THE TRANSPORT COMMISSION OF GREENLAND. Stine Bendsen, Jesper Nordskilde and Mads Paabøl Jensen COWI A/S

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1 THE TRANSPORT COMMISSION OF GREENLAND Stine Bendsen, Jesper Nordskilde and Mads Paabøl Jensen COWI A/S 1 ABSTRACT Transport represents a significant portion of the overall economy of Greenland, and it is therefore crucial that resources are used as efficiently as possible in this area if Greenland is to achieve its long term objective of a selfsustaining economy A Transportation Commission appointed by the Greenland Self Government has with assistance from COWI analyzed and made a list of recommendations in relation to the challenges of transport Based on economic assessments, the Transport Commission has made a number of specific recommendations in a final The Transportation Commission has identified a number of projects with a long term perspective which may help to streamline transport and thus contribute to it achieving the ambitious financial targets In addition, the Commission points out a set of transport policy areas which can be adjusted or organized in new ways with efficiencies as a result Among the key recommendations is the construction of a new airport in the capital Nuuk, relocation of the airport in southern Greenland (from Narsarsuaq to Qaqortoq), relocation of the central Atlantic airport (from Kangerlussuaq to Nuuk), closure of the coast long sailing and extending the runway in Ilulissat 2 INTRODUCTION This paper has been prepared by Stine Bendsen, Mads Paabøl Jensen and Jesper Nord Source, COWI, on the basis of the Greenland Transportation Commission's analysis and reporting COWI has assisted the Greenland Self Government as secretaries of the Greenland Transportation Commission The Transportation Commission was established by the Government (Naalakkersuisut) with the Danish Professor Christen Sørensen as Chairman Transportation Commission have completed their work and proven results in a final report, published first April 2011 (available from the 21 Background The Greenland Government (Naalakkersuisut) established in the autumn 2009 a Transport Commission who was tasked to propose solutions to the challenges of transport Greenland is facing in the near future The Transportation Commission should make recommendations for long-term Association For European Transport and Contributors 2011

transport policy and traffic in the country that can support the long-term goal of a self-sustaining economy The Transportation Commission has now presented its final report It highlights a number of

2 transport policy and traffic in the country that can support the long-term goal of a self-sustaining economy The Transportation Commission has now presented its final report It highlights a number of key issues and challenges in relation to transport of both passengers and goods The report contains a range of interesting analyses and recommendations Via the Greenland Self Government COWI assisted the Transportation Commission as secretaries and COWI has been deeply involved in the analyses underlying the Commissions recommendations and findings Figure: Greenland and Europe a comparison 22 Purpose The purpose of this paper is to give an overall description of the Transportation Commission's work It outlines the challenges of transportation in Greenland and on the considerations the Transportation Commission has had in its work It also aims to give an overall presentation of the completed analyses, findings and recommendations of the commission's work The work has included more than 20 analyses of specific investment projects ranging from investment in a new airport in Nuuk, expansion of port facilities in numerous towns and construction of roads in southern Greenland 23 Content This paper presents selected parts of the Transportation Commission's overall report The purpose of the paper is to give the reader a quick overview and introduction to the specific issues analysed by the Transport Commission as well as a quick overview of the approach and method used However, this paper represents only a brief summary of the Transportation Commission's analysis, recommendations and conclusions For a more in-

3 depth introduction references is made to the Transportation Commission's final report, which can be accessed at 3 THE MANDATA OF THE TRANSPORT COMMISSION The transport system and the economy in a country are closely linked and the transport of goods and people is a key element of a modern welfare system an efficient transport system is a must for economic growth The large geographical distances, the Arctic climate and low population density mean that transport is often difficult and expensive in Greenland The Transportation Commission was generally responsible for providing thoughts on how priorities in transport should be made in the future to support the overall economic and social development and to ensure an economically viable transport system An important task for the Transportation Commission was also to suggest a vision for the transport system that takes the Self Government and the longterm goal of independence into account Transportation Commission members were: Christen Sørensen (Chairman), Professor at Southern University of Denmark Vagn Andersen, Director Kristian Lennert, Director, Inuplan A / S Nick Nielsen, Engineer Karl Davidson, Deputy Director, Kanukoka Susanne Larsen, former CEO of SAS 4 PROCESS, APPROACH AND METHOD The recommendations from the Transportation Commission are based on its own analyses Analyses are carried out on the basis of information and data collected from relevant authorities and organizations in the transport sector in the country In addition, the Commission has also based its analyses on information from the high number previously published studies and reports on transport 41 Process The final report of the Transportation Commission is the result of a longer work, where the commission has collected information, had dialogues with stakeholders and conducted a series of background studies During the process the Transportation Commission have had a series of meetings A number of reference groups were established representing a wider range of significant actors, experts, transport users, interest groups and regional interests These groups were requested to submit responses to some of the deliverables from the Transportation Commission The purpose was to ensure a high degree of transparency and openness of the work and recommendation of the Commission

