The future of the Arctic

I want to thank the Alaska Permanent Fund Corp. for bringing some of the world’s wealthiest funds and nations to Alaska for the International Forum of Sovereign Wealth Funds. With significant interest I watched the panel on “The Future of the Arctic.” I fear that what they may have heard during the session was a message of huge challenges, strife, climate change victims and absence of opportunity.

Though I do not want to ignore these aspects, it is not the lens that I see the region through. Within the region exists economic opportunities that are extractive in nature, but a non-extractive future is here today and is growing. During the past few years, my company has invested in assets where we feel there will be significant growth and opportunity for global integration.

Icelanders are consuming more data than 95% of the world’s users of mobile phones and they are creating valuable companies through technology and partnerships with global firms. Nova, a company that my company, Pt Capital, invested in with local partners, has data usage more than twice the average for U.S. mobile customers. We have innovated with app-driven content, blended with advanced fiber, to provide significant disruption to entertainment content and technology infrastructure. In many ways, we are providing the infrastructure necessary to transition the region to a world of digital data. With the rollout of 5G wireless service, we are now seeing data speeds that are 10 times what the average U.S. home has available.

In tourism, Alaska is projected to see an expected 16.5% growth in cruise ship tourism numbers in 2019, exceeding 1.3 million tourists in 2019. This is driven by the $50 billion of cruise ship vessels under construction as a new era of leisure spreads across the globe to service an expanding middle class. Alaska is perfectly positioned to take advantage, as it is among the highest margin destinations, and most accessible place for the new global traveler to see world-class natural wonders. These include glaciers, mountains, wildlife and indigenous cultures that have had connections to the land for thousands of years. In Iceland, tourism has increased seven-fold in the past eight years, with an estimated 2.4 million tourists in 2019, providing a new industry for the North Atlantic island and creating thousands of jobs and opportunity for entrepreneurs. With acknowledgement of this trend, we have made significant investments in both countries in the tourism sector, recognizing that the world wants to see the Arctic, the sub-Arctic, and as the climate warms, enjoys those things that are changing so fast.

In industrial services, renewables and non-renewables are colliding to provide new sources of energy and minerals to transition our world to less carbon emissions. Alaska’s oil renaissance, driven by partnerships between the state, U.S. government and Native landowners, has put Alaskans and Americans to work in our oil patch. As the Permian Basin struggles with high production costs and heavy infrastructure, Alaska has existing infrastructure to efficiently move oil and gas to market, as well as a global position to deliver to Asian markets. In Iceland and Finland, companies have exported intellectual property for geothermal development to Africa, Asia, Europe and North America and developed significant renewable energy sources to export. Renewable energy drives the production of aluminum and other valuable minerals to reduce the carbon footprint of the consumer markets in Europe.

As a transition to batteries and renewable energy occurs, the world will need friendly sources of graphite, cobalt, copper, zinc and rare earths to power the new modes of transportation, communications, and logistics. Alaska, Canada, Greenland and Finland all have these in spades, and they are part of the Western Hemisphere economy, working together to bring geopolitical stability and helping to react to a warming world.

The opportunity for Arctic residents is immense and has a much stronger outlook than many places in the world. As a company squarely focused on growing the investment opportunities in the space, we have a mission to take lessons learned in traditional extractive countries such as Finland, where we have a presence, and apply Finland’s model to Alaska and other parts of the Arctic, growing the knowledge economy and non-extractive opportunities.

I want to say to those in Juneau from all over the world, the future of the Arctic is one that has immense potential, and it will take some interest and patience to understand and feel comfortable with this emerging market.

Hugh S. Short co-founded Pt Capital and is the CEO, based in Anchorage, Alaska. Pt is invested in Alaska, Iceland and Finland in private companies. He is an Inupiaq, served as the mayor of Bethel from 2002 to 2004, and is a board member for Rural Energy Enterprises, as well as Nova, Keahotels, Alpine Air Alaska, Ice Services, and Alaska Scrap and Recycling.

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