Renewable Energy Success Story of Iceland – Green in Full Gear

Energy is a crucial contributor to any country’s development. It has empirically been linked to both economic growth and human welfare. Energy is a prerequisite for providing basic services such as heat, illumination, refrigeration, transportation, industry operation, and many more. However, its generation is also a culprit of massive environmental challenges. Considering the pace of resource depletion and environmental degradation worldwide, nearly all countries have agreed on the need to achieve energy independence and security via clean energy production. The discussion has been on for over a couple of decades now. However, while some countries are yet to start with green energy, others have gone far along the way. Iceland’s renewable energy transformation has turned the country into a land of plenty that others look up to, leading the path to self-sufficiency and long-term sustainability.

Clean Energy Profile of Iceland

Iceland is known as the land of fire and ice. The country has a unique mixture of geology alongside northerly location. In addition, it lies in a very active volcanic zone that supports a dynamic geothermal system. As a result, the nation has ample access to renewables.

Iceland has no fossil fuel production. The country has neither extracted nor utilized fossil fuels since the 1960s. It imports all petroleum products required mainly by the fishing and transport sectors. Today, Iceland’s 89% of its primary energy supply and nearly 100% of its electricity come from clean energy sources. Approximately 97% of heating output relies on geothermal energy.

In 2010, Iceland introduced a carbon tax that covered four categories: gas, diesel oil, motor gasoline, heavy fuel oil, and LPG. This measure supports the achievement of carbon neutrality before 2040 and the reduction of greenhouse gas emissions by 40% before 2030, which the country has committed to.

Despite having an abundance of unexploited clean energy reserves, as mentioned above, they are not limitless. There are only rough estimates of their size. Thereby, uncertainties exist concerning to what extent they can be harnessed to balance technical feasibility, cost-effectiveness, and environmental sustainability.

Iceland Renewable Energy History 

Today, Iceland is a success story of renewable energy transformation. However, it hasn’t always been this way. Until the mid-20th century, Iceland’s most widely used fuels were peat and dung. This trend was due to the scarcity of wood countrywide. What we call modern energy utilization only started after the industrial revolution. However, the nation was also one of the latecomers to the era of mechanization.

In 1923, Iceland’s government enacted the Inland Waters Act. It aimed to govern the utilization and exploration of national energy resources. Even so, until the early 1970s, the country’s energy consumption heavily depended on imported fossil fuels.

The very first Icelandic hydropower turbine started operating in 1904. It was designed by an innovative carpenter to serve his workshop and a few neighboring households. Many small plants appeared shortly following the example.

Experiments on generating electricity through geothermal steam started in 1944, laying the foundation for the first commercial geothermal steam turbine employment in 1969. The exploration of hydropower potential started around the early ’60s, and it was only in 1972 that the first glacial river plant became fully operational. Meanwhile, development efforts continued to connect and centralize individual power distribution systems until the nation achieved energy security.

Renewable Energy Use

Iceland nation is by far the largest consumer of electricity worldwide, averaging nearly 53 megawatt-hours per person. Green energy source applications are manifold. For example, geothermal energy is extensively used for space heating. It is most common across Icelandic buildings (about 85% use it), and demand for it has been rapidly increasing alongside population growth. Moreover, geothermal energy is extensively used for snow melting in streets and pavements of urban areas. This is why it is uncommon to see walking areas packed with snow in wintertime. What is more, Iceland has a number of geothermal power plants used for electricity generation.

What triggered the transition to renewables?

Although climate change and environmental sustainability have been high on the international agenda lately, Iceland’s transition to green energy wasn’t triggered by these concerns. In fact, exploration and utilization of these resources happened for mere practical reasons. Iceland used to be one of the poorest nations in the Western world. Thereby, it was unable to sustain oil price fluctuations following a number of crises in world energy markets. To ensure the country’s economic growth and stability, it required reliable domestic energy resources, especially in the face of its isolated location on the edge of the Arctic Circle.

Is the example of Iceland scalable?

Many argue that the success story of Iceland’s clean energy transition should be viewed and analyzed in isolation. This is due to the fact that the country has natural proximity to resources that support the mass use of renewable energy, which would otherwise not be possible. Although true, there are a set of best practices and lessons to be learned. Iceland can set an example for a similar transition in many developing countries. The path it has been through – overcoming poverty, deteriorated infrastructure, foreign ruling, and lack of specific knowledge or experience – resembles many other cases we are currently seeing around the world. Thereby, the key steps to success can be extrapolated to other states as well.

In addition, some Icelandic enterprises facilitate the application of best practices in other countries and regions. For example, Arctic Green Energy Corporation works to export success and leadership of national renewable geothermal market to Europe and Asia. The impact of their strategy and solutions can be clearly seen in China, where they facilitated the arrangement of geothermal district heating. Replacing its predecessor – coal, the new system has led to positive changes in the environment eliminating over 11 million tons of CO2 emissions. Other companies like Icewind focus on wind power and the design of turbines that can withstand extreme weather conditions and be successfully deployed in rural and remote areas. Moreover, the enterprise aims to minimize operational costs and focuses on scalability.

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