4 42 Approach and methodology To answer the overall issues related to transport policy, the Transport Commission has used a traffic model and an associated economic calculation model in its analyses The traffic model and the economic calculation model have been main components in the applied approach and methodology Traffic model and economic calculation model The tools are developed by COWI for the Department of Housing, Infrastructure and Transport in Greenland before the Transport Commission s work was initiated The purpose of the tools was to ensure uniform assessment and comparison of different investments in infrastructure in Greenland Examples of traffic changes and / or investments that can be assessed with the modelling tool are: - Traffic and economic assessment of new airports or sea ports and extensions or closures of existing ones - Traffic and economic assessment of new air and sea routes - Effects of adding new equipment that can fly / sail faster on selected routes The traffic model includes traffic by air, sea and road and can handle both passengers and cargo It is based on the software VISUM and enables use and presentation of results as usual for this software It eg means possibilities for graphic illustration of results as well as easy formatting to MapInfo or Google Earth Results can also easily be presented in tables, which serve as input to the economic calculation tool TERESA-Greenland also developed by COWI This is an Excel tool based on the Danish TERESA-model, which are developed for the Ministry of Transport to be used for economic analysis of infrastructure investments in Denmark TERESA-Greenland enables calculation of the economic consequences of changes in infrastructure and calculates economic key parameters like IRR and NPV It also enables relatively easy sensitivity analysis The use of these tools has ensured coherent and consistent analyses of the different issues considered by the Commission It is used as a tool to support the Commissions analyses of specific projects Focus of the Commission The focus of the Transportation Commission has been to analyse projects from an economic point of view and to justify the economic benefits of the projects The Commission was further focused on establishing a professional, qualified public debate on transport The reason for focusing on economic feasibility is the fact that it will increase opportunities for economic independence of Greenland Economic analyses have been carried out for a long list of specific projects where costs and benefits for all stakeholders in Greenland have been weighed together The

5 economic calculations are carried out from a national perspective from Greenland The Commission has used the same approach every time the economic feasibility of a specific transport project has been analysed First, it has been specified how the situation would be if the project is not implemented (base situation), and then it has been specified how the situation would be if the project is implemented (project situation) The difference in cash flows between these two situations are analysed to assess the economic feasibility of the specific transport project 5 FRAMEWORK CONDITIONS AND CHALLANGES Greenland has some unique transportation challenges with its population of 56,000 and a distance from north to south that is as long as from the northern part of Denmark to Gibraltar You can not go by car between the towns, the population is located in 18 cities and approx 60 settlements, and parts of the year, you can not sail because of ice conditions Further, the current infrastructure is to a high extend based on old military installations meaning that the only two airports which can receive air planes from Denmark, is located far from the locations where the majority of the population is located The scattered population means that investments in airports and ports are of very high importance The enormous distances also entail that transport costs are generally high For example there are port facilities in 16 cities and berthing and fishing bridges in the villages In total there are approx 185 port plants In Greenland there are 59 airports of which 13 are airports for fixedwing aircraft, while the rest are served by helicopter 6 RECOMMENDATIONS FROM THE TRANSPORT COMMISSION The Commission's vision is as follows: The population must have access to cheap, efficient and economically efficient transportation This vision has been the back bone in the work of the commission to identify recommendations for transport These include recommendations of projects to be implemented due to economic reasons and projects that should not be implemented Additionally, the final report contains a number of recommendations which are not project specific 61 Recommended projects The Transportation Commission has analysed a number of projects across the whole country The evaluated projects include all projects discussed at and proposed by different stakeholders eg the Self Government, Municipalities, operators, infrastructure owners and other stakeholders who for different reasons have interest in the organisation of transport The following presents the projects and Transportation Commission's assessments The projects are split into three categories:

6 1) Projects with an overall positive contribution to the economy and a recommendation to proceed with the project 2) Projects where further analysis is necessary to assess whether the project should be implemented or not 3) Projects where it is recommended not to proceed with the implementation due to negative contribution to the economy The table below shows selected projects from the first category It contains only brief descriptions and summaries of the Transportation Commission's recommendations the full description and the recommendation is to be found in the Transportation Commission's report Table: Selected projects with an overall positive contribution to the economy and a recommendation to proceed with the project Project Description Recommendation Airport in Nuuk Airport in Qaqortoq A relocation of the country's central airport from Kangerlussuaq to Nuuk Passengers to / from Nuuk is expected to continue to be the dominant passenger group The Transport Commission has analysed three locations in Nuuk and the use of Keflavik in Iceland as the central hub for the country's air traffic A relocation of the airport in southern Greenland from Narsarsuaq to Qaqortoq The majority of passengers to southern Greenland have the start or destination in Qaqortoq Various airport locations have been analysed and two different lengths of the runway (1199m and 1799m) The Commission considers a basis to move the central airport in Greenland from Kangerlussuaq to Nuuk The Commission's analyses show that it is economically feasible to extend the existing runway at the current location in Nuuk (to 2200m) The Commission's recommendations of moving the airport depends however on additional regularity studies and that these studies find the current location suitable for aviation with larger jets The economic feasibility of moving the country's main Atlantic airport from Kangerlussuaq to Nuuk is based on the very important premise that the airport in Kangerlussuaq is closed There is not a both / and A relocation / extension to 2200m should await the outcome of supplementary analyses of the regularity, which the Transport Commission estimates can be finalised within a year However, an expansion up to 1199m should be initiated soon due to the development of airplanes Commission's analysis indicates that it is profitable to build a new airport in Qaqortoq and to close the airport in Narsarsuaq The new airport will only be economic feasible with a length of 1199m, but to ensure its functionality regarding further development in aircrafts, the Commission recommends a location where extension to 1799m is possible Transportation Commission emphasises that it will be even very expensive from an economic point of view to maintain the airport in Narsarsuaq together with a new airport in Qaqortoq and this is not consider this a realistic possibility by the Commission

