The social license to operate of oil and gas development in Greenland

Smits, Coco C.A.


The Arctic is changing. The effects of climate change are most profound in this part of the world: Sea ice extend is decreasing and temperatures are rising faster than anywhere else. The melting Greenlandic ice sheet is expected to contribute 6 meters to global sea level rise and is a threat for many densely populated coastal communities around the world. At the same time, the decreasing sea ice extend and rising temperatures also create new opportunities. The region is opening up to activities including fisheries, tourism, shipping, mining and oil and gas. Over the past decade an increase in economic activities was experienced throughout the Arctic and it was estimated that the region could potentially attract over $100 billion of investments. Shipping, mining and oil and gas were considered to be the main drivers of economic development and between 2010 and 2015 offshore oil and gas exploration activities took place in many parts of the Arctic Ocean. Even though the development of Arctic offshore oil and gas activities has largely come to a halt now, it has sparked a lot of debate and controversy over the past years.

In 2009, right at the start of the boom in Arctic offshore oil and gas activities, Greenland obtained Self-Rule within the Kingdom of Denmark, thereby obtaining authority over the underground and thus the development of oil, gas and minerals. Greenland expressed the wish to develop these extractive resources to generate additional income and employment opportunities to support the long term wish of becoming (financially) independent from Denmark. In Greenland everything comes together: The melting ice sheet illustrating global climate change and at the same time a government expressing the ambition to develop oil and gas resources. Opening up to oil and gas development attracted the attention from some of the largest international oil companies and the world’s largest states, while Greenland has a population of only 56.000 people living on the world's largest island. Furthermore, the oil and gas exploration activities that took place in Greenlandic waters were subject to critique from individual citizens and NGOs, both in Greenland and far beyond.

Critique, societal debate and resistance against large industrial activities, including oil and gas, is increasingly studied from a social science perspective by using the concept of a 'Social License to Operate'. The social license to operate concept addresses the emergence of increasingly critical civil society organisations and citizens at a local level that seeks to have influence on the development of large industrial activities. However, the case of Greenland shows that the development of oil and gas activities is not solely an affair of state authorities and companies, nor is it solely a national affair: National level stakeholders want to become more involved in the decision making process and at the same time oil and gas activities are closely linked to the globally debated theme of climate change and the transition towards renewable energy.

The traditional, rather instrumental focus of the social license to operate concept on a local project context and the relation between a company and its local stakeholders, therefore misses essential elements of today's increasingly interconnected and complex society. Trust and legitimacy are in general considered key components of a social license to operate, but are also difficult to measure and therefore less examined. The role of human capital development is hardly studied, even though human capital development is one of the main challenge in small Arctic societies. Influences from political and legal arenas or other operational levels that could influence the implementation of an activity are not necessarily integrated in the current social license to operate approach.

The aim of this thesis is therefore to understand the development of a social license to operate of controversial energy projects by analysing the role of trust, legitimacy and human capital development in an Arctic context and by developing a multilevel approach of a social license to operate that includes legal and political licenses both in theory and in practice. A case-study approach was selected and the primary data to study this case was collected in two sets of semi-structured interviews (December 2011 and February 2016) and observations, supplemented by secondary data from literature, project and policy documents, social media and newspapers.

Chapter 2 explores the multilevel governance setting of Arctic oil and gas activities and studies the changing spheres of authority in Greenland. Chapter 3 takes a closer look at the challenges and opportunities of maximising the local benefits of energy development for small Arctic states. Chapter 4 examines the role of human capital development in relation to obtaining and maintaining a local social license to operate for the development of energy activities in small Arctic states, including Iceland, the Faroe Islands and Greenland. Chapter 5 analyses the role of trust and legitimacy, as two fundamental elements of not only the social license but also the political and legal licenses to operate. Subsequently, Chapter 6 develops a set of hypotheses and a typology for the interaction of the social license to operate at multiple levels, including interaction with the political and legal licenses.

Chapter 7 concludes that based on the research presented in this thesis, the national level social license to operate concept needs to be studied in relation to the legal and political licenses using a broader definition of trust and legitimacy. Furthermore, the environmental and social impacts of oil and gas activities often do not confine themselves to nation state boundaries, nor are these activities operated solely in a national level context. Incorporating multilevel dynamics into the social license to operate concept is thus essential in analysing the multilevel context in which Arctic oil and gas activities were being developed. With regards to the Arctic context, it is important to consider the role of human capital development as it has a strong link with trust building and legitimacy at a national level and can play a role in the degree of interaction between licenses on multiple geographical levels within a multilevel social license to operate concept. This thesis shows that it is important for both governments and companies to realise that the implementation of energy activities locally, is thus subject to direct international level influences, which run primarily via the social license to operate. Future research, based on case studies conducted in other parts of the world, could enhance the multilevel social license to operate concept as developed in this thesis. Furthermore, the multilevel social license to operate concept would benefit from further research into the role and effectiveness of social media in shaping an international digital network, which is driven to change public opinion and steer decision making processes.