ICELAND: A land of clean energy steams towards the future
Karin Palmquist

They call it the land of fire and ice, and anyone who has visited this island of arctic deserts and volcanoes understands why. A tenth of Iceland is covered by glaciers and the country has more than its share of geysers.   

But the island's geology does more than provide a dramatic countryside. In the 1930s, the capital city of Reykjavík started heating some of the city's houses using geothermal energy. Today huge reservoirs of hot underground water heat houses all over the country and supply 90 percent of all Icelanders with natural hot water. It's clean, it's cheap and a blessing for a country that has no fossil fuels of its own.

If hydrogen could heat houses, why not fuel cars as well? 

Last fall three hydrogen-powered buses, belching nothing but steam, started traversing the streets of Reykjavík. The buses run at a maximum speed of 65 miles an hour and fill up at the world's first hydrogen filling station.

It doesn't stop there. The country has a radical plan to stop using any fossil fuels in the next 50 years.

DiplomaticTraffic.com sat down with Helgi Ágústsson, Iceland's ambassador to the United States, to hear about this plan and other innovative projects pointing the way to the future of this remarkable island.

"We want to become the first hydrogen country," Ambassador Ágústsson said. "We have done a great deal of research on this in Iceland. There has been a lot of interest here in the United States, from Congress and so on. In his 2003 State of the Union address, President Bush spoke about hydrogen energy. The United States invited Iceland to take the lead of a group of countries that came here to visit last year to talk about cooperation in research and development of hydrogen energy. We are testing hydrogen cars in Iceland. Iceland is very fortunate in this respect that we have these geothermal sources. Seventy-two percent of all energy used in Iceland is clean energy."

With geology this unique, could the findings in Iceland be duplicated in other places?

"The United States has tremendous geothermal resources," the ambassador said. "There are vast resources in places like California and Alaska, but they are not utilized. One of the issues we have been working on with the United States is deep drilling into the earth's crust, five kilometers down. Deep drilling like this could multiply Iceland's resources by ten."

But Iceland already has all the energy it needs. Can this energy be stored, and possibly exported?

"It is possible to export it, by cable, but you'd have to do it on a very big scale. You of course lose some, about five percent. This is something we have no plans for at the moment. There were talks of exports by cable to Scotland and England, and from there on we would be able to connect to the European cable grid, but it is not an active issue right now. But we could use more energy. We have been attracting high-power [consumption] industries, like aluminum smelters. It is of course very good for the environment when such industries use sources of clean energy," the ambassador said.

There are dangers of living on top of highly active volcanoes. Icelandic scientists carefully monitor the island's seismic activity and try to predict future eruptions.
The volcano Katla, in the Myrdalsjökull glacier, has erupted on average every 40 to 80 years since the island was settled in the 10th century, the last time in 1918. Each eruption has had serious consequences, with violent floods of melted water, up to 300,000 cubic meters per second, causing enormous damage. Lately, almost constant seismic activity, along with cauldrons of melted water forming in the ice above the volcano's caldera, have scientists believing Katla is waking up and preparing for a new eruption.

"If the flood take the direction of the ocean it will be fine," the ambassador said. "If it goes inland, then there will be much more damage."

Perhaps the most famous of all eruptions was of a volcano underneath the water surface about 20 miles off the south coast of Iceland. Eruptions between 1963 and 1967 resulted in the formation of a new island, named Surtsey after Surtur, a giant in possession of fire in Nordic mythology.

"No one, except for scientists, is allowed on the island. Now botanists have reported they have found 60 species of flora and fauna on Surtsey. It's quite remarkable. The island was nothing but lava, but in less than 40 years, the lava has turned into something fertile, something living. Now the first birds are nesting on the island," the ambassador said.

It is not only in the area of energy that Iceland has proved itself innovative. Icelanders have been successful in areas such as software development and gene research. Genetics company deCode is on an ambitious quest to map the genetic code of all of Iceland. The genetic heritage of each of Iceland's 290,000 people will be mapped in an attempt to find the genes responsible for such conditions as stroke, obesity and osteoporosis.

The project has found that Iceland's male population descends almost exclusively from the first wave of Norwegian settlers in the 10th century. Icelandic women on the other hand are 80 percent of Celtic origin. Asked if there was a wave of Celtic immigrants, the ambassador, speaking like a true Viking, said:

"Either there were intermarriages with women on the British Isles, or they were just taken."

Cheap energy and innovative thinking has left Iceland with a good economic outlook.

"We have a forecast of four percent growth until 2006. The past ten years our economy has been growing by 5 percent a year," the ambassador said.

 The Icelanders are living well. The gross domestic product per capita is $37,000, slightly above America's GDP per capita of $35,000. The government has done its part to fuel the economy by lowering tax levels.

"We've lowered the corporate tax from 50 percent to 30 percent, and the inheritance tax from around 50 percent to 5 percent. It's good to die in Iceland," the ambassador noted, smiling. And, reductions in tax rates have produced higher tax revenues, a lesson of relevance to other nations, the ambassador said.

The country is part of the European Free Trade Agreement (EFTA) since 1972, but has never applied for membership in the European Union.

"We never applied for membership of the European Union because of their fishery policies," the ambassador said. "Plus, we are on a trend of lowering our taxes, not increasing them. Being part of the European Economic Area (EEA) we have access to the market without the burden [of EU membership]. We accept most of the legal framework of the European Union."

As an EU member, Iceland would have to adopt the EU's Common Fisheries Policy (CFP) and thereby cede the right to implement its own policies. Fishery regulations matter a lot for a country where income from fish-related industries makes up 50 percent of the gross domestic product and employs eight percent of the workers.

The Icelandic public seems equally ambivalent about EU membership, with the population evenly divided over joining.

"There is no serious discussion to apply [for EU membership]," the ambassador said.

The country might shy away from joining the EU because of some of its policies, but the country has a long-standing relation across the Atlantic. Iceland is one of the founding members of NATO, and since 1951 NATO has had a military base in Keflavík, just outside the capital Reykjavík. With the end of the Cold War, a base community of around 5,500 including dependents (3,000 servicemen) has now shrunk to 3,000, including dependents.

"After 1990, after the end of the cold war, there was no need to keep such a strong base," the ambassador said. "After negotiations in 1996 [the US Air Force fleet] was reduced to four aircraft. Then we were informed by the USA in 2002 that they intended to remove the remaining four aircraft. This came as a bit of a surprise and we did not agree to this, because of our security needs. The purpose of the agreement was to serve NATO, the United States and Iceland. We have always negotiated bilaterally. On July 6 the prime minister of Iceland [David Oddsson] met with President Bush in Washington to try to get the issue resolved."

With its pioneering use of non-fossil fuel energy, its wise exploitation of fishing resources, its innovative hi-tech industries, and its successful tax reforms, Iceland moves towards the future, full steam.