How the Arctic Economic Council is Creating Connections in the Arctic

The Arctic Economic Council (AEC) is an independent business organisation facilitating sustainable economic development in the Arctic. Its membership includes more than 30 companies and organisations that all have interests in the High North. The members are large multinational corporations and SMEs, as well as indigenous organisations such as the Inuit Circumpolar Council, RAIPON, NANA Regional Corporation, and the Aleut International Association.

Currently the AEC has five working groups that cover:

• Maritime Transportation
• Investment and Infrastructure
• Responsible Resource Development
• Blue Economy
• Connectivity

The Connectivity working group has mainly focused on telecommunication. However, the AECS’s everyday work is based on connectivity in building relationships with stakeholders, fostering business opportunities and promoting investment opportunities.

The work of the AEC can be listed under three themes:

1. Policy Advocacy: The AEC conducts policy advocacy to promote the best framework conditions for companies operating in the Arctic. This happens both with national governments and international organisations.
2. Partnerships: The AEC facilitates networking among its members in creating private- public partnerships.
3. Awareness Raising: The AEC communicates opportunities in the Arctic to the public. This involves addressing prevailing misconceptions surrounding the Arctic and shaping the image of the region as a provider of innovative technological solutions for the rest of the world.

The Connection with the Arctic Council

The inaugural meeting of the Arctic Economic Council took place in Iqaluit, Nunavut, Canada in 2014. This was after the Arctic Council (AC) had recognised a missing link in communicating with the business sector. Both the AEC and the AC have their main offices in Tromsø, Norway, which allows for close dialogue and coordination. Over the years, this collaboration has developed into a strategic partnership formalised under the Icelandic chairmanship, and culminated in 2019 with the signing of the Memorandum of Understanding in Rovaniemi. Soon after, AEC and AC hosted their first joint meeting where the Senior Arctic Officials, Permanent Participants, AEC members, and representatives from the working groups discussed common challenges. Most recently, the two councils have been collaborating on the AC Task Force on Improved Connectivity. The AC has a coordinator to follow the work of the AEC Connectivity working group.

Investment Matrix

The pandemic has highlighted the digital divide that exists in the Arctic region. This May, the AEC will share its final report on connectivity with the Arctic Council, which will be made available on our website. Led by Dr. Pam Lloyd from the Alaskan telecommunications company GCI, the report highlights the status of the telecommunications infrastructure and has developed an investment matrix. This matrix can in the future be used by policymakers and investors as a tool to finance connectivity projects in the polar regions.

Closing the Infrastructure Gap

There exists an infrastructure gap in large parts of the Arctic region. This has resulted in many of the AEC’s members working on developing and upgrading their infrastructure. Three such companies are:

1. The Norwegian energy provider Troms Kraft, which invests in hydrogen projects.
2. The Finnish company Destia, which is among industry leaders in road and rail construction in the northernmost parts of Scandinavia.
3. The Canadian company ATCO, which provides integrated energy, housing and infrastructure solutions in the most remote areas of Canada.

The ocean can best be described as the the highway of the Arctic. Companies like Crowley Solutions, Rosatom, and Sovcomflot are operating in challenging maritime environments, delivering resources and exporting raw materials to the rest of the world. The promising economic potential of the Arctic is often challenged by the fact that only million people live there. Therefore, it is necessary that companies in the Arctic trade with the world, even when business operations are at times more expensive than elsewhere.

Closing the infrastructure gap will not only boost the quality of life of the local population, but it will also make the region more accessible for investors and new business ventures. The Arctic holds some of the world’s most desirable resources e.g., minerals that can provide key elements for the high-tech production of electric vehicles, wind turbines, and cell phones. Other important resources, such as oil and gas - as well as renewable energy resources - are then exported from the region to the international market.

In the coming decades, more people around the globe will be categorized as middle class leading to an increased demand for sustainable food sources. Today, Arctic fisheries and aquaculture already supply protein rich meals to the entire world. Simultaneously, innovative approaches by local companies have turned seafood waste into commercially valuable products with a wide range of potential applications. Market opportunities for other sustainable Arctic food products such as reindeer meat are also growing.

Arctic Investment Protocol

Investments are needed in the Arctic which is why the AEC is promoting the Arctic Investment Protocol (AIP) as a set of guidelines for investors aspiring towards sustainable operation in the region. The protocol was developed within the framework of the World Economic Forum, in accordance with the UN Sustainable Development Goals, and with a special contribution from Guggenheim Partners. The document gives guidelines to potential and current investors, helping them to:

• Build resilient societies through economic development;
• Respect and include local communities and indigenous peoples;
• Pursue measures to protect the environment of the Arctic;
• Practise responsible and transparent business methods;
• Consult and integrate scientific and traditional ecological knowledge;
• Strengthen pan-Arctic collaboration and sharing of best practices

The AEC promotes best practice in the region and will, in the coming months, produce a report highlighting specific investment opportunities in the Arctic. We wish to connect investors with exciting projects.

Strategies for the Region

In recent years, we have seen an increased interest in the Arctic. Many countries have updated their National Strategies and the AEC is actively working on connecting with and reaching out to the wider political establishment. We want to make sure that National Governments do not forget the important role of business and development in the region. Countries like Norway and Sweden have recently published their strategies; soon Finland and the Kingdom of Denmark will follow. Likewise, the European Union will publish its updated Arctic strategy in October this year. What is crucial is that these policy documents mirror the realities and aspirations of the people living and working in the region. The strategies need to reflect the need for investments in infrastructure and connectivity that benefit the people living in the Arctic.

Cooperation with Non-Arctic States

It is important for the AEC to communicate with non-Arctic states, especially to avoid the misconception that the Arctic is a frozen wasteland or a protected national park inhabited solely by polar wild life. The strategic location of the Arctic connects the world via maritime sailing routes, aviation services, and LEO-satellites. Megatrends like the climate emergency, changing demographics, and increased digitalisation have global consequences. The Arctic needs to be promoted and included in a global context. It could, for example, become the key region for the newly established European Cluster of Raw Materials, where companies like LKAB or Ambler Metals could contribute valuable expertise.

New Members Welcome

In May of this year, Russia will take over the Chairmanship of the Arctic Economic Council with the following focus areas: maritime shipping, digital infrastructures and sustainable investments. The Chairmanship has identified cross-border collaboration as one of the key priorities as well as the development of strategic partnership with the Arctic Council. The AEC welcomes new members from Arctic and non-Arctic states to join our platform and resources.

No. 7/2021, 18 May 2021

This article is a part of the Arctic Circle Journal Series which provides insight, understanding and new information. The material represents the opinions of the author but not those of Arctic Circle.