Will Climate Change Lead to an Independent Greenland?
No place on earth will be more affected by climate change than Greenland, is it ready to handle the economic and political implications?
For nearly all of its history, Greenland has been defined by ice. Although it is the 13th largest country in the world by land mass [1], ~80% of it is currently covered by a large sheet of ice, rendering most of its land economically useless. Since the Greenland GDP is not independently large enough to sustain a high quality of life for its 56,000 inhabitants, it depends on an annual subsidy of $600M USD from the Danish government to maintain operations, an amount that comprises ~1/4th of its total GDP and allows Denmark to retain foreign policy, defense, and monetary control over Greenland [2]. However, the effects of global warming have been especially conspicuous in Greenland, with rising temperatures causing the ice sheet to melt at an accelerated rate and a more hospitable average climate for Greenland residents.
While this drastic temperature increase may be problematic for the majority of the earth, it is actually somewhat beneficial for Greenland. Recent years have seen Greenland inundated with interest from outside parties, including oil exploration, precious metal and uranium mining, and tourism [3]. This positive economic outlook has reignited calls from Greenland residents for full independence from Denmark, as the returns in these burgeoning industries should replace the need for the Danish subsidy [4]. While a fully independent government would allow Greenland total autonomy in its decision making, it would also bring on a host of challenges that Greenland has never faced before on the international stage.
For this independence to even be feasible Greenland needs to lay the foundation needed to build a new economy, and the government has been active in making that happen. Greenland has currently been focused on both bringing in outside investors and working to relax certain restrictions against practices that may further the effects of climate change. Greenland has begun actively promoting itself as a tourist destination [5], and has made agreements with cruise ships to route traffic to the Greenland coast [6]. In addition to tourism, Greenland was able to attract multiple international oil companies to begin oil exploration in Greenland. Although the oil they discovered is not currently economically viable due to low crude prices, an uptick in those prices will likely see these international companies commence drilling [7]. Greenland was able to perform most interactions without significant Danish oversight, but ran into issues when companies from Australia and China wanted to mine radioactive materials in Greenland. Although Greenland’s internal government voted to allow the rare earths mining in October 2013 [8], they needed Danish approval to finalize the agreements, which was not obtained until February 2016 [9].
Greenland has been able to fight back against Danish oversight in specific instances, but to rapidly grow its economy it will need to create specific targets to hit that will move the country towards full independence. While politicians have continued to express the desire for full independence, none have laid out a specific GDP target that should allow for economic independence. Additionally, the Greenland government needs to be prepared for more international scrutiny as it grows its industrial production. Currently, Greenland has been able to fight international agreements such as the Paris Agreement [10] because it is currently the victim of global warming, not the perpetrator. However, if its oil and mining industries gain heavy traction, Greenland will become a more and more significant contributor to global warming, and will face pressure from environmental activists, governments, and likely its own citizens to regulate its production. While this is currently not an issue, the government should proactively create emission guidelines that can be reviewed and approved by the global community before any future complications arise.
While Greenland has a firm understanding of the disruption to its economic supply chain if it attains complete independence (they simply won’t have a subsidy), the country is having a more difficult time understanding the political and social implications that independence would bring. A largely industrialized economy would bring in thousands of migrant workers, and even the Prime Minister does not know how the population will react to this shift: “Are we ready for this? Are we ready for being a mining nation where we have thousands of people coming from outside to work? Are we able to stop Greenlanders becoming the minority?” [11]. The potential abundance of these resources will not only attract foreign workers, but may attract some unwanted attention from geopolitical powers. Greenland has no military and no weapons, how will it react if Denmark is willing to fight to maintain control of Greenland? Or if independence is granted and a different country aims to claim some of Greenland’s resource-rich land? Climate change has completely altered Greenland’s future, and it is still unclear whether Greenland is ready for this new paradigm.
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1. Data.mongabay.com. (2008). List of Countries by Land Mass [Ranked by Area]. [online] Available at: https://data.mongabay.com/igapo/world_statistics_by_area.htm.
2. Economist.com. (2015). Independence on ice. [online] Available at: https://www.economist.com/news/europe/21640224-falling-crude-prices-are-forcing-greenland-put-plans-split-denmark-independence-ice.
3. Rossi, M. (2016). Greenland isn’t in a rush to fight climate change because it’s actually good for the country. [online] Quartz. Available at: https://qz.com/813742/climate-change-is-benefitting-greenland/.
4. Milne, R. (2013). Greenland prime minister eyes independence from Denmark. [online] Financial Times. Available at: https://www.ft.com/content/4eb3e29c-416c-11e3-9073-00144feabdc0.
5. Greenland Government (2017). Visit Greenland. [online] Available at: https://www.visitgreenland.com.
6. Mathisen, M. (2017). Iceland ProCruises Eyeing Expansion with Booming Business. [online] Cruiseindustrynews.com. Available at: https://www.cruiseindustrynews.com/cruise-news/17776-iceland-procruises-eyeing-expansion-with-booming-business.html.
