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Ministry for Foreign Affairs

Address at the Japanese Ocean Policy Research Institute (OPRI): “Sustainable Business in the Arctic”

“Sustainable Business in the Arctic”
Address by H.E. Guðlaugur Þór Þórðarson,
Minister for Foreign Affairs of Iceland
At the Ocean Policy Research Institute
Tokyo, 30 May 2018

Distinguished guests, ladies and gentlemen,

I would like to thank the SASAKAWA Peace Foundation and the Ocean Policy Research Institute for organising this event today. I have been informed about the warm welcome that former President Ólafur Ragnar Grímsson received here in February at the Arctic Governance Workshop and we appreciate Japan´s active participation in the yearly Arctic Circle Assembly – the largest gathering in the world on Arctic affairs. 

Japan is the first country in Asia that I have visited during my time as Foreign Minister. Japan and Iceland enjoy a strong relationship and I can see further opportunities for co-operation between our nations, not least in the Arctic. Today’s topic “Sustainable Business in the Arctic” is therefore well founded. 

For Iceland, sustainable development in the Arctic is key and will be our guiding principle as we prepare for our chairmanship in the Arctic Council next year. This applies to economic, environmental and societal aspects alike. On a global scale we also emphasize the importance of joint international efforts in implementing the Paris Agreement, as well as Agenda 2030 and the Sustainable Development Goals.

So why is the concept of sustainability important in the context of the Arctic? We all know that the icecap receding because of climate change and the Arctic is opening up. These developments bring about both new opportunities as well as challenges in various fields such as trade, transport, investment, research, services and social development of the region.

Iceland depends on sustainable use of natural resources. This we have learned in the past and this is what we will focus on in the future. I could go even further and say that our very existence in the long term depends on sustainable use of natural resources. 

Globally we have joint responsibilities, as our economies are interconnected and will be negatively affected by climate change if nothing is done. No country by itself can tackle these global challenges.

The Arctic is rich in natural resources. This includes oil and gas, as well as valuable minerals. The region is also endowed with fish and numerous other types of resources that can be harnessed in a sustainable way. In my address here today, I would like to bring forward three examples from an Icelandic perspective on the Arctic that highlight the importance of utilising our resources in a sustainable way. 

Firstly, renewable energy, secondly, fisheries and the ocean and, thirdly, transportation infrastructure. Finally, I will touch on the current landscape of Arctic co-operation and offer some views on the way forward. But before that I would like to offer a few general remarks on Arctic cooperation and Iceland’s policy.

Ladies and gentlemen,

When it comes to Arctic cooperation, Icelandic politics are in full agreement, which is not always the case. Across the political spectrum in Iceland there is consensus on our role as a committed and responsible Arctic state in a region where co-operation and sustainable development is the guiding light.

We all agree on the importance of the Arctic Council, which Iceland will chair next year when we take over from our Finnish friends. The Council plays a key role in promoting sustainable development in the Arctic. Protection of the environment is crucial for the future of the region, but it needs to go hand-in-hand with responsible economic development. The interests of the inhabitants of the Arctic need to be respected, with a special focus on the indigenous peoples. It is our responsibility to allow the people of the region to enjoy security and prosperity in different forms. That includes access to local health care, education, employment and communications. 

Over the last decade, the Arctic region has caught the attention of the outside world. We have seen an increased number of states and organisations developing and adopting policies on the Arctic from their own points of interest. This includes most of our larger neighbours in Europe and the European Union, but also Russia and China. The increased attention can also be seen by a growing number of observers to the Arctic Council, including Japan.

Back home in Iceland we see an increase every year in the participation in the Arctic Circle Assembly in Reykjavík, which has sometimes been called the Davos of the Arctic and attracts more than 2.000 participants every year from all over the world.
Indeed, the spotlight of the outside world is shining on the Arctic. As the icecap in the Arctic continues to melt, we need to use that spotlight in a constructive way. 

Climate change is the evident and main driver of that development. It is hard to grasp, but the icecap is now only half the size it was 50 years ago. All around the world we witness the consequences of climate change, but its impact is particularly revealing in the Arctic.

