A Conference on Energy Security and Geopolitics in the Arctic: Challenges and Opportunities in the 21st Century

I. Dynamic Changes in Arctic Sea Ice

1. Overview of conditions 2. Changes in Arctic sea ice extents

II. Crisis and/or Opportunity

1. Risks of the melting Arctic ice 2. Potential benefits of Arctic melting

III. Sea Routes

1. Southern sea route (SSR)2. Arctic sea routes (ASR)

IV. New, Potential Sea Shipping Route

1. Comparison northern sea route (NSR) with SSR2. Effects of NSR on shipping, cost and environment

V. Consideration and tasks

1. Consideration2. Tasks

VI. Conclusion

Outline of Presentation

I. Dynamic Changes in Arctic Sea

Ice

1. Overview of conditions

Source: Polar Research Group, University of Illinois at Urbana-Champaign, IL, USA

2. Changes in Arctic sea ice extents

Source: National Aeronautics and Space Administration (NASA), USA

2.Changes in Arctic sea ice extents

Source: modified from The National Snow and Ice Data Center, University of Colorado at Boulder, CO, USA

Decline of 6.6% per decade

2007

II. Crisis

and/ or Opportunity

1. Risks of the melting Arctic iceClimate Change

Melting of the Ice Caps

Rising Sea Levels

Affecting Native People, Wildlife,

Plants

Accelerating Global Warming

Threatening Low-Lying Areas

Impacting on Weather Patterns

Influencing Food Production

Crisis on

Human

Survival

2. Potential benefits of Arctic melting

Huge commercial opportunity & formidable technological challenge

Decrease in the cost of shipping &

travelling

New reserves of energy, natural

resources

Mitigation strategy for reduction of CO2

emission

New passage of world

economics

III. Sea Routes

1. Southern sea route (SSR)

Through the Suez Canal and the horn of AfricaThrough the Cape of and along the coasts of Africa

(Asia)(Europe)

(Africa) (Africa)

(Asia)(Europe)

(Australia) (Australia)

(Suez Canal)

2. Arctic sea routes (ASR)

Sea route along the coasts of

northern CanadaSea route along

the coasts of Russia

Sea routes along the edges of the Arctic ocean

Source: United Nations Environment Programme

(NSR)(NP)

IV. New, Potential Sea Shipping

Route

1. Comparison NSR with SSR

*Hyundai Heavy Industries and Korea Sailing Federation; picture from theguardian

10,754 nmDistance

Oil tanker:

28 daysContainer ship:

18 days

Time

Oil tanker:

3,108 ton MFO

Container ship:

4,410 ton MFO

Fuel

SSR NSR

Vessel type*

• Oil tanker: 320K ton• Container ship: 8,500 TEU, 100K ton

Vessel speed*

• Oil tanker: 16 knot• Container ship: 26 knot

Fuel consumption*

• Oil tanker: 111 ton MFO/day• Container ship: 245 ton MFO/day

Pusan

Oil tanker:

1,998 ton MFO

Container ship:

2,695 ton MFO

Fuel

6,857 nm Distance

Oil tanker:

18 daysContainer ship:

11 days

Time

Category Vessel type Reduction Saving rate

Fuel consumptionOil tanker* 1,110 ton MFO 36%

Container ship** 1,715 ton MFO 39%

2. Effects of NSR on shipping, cost and environment

Category Vessel type Reduction Saving rate

DistanceOil tanker*

3,897 nm 36%Container ship**

TimeOil tanker* 10 days 36%

Container ship** 7 days 39%

1) Shipping

In the case of the use of NSR

- Approximately 36 ~ 39% of distance, time and fuel consumption will be saved.

- The shipping company may have an advantage for competition, creating economic income

*Oil tanker: 320K ton, 16 knot**Container ship: 8,500 TEU, 100K ton, 26 knotMFO: marine fuel oil

2. Effects of NSR on shipping, cost and environment2) Fuel cost

Trends of bunker prices

between 1998 and 2010

- In 1998, as low as

$50/ton MFO

- By 2005, gradual

increase to $360

- In 2008, from $800 to

$225 due to financial

crisis

Bunk

er p

rice

(USD

/ton

MFO

)

Source: Clarksons

2. Effects of NSR on shipping, cost and environment2) Fuel cost

In the case of the use of

NSR compared with SSR

- Oil tanker: 36%

saving/voyage

- Container ship: 39%

saving/voyage

If bunker price increases,

the amount of saving

increases

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Savi

ng a

mou

nt (U

SD/v

oyag

e)

Bunker price (USD/ton)

Oil tanker Container ship

2. Effects of NSR on shipping, cost and environment3) Environment

CO2 emission: 3.02 ton CO2/ton MFO (Devanney 2010)

SSR NSR Oil tanker: 9,386 ton CO2

Container ship: 13,318 ton CO2

Oil tanker: 6,034 ton CO2

Container ship: 8,139 ton CO2

* CO2 emission cost: $25/ton CO2 issued to OECD countries since 2008 (OECD Economic Department Working Papers, No. 658, 2008)**Economic loss cost in Korea: $71 ~ $180/ ton CO2 (Lee and Kim 2010, Journal of East Asian Economic Integration)

Oil tanker: 3,352 ton

CO2/voyage

Container ship: 5,179

ton CO2/voyage

Oil tanker:

$83,800/voyage

Container ship:

$129,475/voyage

Korea: $237,992 ~

$932,220/voyage

Reduction of CO2emission

Saving of CO2emission cost*

Cost Saving of economic loss **

V. Consideration & Tasks

1. Consideration

Uncertainty

Possible commercial navigation

period

Safe route

CO2 reduction vs. climate

change

Sailing cost

90 days → after 2015?

Ice factors ( ice breaking service fee, toll, speed restriction)

Geopolitical conflicts, sovereignty, natural environment

Sensitive region

2.Tasks

Prepare measures for commercial availability• International cooperation, crew training • Economic analysis, simulation development of navigation

Develop special vessels for NSR• Shipbuilding and navigation technology• Successful sea trials

Establish strategies for climate change• Forecast of environmental change• Co-existence of development and protection

VI. Conclusion

Opportunity & Challenge

Conflict & Crisis

NO

YES

If tasks are accomplished

If uncertainties are not solved