Towards a balanced view of Arctic shipping: estimating economic impacts of emissions from increased traffic on the Northern Sea Route

The extensive melting of Arctic sea ice driven by climate change provides opportunities for commercial shipping due to shorter travel distances of up to 40% between Asia and Europe. It has been estimated that around 5% of the world’s trade could be shipped through the Northern Sea Route (NSR) in the Arctic alone under year-round and unhampered navigability, generating additional income for many European and East Asian countries. Our analysis shows that for Arctic sea ice conditions under the RCP8.5 emissions scenario and business restrictions facing shipping companies, NSR traffic will increase steadily from the mid-2030s onwards, although it will take over a century to reach the full capacity expected for ice-free conditions. However, in order to achieve a balanced view of Arctic shipping, it is important to include its detrimental environmental impacts, most notably emissions of short-lived pollutants such as black carbon, as well as CO2 and non-CO2 emissions associated with the additional economic growth enabled by NSR. The total climate feedback of NSR could contribute 0.05% (0.04%) to global mean temperature rise by 2100 under RCP8.5 (RCP4.5), adding $2.15 trillion ($0.44 trillion) to the NPV of total impacts of climate change over the period until 2200 for the SSP2 socio-economic scenario. The climatic losses offset 33% (24.7%) of the total economic gains from NSR under RCP8.5 (RCP4.5), with the biggest losses set to occur in Africa and India. These findings call for policy instruments aimed at reducing emissions from Arctic shipping and providing compensation to the affected regions.

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