The overarching goal of this paper is to highlight the importance of considering the climate change implications of oil development in the Arctic. The current global climate change regime lacks universal emissions controls, thereby creating an opportunity for “carbon leakage.” Fossil fuels, no matter where extracted, find their way to countries that are not subject to mandatory emissions reductions. The recent rush to explore vast hydrocarbon resources in the Arctic may significantly contribute to the existing carbon lock-in. To illustrate the dangers of the Arctic carbon lock-in, this paper explores the development of new oil production capacity in the South Kara Sea in Russia.