Ladies and gentlemen – and turning to my first example.

Iceland has utilised its renewable energy sources for decades. In recent years the world has been gaining ever more understanding of the importance of securing renewable energy development. It has been a long-standing policy in Iceland to support initiatives worldwide that aim to increase the utilization of geothermal energy. In Iceland we have a good track record of direct use of geothermal energy in heating of buildings, and a power source for the industry, agriculture and fishery sectors. The potential is enormous. 

Reliance on fossil fuel is still a big challenge for many of the Arctic’s remote communities. As the Arctic is one of the most vulnerable regions to pollution, reliance on fossil fuel for energy is a risk that needs to be reduced. 

It is well known that many of these communities will not be connected to a national energy grid anytime in the near future. Therefore, they will need to develop their own local energy systems. Those systems will most likely be different sorts of hybrid renewable solutions for using wind, solar, tidal, hydro and geothermal. For this to become more readily available, efforts need to be put into investment and research in different energy technologies.

It is also worth noting that we are witnessing positive developments in other regions that can have positive effects in the Arctic. For example, big investments are taking place in China to build cities with district heating from geothermal energy. This transformation in China has been done with Icelandic participation. The example from China shows what large-scale investments in infrastructure can do for air quality and improve quality of life – An impact that is both local and global in terms of climate change. 

On a side note, I would also like to use this opportunity to mention that geothermal energy has for decades been one of the key focus areas of Iceland’s international development cooperation. We are proud to be able to share our experience with other countries, which hold potential in geothermal utilization, either for electricity or direct use. We run the United Nations Geothermal Training Programme, which is the flagship of Iceland’s support to geothermal development. The programme has graduated almost 700 fellows from 60 countries and welcomed around 2.000 experts for short courses worldwide. 

By utilising geothermal resources, in countries with the potential, we can create foundations for an environmentally friendly production of electricity - plus all other direct use possibilities. That contributes to both economic and social development, but also plays a role in mitigating climate change. 

Awareness of the need for sustainable energy solutions has increased in recent years. However, increased awareness is not enough on its own. In order to transit successfully to sustainable energy, we need to stimulate co-operation and joint efforts between countries and regions of the world. Otherwise this will not happen.

Distinguished guest - this brings me to my second example. 
Iceland's economic progress and prosperity has for centuries been shaped by the rich natural resources and the climatic conditions of the north. 

We have broad experience in the potential of our ocean. For centuries people believed that fish stocks were inexhaustible, but experience taught us otherwise. Our approach today is to balance the sustainable use and the conservation of the oceans and their resources.

Iceland is a firm believer in responsible resource management on a local level, combined with regional and global solutions where appropriate. We have come a long way in our understanding of the challenges related to sustainable conservation and management of the oceans.

Just recently, the landmark negotiations on potential future of the Central Arctic Fisheries were concluded where Iceland and Japan were amongst participants. History has proven that regional cooperation built on scientific evidence and international law is exactly what we need. 

To understand today’s situation, it is important to reflect on history. For about 500 years Iceland remained a part of the Kingdom of Denmark. During that time the most sought-after resource of Iceland was fish, which was harvested at different times by foreign powers such as England and France. 

In recent times, Iceland has implemented a responsible system that is science-based and focuses on long-term sustainable utilisation of this important natural resource. Our fisheries management system has overcome the inefficiencies of the past and the industry generates substantial economic profit, which is subject to taxation. There are no subsidies in the Icelandic fish industry.

Fisheries will remain one of the main pillars of the Icelandic economy and a quality export commodity that we are proud of – and I am pleased that Japan continues to be an important market for our sea-food. The industry has also developed and today the fish is fully utilised, including its skin for medical purposes, fashion and design – a truly remarkable development.

For a nation of seafarers and fishermen we are also obliged to address some obstacles while utilising the resources in the sea. Pollution in our waters should not be tolerated. One of the important tasks we have for the future is to tackle marine litter, notably plastic, in the ocean. In this context, Iceland has made voluntary commitments to reduce marine litter in its waters. 

