As fossil fuel prices rise and carbon taxes start taking effect, businesses are starting to flock to Iceland for its abundant clean energy, at prices as low as half that of conventional sources. The country’s unique setting provides natural heating (through geothermal energy) and cooling (from the cold air), so temperature-sensitive industries like greenhouses and data centers net especially big savings. At a time when most countries are struggling to convert even a fraction of their energy production to renewable sources, Iceland has such a surplus of green energy that they’re considering building the world’s longest subsea power cable to serve as “the green battery of the UK.”
During the 20th century, Iceland had to rely on smelly peat or expensive imported coal and oil to heat its homes. Though Icelanders have been using the hot springs for centuries for things like baking bread, Scientific American reports that “homes in Iceland were almost entirely dependent on oil heat” until the first oil shock in the early 1970s, when the country got serious about alternative power sources. Because it had very little in the way of domestic fossil fuels, Iceland kept developing alternative energy even after other nations lost interest with the end of the crisis. Today, Iceland is the world leader in geothermal production, with its expertise in demand everywhere from China to Germany to Abu Dhabi.
Sticking to the road less traveled has paid off, literally: according to BusinessGreen.com, Iceland saves 4 – 6% of its GDP as a result of its geothermal resources. Scientific American estimates that if Icelanders were still dependent on oil, their heating costs would be five times higher. Today, 90% of Icelandic households are connected to a district heating system and Reykjavik hosts the largest district heating system in the world.
The most remote households are still heated by fossil fuels, along with boats and cars, but fossil fuel only makes up about 15% of total energy use. For comparison, the EU and US are struggling to bring their fossil fuel use down to 80% by 2020. Meanwhile, Icelanders are looking into harnessing geothermal energy for the production of hydrogen fuel to power their fishing fleet and motor vehicles, which would make the country’s energy use 100% green.
On top of the new opportunities offered by emerging technology, Iceland still has plenty of untapped geothermal reserves waiting in the wings. Due to its location on the Mid-Atlantic Ridge, Iceland is one of the most tectonically active places in the world, boasting over 200 volcanoes and over 600 hot springs. And power plants harness a mere 17% of the economically viable geothermal energy occurring naturally in the country.
In contrast, though technically plenty of oil still exists in the world, the easy reserves have been exhausted and companies are pushing on to areas previously considered too inaccessible, expensive, or risky. As Der Spiegel reports, “prospectors must use costly methods to search for new oil fields that yield amounts of oil once considered marginal.” The chairman of energy research firm IHS CERA says that oil prices are “higher than they’ve ever been since the 1860s.” Furthermore, with high profile environmental controversies like the Keystone XL Pipeline and BP’s Deepwater Horizon spill, public opposition to new sources like tar sands, deepwater drilling, and fracking continues to grow. Between increasing scarcity and increasing disincentives from climate change legislation, the price of oil continues to spiral ever upward. For this reason, more and more companies are moving their operations to Iceland, where they can access cheap green energy that benefits both the environment and their bottom line.