John Perkins, the author of The Confessions of an Economic Hitman, is currently in Iceland. Perkins is here to be at the premier screening of The Dreamland, a documentary based on Andri Snær Magnason’s book, also titled The Dreamland. Last Sunday, Perkins was interviewed in a political TV show on RÚV (the state television station) where he spoke about the threat of Icelandic resources being sold to foreign corporations and advised Icelandic authorities not to collaborate with the International Monetary Fund (IMF).
Perkins used to work for the U.S. National Security Agency and his job included “to convince poor countries to accept enormous development loans – and to make sure that such projects were contracted to U.S. companies,” as says on the back cover of his book. Perkins states that Iceland is the first ‘developed’ country in the world to be hit by the ‘Economic Hitmen’, referring to the invasion of the aluminium industry in Iceland. Read More
From Draumalandið website – Dreamland is a truly epic film about a nation standing at cross-roads. Leading up to the country’s greatest economic crisis, the government started the largest mega project in the history of Iceland, to build the biggest dam in Europe to provide Alcoa cheap electricity for an aluminum smelter in the rugged east fjords of Iceland. The mantra was economic growth. Today Iceland is left holding a huge dept and an uncertain future
Dreamland is a film about exploitation of natural resources and as Icelanders have learned clean energy does not come without consequence. Iceland is a country blessed with an abundance of clean, renewable, hydro-electric and geothermal energy. Clean energy brings in polluting industry and international corporations. Read More
Yesterday three black dressed individuals, masked with aluminium foil, threw green Skyr (traditional Icelandic dairy product) on representatives of Icelandic energy companies during a greenwash presentation in the University of Iceland. In June 2005 Saving Iceland threw Skyr on representatives of Alcoa and Bechtel during an international aluminium conference in Reykjavík.
Gaia – the student association of Master students in Environment and Natural Resources, had organized a “Green Week” in the university. Among activities was this particular presentation by e.g. Landsvirkjun (Iceland’s national energy company), O.R. (Reykjavík Energy) and Geysir Green Energy; all companies who are involved in the development of the aluminium industry in Iceland. Read More
The economic issues currently causing mass demonstrations in Iceland have a less publicised ecological cousin, and one which the IMF has recently identified as part of the economic collapse. In 1995 the Ministry of Industry and Landsvirkjun, the national power company, began to advertise Iceland’s huge hydropower and geothermal energy potential. In a brochure titled “Lowest energy prices!!” they offered the cheapest, most hard working and healthiest labour force in the world, the cleanest air and purest water – as well as the cheapest energy and “a minimum of environmental red tape” to some of the world’s most well known polluting industries and corporations (such as Rio Tinto and Alcoa). This campaigning has led to the development of an ‘Energy Master Plan’ aimed at damming almost all of the major glacial rivers in Iceland, and exploiting all of the geothermal energy, for the power intensive aluminium industry. The loans taken by the Icelandic state to build large scale energy projects, and the minimal payback they have received from the industry, has been a considerable contributing factor to the economic crisis, while at the same time creating a European ecological crisis that is little heard of.
The Largest Wilderness in Europe
I first visited Iceland in 2006 and spent a week with activists from the environmental campaign Saving Iceland, a network of individuals from around Europe and Iceland who decry the fragmentation of Europe’s largest wilderness in favour of heavy industry. From these informed and passionate folk I learned of the 690 MW Kárahnjúkar dam complex being built in the untouched Eastern Central Highlands to power one Alcoa aluminium smelter in a small fishing village called Reydarfjörður. The dams formed the largest hydro-power complex in Europe, and were set to drown 57 km2 of beautiful and virtually unstudied wilderness, the most fertile area in the surrounding highlands. Ultimately it would affect 3% of Iceland’s landmass with soil erosion and river silt deprivation. They also explained how materials in the glacial silt transported to the oceans bonds with atmospheric CO2, sinking carbon. The damming of Iceland’s glacial rivers not only decreases food supply for fish stocks in the North Atlantic, but also negatively impacts oceanic carbon absorption, a significant climatic effect. After taking part in demonstrations at the construction site of the Alcoa smelter (being built by famous Iraq war profiteers Bechtel), I went to see the area for myself. Read More
Þeistareykir ehf. and Landsvirkjun (Iceland’s national energy company) have now started discussions with the Norwegian aluminium producer Norsk Hydro about the purchase of geothermal energy from Þingeyjasýsla, north Iceland. The energy was supposed to run Alcoa’s planned aluminium smelter in Bakki, Húsavík.