Through our fisheries industry we have also learned, often from bitter experience, the importance of maritime safety infrastructure in our waters. We need to stay alert and continue to enhance the co-operation between the Arctic states, including on search and rescue. This is of key interest to all Arctic States and, here, the important work of the Arctic Council has benefitted all of us.
Ladies and gentlemen,

My third and last example relates to development of transportation infrastructure, which are topics that also needs to be approached in a sustainable way.

With more interest in the Arctic as a tourist destination we are seeing visitors from all corners of the world enjoying the beautiful landscape and natural wonders such as the Northern lights. Inbound tourism to Iceland has constantly been increasing in the last decade and last year some 2.3 million tourists visited Iceland – and bear in mind that we are a population on 350.000 people. Iceland has become a flight-hub in the Arctic connecting tourists from all over the world. We have also seen positive development as regards services related to shipping routes and related fields. 

Solid infrastructure, including roads, ports and airports are instrumental in this respect. Better connections in the region will increase the service level for both businesses and the people of the Arctic. In many respects, Iceland is centrally located in the Arctic and can serve as an important hub and venue for Arctic-related activities. Good access to new markets through alternative Arctic transportation routes can help stimulate economic growth in the region. 

We already see this happening and, although conditions in the Arctic will continue to be harsh, the number of vessels and volume of cargo are likely to increase. You only have to look at the map to understand why. The transport time between Asia and Europe is substantially cut, which saves time and money – and benefits the environment. New connections through Arctic rail links are also under consideration and, needless to say, any future developments of transport links need to take place in close co-operation with national, regional and local authorities and enterprises – and need to be sustainable. 

All these new transport routes need to focus on increasing energy efficiency or utilising sustainable energy resources where possible and, when focusing on infrastructure, telecommunications and connecting remote areas should also be a priority. Improved connectivity supports better access to education, healthcare, commerce and business development, and improves quality of life.

Ladies and gentlemen,

Looking towards the future, I believe it is important for businesses to take a joint responsibility with their respective governments in transforming the way the world’s economies are run.

Some of you here might be familiar with the Arctic Economic Council that was established under the Canadian Chairmanship of the Arctic Council back in 2014. 
The Arctic Economic Council is an independent organisation that focuses on facilitating business connections and activities in the region. The Council puts a focus on responsible economic development through the sharing of best practices, technological solutions, standards, and other information. 

The Arctic Economic Council represents different industries, ranging from mining and shipping companies, tourism and transport to reindeer herding and indigenous economic development corporations. It is important for different types of businesses to have a voice in the development of the region and take an active part in seeking solutions.

I believe it is vital to have a strong connection between the public and private sector. Iceland therefore is very keen on working closely with the Arctic Economic Council in the coming years. 

Ladies and gentlemen,

Increased cooperation between the eight Arctic states is gradually leading to new business opportunities and economic activities. Fortunately, this co-operation is also stimulating research and development in various fields, which helps us to utilise the resources of the Arctic in a sustainable manner.

We need improved infrastructure that fosters sustainable growth into the future. This needs to be done in co-operation with responsible non-Arctic states and with the involvement of the private sector. The Asian powerhouses have all revealed their interested in the Arctic and Japan, South Korea, Singapore, India and China have all obtained observership in the Arctic Council. There is growing global awareness of the economic potential of the region and it is reassuring to witness expanding political contacts and practical cooperation in both bilateral and multilateral fora.

I have said this before, and I say it again. A global focus on the Arctic is long overdue. I sometimes like to point out that the geographic size of the Arctic region is equal to the whole of Africa. The region includes the largest pristine wilderness in the world and, at the same time, vast opportunities for the 4 million people who live there. 

The effects of climate change are occurring at a fast pace in the Arctic and we need to support environmental protection while working on enhancing economic development. It is a balancing act.

The region offers significant opportunities for economic growth, science, and innovation. These opportunities need to be accessed in a sustainable way. The potentials are great, but so are the challenges. The Arctic is warming up for business, but we still need to keep our heads cool. 

Thank you for your attention and I look forward to our discussion.


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