How Iceland transitioned to green energy

This tiny nation could be a model for other nations seeking a similar green evolution

Reykjavik, Iceland in winter - BENEDICT LOPEZ, 2012

COP 26, the 2021 UN climate change conference, concluded in Glasgow recently with many nations making commitments.

World leaders and climate change officials from over 100 countries, which account for about 85% of the world’s forests, pledged to stop deforestation by 2030.

Many countries have also pledged to be carbon neutral by 2050, while others have requested for a much longer period. Hopefully, most countries will abide by their commitments.

It is a lofty goal for countries to subscribe to, but not impossible if the global community makes a sincere, concerted effort to tackle this critical issue confronting humanity.

Reducing deforestation is key to curbing climate change. Trees and other greenery absorb large amounts of carbon dioxide (CO2), a key greenhouse gas responsible for global warming.

Global sea levels are rising an unprecedented rate. The rise in 2020 was 91.3mm (3.6 inches) above the 1993 average. This record was set despite lockdowns in many countries, the suspension of economic activities and minimal air flights for many months.

Sea levels have risen quicker over the last hundred years than at any other time in the last 3,000 years. This rise will continue if no drastic action is taken. A further 15-25cm rise in greenhouse gas emissions is expected between now and 2050, the target year for countries to become carbon neutral.

Rising sea levels are threatening a string of islands in the Atlantic and Pacific Oceans. The next wave of refugees may well be environmental refugees.

Time is running out and countries around the world must undertake concerted efforts to implement sustainable energy solutions.

Tiny Iceland offers a unique model. Almost all the electricity used in this small Nordic country of 360,000 people comes from renewable energy.

Iceland can take pride that nine out of every 10 houses are heated directly with geothermal energy, primarily from the Hellisheidi power station. This is among the world’s largest geothermal power stations, located just 25km (15 miles) from Reykjavik.

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Geothermal spa, Blue Lagoon in winter: Swimming is possible here even during the peak of winter – BENEDICT LOPEZ, 2012

Currently, Iceland’s energy requirements are largely met by green energy-hydro and geothermal sources. From the provision of heat to meeting the needs of the different economic sectors, green energy is used. (Fossil fuels are used in the transport sector.)

Other than for residential and industrial use, geothermal energy is widely used to melt snow on pedestrian walkways, heat swimming pools, power fish farming and greenhouses, and process food. It is also used to produce cosmetics, such as the merchandise from Iceland’s famous geothermal spa, the Blue Lagoon.

Lessons along the way

In the early 1970s, when it was seen as a developing country, Iceland derived its energy from imported fossil fuels.

What made this small nation navigate a different course? Volatile oil price fluctuations in world energy markets. Iceland quickly needed stable and economically viable domestic energy sources to for its people and industry.

Today, the nation is a model in generating green energy to power its modern economy. For centuries, geothermal energy was used only for washing and bathing. Only a few megawatts were used to generate power in the 20th Century.

Local entrepreneurs undertook renewable energy initiatives with geothermal and hydropower in the early 20th Century.

The wider use of geothermal energy had its origins when a farmer found a way to use the hot water seeping out of the ground to develop a primitive geothermal heating system for his farm. Gradually, municipalities developed a more efficient way to explore the available geothermal resources.

The writer in Reykjavik at sunset in winter – BENEDICT LOPEZ, 2012

Drilling technology from the oil industry was used to drill deeper for hotter water that could heat more homes. Larger projects were then developed with the application of geothermal district heating systems on a commercial scale.

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To expand the use of geothermal energy, the Icelandic government established a geothermal drilling mitigation fund in the late 1960s. Loans were given for geothermal research and test drilling, while cost recovery was provided for failed projects.

This expansion proved to be a boon for households: many could now link their homes to the geothermal district-heating network and discontinue the use of fossil fuels.

Iceland also focussed on large-scale hydropower development, which drew large international industrial energy users. The aim was to diversify the economy by attracting new industries, generating employment and setting up a nationwide power grid.

Successful measures

Iceland’s success in the green evolution shows how its measures overcame obstacles in the transition to renewable energy:

  1. Tripartite cooperation among all stakeholders – municipalities, government and the public – during the early stages of transition propelled the evolution
  • Local municipalities in Iceland engaged and learned from innovative entrepreneurs about the geothermal and hydro concepts and realised their value
  • Iceland set up a sound legal and regulatory framework, coupled with incentives, to spur the development of green energy. The Icelandic drilling mitigation fund hastened the conversion by decreasing the risks that municipalities faced in undertaking geothermal projects
  • Just as with industrial development, sound long-term planning and policies for renewable energy implementation are vital. The government undertook a stakeholder-inclusive masterplan process for the future development of renewable energy
  • Public participation at every step of implementation was key. Municipalities that gained steady access to geothermal hot water became powerful role models for others. Politicians capitalised on this by showing photos and other evidence to voters so that they could compare the use of geothermal energy and fossil fuels. In this way, the politicians impressed on the people how they could get cleaner air through the use of geothermal energy
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Iceland today is a leader in geothermal technical aid and renewable energy education.

Over 1,000 experts from around the world have been studying geothermal methods in Iceland since 1979. These courses are conducted through UN geothermal training programmes and at institutions of higher learning, such as the Iceland School of Energy, Reykjavík University.

The Icelandic energy industry has also taken part in geothermal projects in over 50 countries and continues to be highly active worldwide.

Model for the rest of the world

Iceland is an inspiring story of what is possible. It is a story that provides many critical lessons to be learnt for countries seeking a transformation from fossil fuels to renewable energy.

The country is a poignant reminder that not only rich developed countries but even small ones can surmount obstacles standing in the way of a green evolution.

Iceland is an invaluable role model for countries transitioning towards a more sustainable future.

Developing and developed countries need committed, determined leadership in realising the critical need to spur the transition to renewable energy. Knowing the country, I am optimistic that Iceland can assist other countries along this path for the greater good of humanity. 

Every country’s approach is unique, and its transition will be different. Iceland’s conversion is an impressive success story, but it is the ‘Icelandic experience’ – not a model that can be replicated wholesale.

Still, it is a remarkable feat by any measure for this tiny island nation with a small population – one that other nations can learn from.



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