Greenland, a small Danish island territory in the Arctic, with rich oil and minerals resources, has thrown in the towel respecting oil exploration, citing the impact of fossil fuel on the environment and global push for a shift to cleaner energy.
The decision is the latest boost to the global quest to end carbon emission, and poses a striking contrast to the oil exploring moves that the Nigerian government has been making in frontier basins.
Though the Greenlandic government, Naalakkersuisut, remains committed to developing the country’s vast mineral potential, it is only focusing on where it does not involve the extraction of uranium. A draft-bill has been sent out for consultation, which bans preliminary investigation, exploration and extraction of uranium in Greenland.
The Greenlandic 57,000 population has based its livelihood on the country’s natural resources for centuries, and the ban on uranium mining is rooted in a profound belief that business activities must take nature and the environment into account. The government believes that the way the world is going, oil has no future.
“The future does not lie in oil. The future belongs to renewable energy, and in that respect we have much more to gain,” the Greenland government said in a statement. The government said it “wants to take co-responsibility for combating the global climate crisis.”
The Greenlandic underground contains large unexplored deposits of oil. A recent study from The Geological Survey of Denmark and Greenland (GEUS) estimates that there are DKK 18 billion de-risked barrels of oil on the west coast of Greenland. Large deposits are also expected to hide below the seabed on the east coast of Greenland.
However, the Greenlandic government believes that the price of oil extraction is too high. This is based on economic calculations, but considerations of the impact on climate and the environment also play a central role in the decision.
Against this background, Naalakkersuisut has decided to cease issuing new licenses for oil and gas exploration in Greenland.
The Minister for Housing, Infrastructure, Mineral Resources and Gender Equality, Naaja H. Nathanielsen said it’s time for soul-searching.
“As a society, we must dare to stop and ask ourselves why we want to exploit a resource. Is the decision based upon updated insight and the belief that it is the right thing to do? Or are we just continuing business as usual? It is the position of the Greenlandic government that our country is better off focusing on sustainable development, such as the potential for renewable energy,” he said.
No oil has been found yet around Greenland, but officials there had seen potentially vast reserves as a way to help Greenlanders realize their long-held dream of independence from Denmark by cutting the annual subsidy of 3.4 billion kroner ($540 million) the Danish territory receives. But in a sudden turn, the government is choosing the environment over oil revenue and independence from Denmark.
The government’s decision to stop oil exploration was welcomed by environmental group Greenpeace, which called the decision “fantastic.”
The Minister for Agriculture, Self-sufficiency, Energy and Environment, Kalistat Lund said the decision will help the government to fight climate change and focus on other sources of economic growth.
“Naalakkersuisut takes climate change seriously. We can see the consequences in our country every day, and we are ready to contribute to global solutions to counter climate change. Naalakkersuisut is working to attract new investments for the large hydropower potential that we cannot exploit ourselves. The decision to stop new exploration for oil will contribute to place Greenland as the country where sustainable investments are taken seriously,” he said.
Crude oil price is at $71, the highest in four years. For oil economies, it offers an opportunity for swift recovery from pandemic-induced economic losses but it also means further harm to the environment.
In Nigeria, the government has adamantly continued oil exploration even as the world moves on. The Petroleum Industry Bill (PIB), which has been under consideration by Nigerian lawmakers proposes that 30% of oil profits be dedicated to oil exploration, in clear opposition to the global push for clean energy.
Greenland Minister for Business, Trade, Foreign Affairs and Climate, Pele Broberg said businesses moving away from oil indicate it’s time the government considered the environment and explore futuristic opportunities.
“International investments in the energy sector in recent years are moving away from oil and gas and into renewable energy. It is therefore natural that we emphasize business on the opportunities of the future and not on the solutions of the past. The decision to halt oil exploration is also the story of a population that puts the environment first. It is a story I look forward to sharing with the tourism sector and include when I represent Greenland internationally,” he said.
Recently, many companies in the energy industry have announced plans to divest. Saudi Aramco, Shell, BP etc. all said they are moving away from crude oil to cleaner energy, winding down their operations in some countries and developing frameworks for environmentally friendly business.
The pro green Joe Biden administration has taken the United States back to the Paris Climate Accord, leading the charge for global climate action that will hurt oil production in the near the future.
With efforts collectively yielding alternatives to oil, and more governments and firms showing willingness to embrace the alternatives, Nigeria may need to find a new use for its abundant oil soon.