green economy" reflects three major concerns: the need to tackle climate change and other environmental problems; the desire to strengthen energy security by reducing dependence on imported oil and gas; and the need to stimulate job-creation in many rural areas, particularly in the aftermath of the economic and financial crisis. The first two points are compatible with higher prices for energy, the third is harder to reconcile.
For Iceland the 2008 economic crisis has significantly changed the way it wants to exploit its energy reserves. A recent report, commissioned by the country's Department of Industry, argues that a new energy policy for Iceland should prioritise profitability, sustainability and national gain. Energy is seen as the key to Iceland's welfare.
Iceland's natural energy reserves include hydro and geothermal power, which will be central also in future development. A large amount of the energy produced is sold cheaply to heavy industry – mainly aluminum plants. Even aluminum plants in Africa pay more for the energy they use than the plants in Iceland plus that they enjoy the benefit of energy being exclusively produced on a renewable, CO2 free base.
Norway, despite being rich in oil and gas, also feeds much of its electricity demands with hydropower. The Norwegian government has tried to develop green energy also in the Arctic regions. In the 3 northern provinces of Nordland, Troms and Finnmark but also the rest of the country, hydropower is the main source of energy, but usage of wind and tidal current energy are increasing. This is also the case for small scale hydropower facilities.
Sweden also attempts to "green" its energy production. A substantial share is from renewable sources. Again, hydroelectricity in Sweden depends on precipitation and wind wind-energy faces the challenge of harsh Arctic conditions. However tests with wind turbines designed specifically to withstand harsh Nordic conditions have been successful. This is shown in the case of the Suorva wind turbine. More than 1,000 wind power plants will be built in the country over the next few years at the price of 70 billion Swedish kronor.
Challenges exist in the general transition from non-renewable to renewable energy in the circumpolar North. Especially the harsh climate conditions have to be mentioned: frost and icing remain a problem for wind turbines and aridity for hydropower. Thus a lot of efforts will have to be put in the technological preparation for a "greening" of economies. Hydropower based systems might need to adapt to climate change and changes in precipitation and snow melting patterns. This could e.g. mean construction of higher dams (to retain the equal amount of water with changed precipitation pattern) or even construction of new dams.
A special case will be Greenland. It has become increasingly focused on the use of renewable energy in its energy supply and there is a tremendous potential for the development of amongst others Hydropower. The Greenland icecap constitutes an ideal source for generating hydroelectric power, and it is estimated that Greenland has a hydropower gross potential of approximately 800,000 GWh per year.
However, most of the power generated is based on diesel based generators today. One of the reasons for this is the "island" structure of the settlements with no on-land connections, and with power supply thus far only based on local production. The challenge for Greenland will be to establish a common grid structure. This would be extremely expensive and more research has to be done to find a sustainable solution. In a first step energy efficiency measures must aim at reducing the amount of fossil and non-renewable energies until a transition to a complete renewable base can be done. Also, as in other parts of the Arctic the option of exporting energy through energy requiring products is actively under consideration. Thus, the international aluminum industry is currently investigating the investment potential of Greenland.
Sources: Arctic Climate Impact Assessment NordicenergyPerspectives HomePower Megatrends Sustainable Planning of Megaprojects in the North