7 Project Description Recommendation Container port in Nuuk Internal passenger transport in Southern Greenland Combined road and boat connection between Qaqortoq and Narsaq Extension of runway in the airport in Ilulissat The project deals with a new container port in Nuuk with a 320m long quay with a hinterland of 40000m2 There is a lack of capacity in the current port and the future expected increases in freight volumes will continue to decrease the efficiency of the existing port If the airport in Narsarsuaq is moved to Qaqortoq (as assumed by the Commission) the need for internal passenger transport in the area will be reduced The project focuses on usage of boat transport to replace transport by helicopters during periods without pack ice The aim is to reduce overall costs by reducing the cost of helicopters In addition, the project may increase the number of departures A new airport in Qaqortoq opens for the possibility for a direct connection between Narsaq and Qaqortoq via a combined road and boat connection The project requires establishment of a jetty near the airport and a link road between the airport and jetty The project aims to reduce helicopter transportation and to link the towns more closely Extension of the runway in the airport at Ilulissat in order to improve the traffic conditions and make it possible to use larger aircraft It would ensure a more efficient and economic transportation of both freight and passengers Two options have been analysed: 1199m and 1799m compared to the current runway length of 845m A new port in Nuuk will result in economic benefits The Commission recommends construction of a new port, as the analysis shows robust results even with significant variations in key assumptions Transportation Commission estimates that operation of South Greenland with small boats during periods without pack ice compared to a situation with helicopter service the whole year will result in economic benefits The one-tier transportation system must be maintained, which means that helicopter only will be used during periods where boats can not be used The Commission estimates that smaller boats will provide a more flexible system with increased number of departures for less money The Commissions analysis shows that if the airport is moved to Qaqortoq it will be economic feasible to construct a combined road and boat connection between Qaqortoq and Narsaq via the airport The Commission recommends the construction of this connection and further recommends that the connection is established by inserting small boats The Transportation Commission recommends extension of the runway The Commission's analysis indicates that an extension to 1199m is economic feasible However, this result is sensitive to assumptions about future increases in tourism But changes in technology require extension of the runway to 1050m at a minimum within 5-8 years

8 Project Description Recommendation Simple runways in Nanortalik and Paamiut Runway in Tasiilaq Construction of a simple runway in Nanortalik and a simultaneous downgrade of the runway in Paamiut Together with a new airport in Qaqortoq this makes it possible to use small propeller aircraft along the coast to / from Southern Greenland The Ammassalik district is today operated by the airport in Kulusuk In this project is the airport is relocation to Tasiilaq, where most of the population live The aim is to reduce the need for helicopter transport in the area The project will also improve make it easier for tourists to access the area The Commission's analysis shows that significant economic benefit will be obtained by constructing a simple runway in Nanortalik and using small aircraft in scheduled air services between Nanortalik and Nuuk via Qaqortoq and Paamiut This is only the conclusion if the runway in Paamiut simultaneously is downgraded to a simple runway Without a simultaneous downgrade it will not be profitable to construct a new runway at Nanortalik According to the analyses of the Commission a new airport in Tasiilaq as a replacement of the airport in Kulusuk will be economic feasible This is due primarily to the significant savings obtained in the internal transport by helicopter In addition the project generates significant benefits for tourists to the area On this basis it is the Commission s recommendation to relocation of the airport from Kulusuk to Tasiilaq The Commission notes that the replacement will strengthen the business development on the east coast In general, the Commission has decided to prioritize projects according to their economic profitability (measured as the internal rate of return) which indicates the annual economic returns of an investment It is not possible to initiate all profitable projects at once, and even if only the most profitable projects are realised, it may cause a significant capacity pressures in the economy, leading to very heavy requirements on the financial policy The Commission assesses that the construction of a new container port in Nuuk and the relocation of the airport of Narsarsuaq both are so profitable and serene that these projects immediately can be realised The analyses of a relocation of the country's main airport from Kangerlussuaq to Nuuk show economic feasibility, but the Commission recommends postponing the final decision until the outcome of turbulence research is available This should be ready within 1 year

Figure: Location of recommended projects FOR MORE INFORMATION More information about Transportation Commission's work can be found at: http://wwwtransportkommissionengl/ The final report includes a

9 Figure: Location of recommended projects FOR MORE INFORMATION More information about Transportation Commission's work can be found at: The final report includes a detailed review of the extensive analyses carried out as a basis for the Transportation Commission's recommendations At the Transportation Commission's website you can also find other publications from the Commission, and links to a number of background reports, which have been considered in the work

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