The memorandum of understanding between Þeistareykir, Landsvirkjun and Alcoa because of the aluminium smelter in Bakki, ran out on November 1st 2008 and was not renewed. One of the reasons was said to be the uncertainty on the Icelandic financial markets. Tómas Már Sigurðsson, Alcoa’s director in Iceland, says that decisions about electricity purchase depends on the market situation and hopes that it will get better in the next 12 months. Read More
The construction of Búðarháls Dam (Búðarhálsvirkjun) in Tungnaá river, will probably be further delayed due to the uncertain future of Landsvirkjun´s financial possibilities. Landsvirkjun is Iceland’s national energy company. The construction was originally supposed to start early next year, after being delayed since 2003. The estimated cost is 25 billion Icelandic krónur.
Because of the collapse of the Icelandic banks and the international financial crisis, most possibilities for foreign loans are now frozen. Landsvirkjun’s long time financement is therefore quite uncertain.
“This mostly impacts new constructions, like Búðarhálsvirkjun” says Þorsteinn Hilmarsson, Landsvirkjun’s PR manager. “It is necessary to insure the future financement before the construction starts. ”
Rio Tinto Alcan has taken back it’s plan to enlarge it’s aluminium smelter in Straumsvík, Hafnarfjörður, according to the Icelandic newspaper Fréttablaðið. Alcoa’s planned smelter construction in Bakki (north-Iceland) will also be delayed for the next years. Landsvirkjun (national energy company) and Þeistareykir hf. have agreed to discuss with other interested buyers of geothermal energy in the north of Iceland.
Last Wednesday, Jacynthe Côté, Rio Tinto Alcan’s director, told Össur Skarphéðinsson, the minister of industry, that the company’s planned 40 thousand ton enlargement in Straumsvík would not take place. The enlargement was planned to take place in 2009, inside the company’s already declaired zone. The smelter’s production capacity would have raised from 185 thousand tons to 225 thousand tons.
Landsvirkjun, Iceland’s national energy company, has announced that the tender offer of the dam Búðarhálsvirkjun will be delayed because of the current economical situation. This means that the planned expansion of Rio Tinto Alcan’s aluminium smelter in Straumsvík will also be delayed. Construction of Búðarhálsvirkjun, which was stopped a number of years ago, will dam the Tungnaá River, close to the lake Langisjór.
The construction of Búðarhálsvirkjun is expected to be around 25 billion ISK and the 85 MW dam is supposed to power R.T. Alcan’s increased production in Straumsvík, Hafnarfjörður. R.T. Alcan hopes to increase its production by 40 thousand tons per year without enlarging the smelter. But the company also hopes to enlarge the smelter further, though the people of Hafnarfjörður voted against it in a 2007 referendum, or to construct a new smelter i Thorlakshofn. The dam is also meant to create power for Verne Holdin’s data center to be built in Reykjanesbær. Read More
Preperation for a new aluminium smelter in Bakki by Húsavík, has been delayed and the test drilling for geothermal power plants around lake Mývatn have been laid off. A memorandum of understanding between Landsvirkjun (Iceland’s national energy company) and Alcoa was not renewed now in the beginning of November as Alcoa is not ready to put more finance in to more drilling.
The Bakki smelter was supposed to be powered by geothermal plants in Þingeyjasýsla, near lake Mývatn. Four billion Krona’s worth of test drillings were scheduled for next year, both in Krafla and Þeistareykir. Alcoa was supposed to pay half of the cost. The decision on the future of the drilling will now be delayed for at least one year, according to a joint announcement by Landsvirkjun, Alcoa and Þeistareykir efh.
In times of economic crisis, it is tempting to embrace new megaprojects such as new power plants and aluminium smelters. But will this realistically improve Iceland’s economic prospects?
Prime minister Geir Haarde recently explained on Stöd 2’s chat show Mannamál that one of the main reasons for the fall of the Krona, was due to the execution of heavy industry projects: the construction of Kárahnjúkar and Alcoa’s smelter in Reyðarfjörður. If more large projects are executed, what will the cost be for the Icelandic taxpayer?
Haarde’s comments were not surprising. Before construction of Kárahnjúkar many economists predicted the negative impact on inflation, foreign debt and the exchange rate of the ISK.
Of course there is some economic benefit from new smelters, but “it is probably outweighed by the developments’ indirect impact on demand, inflation, interest rates and the ISK exchange rate,” stated a report by Glitnir in 2006 on the impact of aluminium expansion in Iceland. The report expected an increase in inflation and a depreciation of the ISK.
“Kárahnjúkar will never make a profit, and the Icelandic taxpayer may well end up subsidising Alcoa,” said the eminent economist Thorsteinn Siglaugsson after publishing another report on the profitability of the Alcoa dam in East Iceland before construction commenced. Read More