7. Economist.com. (2015). Independence on ice. [online] Available at: https://www.economist.com/news/europe/21640224-falling-crude-prices-are-forcing-greenland-put-plans-split-denmark-independence-ice.
8. Reuters. (2013). Greenland votes to allow uranium, rare earths mining. [online] Available at: https://www.reuters.com/article/us-greenland-uranium/greenland-votes-to-allow-uranium-rare-earths-mining-idUSBRE99O05A20131025.
9. World Nuclear News. (2016). Denmark and Greenland confirm uranium agreements. [online] Available at: http://www.world-nuclear-news.org/UF-Denmark-and-Greenland-confirm-uranium-agreements-0202164.html.
10. Vidal, J. (2016). Independent Greenland ‘could not afford’ to sign up to Paris climate deal. [online] the Guardian. Available at: https://www.theguardian.com/environment/2016/jan/28/independent-greenland-could-not-afford-to-sign-up-to-paris-climate-deal.
11. Milne, R. (2013). Greenland prime minister eyes independence from Denmark. [online] Financial Times. Available at: https://www.ft.com/content/4eb3e29c-416c-11e3-9073-00144feabdc0.
Very interesting article – this probes a new angel looking at climate change. Meanwhile, I wonder if this is an intellectual challenge posed by the Greenland government or something realistic in the mid term. From a supply chain perspective, here is how I will evaluate the feasibility of the Greenland´s proposal. Raw materials extraction – currently there is little to no infrastructure for natural resources extraction in Greenland, will companies invest in such large-scale infrastructure projects in an politically and economically under-developed territory? Second, from a logistic perspective – I wonder how easy it would be to ship raw materials from Greenland. Thirdly, from a demand forecast perspective, I wonder if oil & gas will still be the main energy source by 2030 as more and more countries are investing into alternative energy. I hope we can significantly reduce the use of fossil fuels before we melt more of Greenland. If so, such a low demand forecast will be difficult to trigger a whole-hearted development of a full supply chain.
I like this essay because it reminded me of a question I had a few weeks ago. Would the developed world’s attitudes (procastination, mostly) towards global warming be different if most of it were located near the equator? Are we suffering from the fact that the most influential people in this world live in areas with 10-degree winters and, therefore, may not subjectively see global warming as such an emergency? While Greenland has this opportunity, the percentage of global population living within the tropics is expected to increase from 40% now to 50% in late 2030s. Will global citizenry preferences change significantly at that point? (specifically regarding this apparent tradeoff between economic prosperity and the environment). This also applies to CEO decision making (let’s remember the example of the consultant sitting in the top floor of corporate HQ, making decisions around a plant hundreds of miles away which he has never seen).
The immigration question is also quite interesting. Greenland simply does not have the human resources to undergo the expansion they call for. The decisions about citizenship around this point will definitely have an impact on the kind of nation they may become in 50-100 years, provided they are able to gain independence as some of them want.
Wonderful article, Matt. As you have beautifully laid out above, there is an extremely compelling economic case to be made for both the positive effects climate change could have on Greenland (oil, tourism, etc.) and the corresponding push for independence. Undoubtedly both strong forces. As you alluded to above, while all of this would be good for Iceland, raising temperatures and more melting of the Greenland Ice Sheet would not be good for the world. If the Greenland Ice Sheet were to melt completely, the sea level would rise by an estimated 20 feet (1). If Greenland is at the heart of a dramatic and potentially catastrophic change in our planet, and the country itself is exacerbating that problem for economic gain, it may bring about a number of adverse effects to both its public image, and its economy as a result. I also wonder how it’s citizens would react should the country be on the front lines of a problem of this magnitude.
Thanks for the thoughtful article.
(1) https://nsidc.org/cryosphere/quickfacts/icesheets.html
Very interesting thoughts about a seemingly useless landmass. If in fact Greenland has a run on its minerals, I would be very interested to know what type of infrastructure would need to be established to support the influx of jobs. I could see Greenland having similar problems that North Dakota had in the most recent spike in oil. There were individuals paying Manhattan level apartment prices because there was such little supply of housing in the region. Unemployment was extremely low and wages were high but once the price of oil fell the region really suffered. What makes Greenland even more interesting is that it is a massive island. I would be worried about the food supply and of of the logistics that would need to be set up to supply a growing population. A potential opportunity for Greenland is to start farming their land as the frozen tundra may turn into fertile farm/pastureland.
Matt, incredibly fascinating. I grew up in a town of ~50K people. So the thought of my hometown forming an independent country is amusing. Doubtful the resources to run a country would be there and/or that Denmark would let go of a prized natural resource, if it indeed is.
This article did bring to mind, like Austin, the Bakken oil fields in North Dakota. The sad ending to the story in North Dakota is a lot of the infrastructure that did get built is now empty and abandoned. So a question would be a how long would this resource last? Would it be a temporary gold rush? Would it provide enough value for ten years and then Greenland would need to be subsidized again? Additionally, as the infrastructure is not built, extracting these resources would be significantly higher in an isolated place like Greenland than even North Dakota. I think this could make the opportunity slightly less attractive.