Saving Iceland

Henner Busch

In times of runaway climate change, phasing out fossil fuels and increasing the share of renewables is imperative. But this transition is not without pitfalls as shown by a recent study of two large renewable projects in Iceland.

The recent IPCC report has made it clear that we need to change our energy supply from fossils to renewable energy if we want to avoid catastrophic climate change. This transition has to happen now and it has to happen fast.

The good news is: renewable energy is a wonderful thing. As countless studies have shown, it can be cheap, low-carbon, good for regional development, and bring about great benefits for local people.

But, our new research cautions that these benefits are not inherent to renewable energy development and that each project needs to be carefully assessed on its merits.

Through a case study in Iceland, we show how the “green” image of renewable energy sometimes makes the public overlook the negative impacts of these technologies.

As a result, some of Iceland’s renewable energy resources have been misused to generate private profits for companies outside of the country. While, the benefits for the local population are, at best, questionable and large areas of unique nature have been lost forever.

 

A developmental model based on heavy industry

In the study, which was recently published in the journal Environment and Planning E: Nature and Space, we investigated the impacts of two large-scale power projects built recently in Iceland: the Kárahnjúkar hydropower project in east Iceland, and the Hellisheiði geothermal plant in the southwest. They are the biggest power plants of their kind in the country.

For our investigation, we analysed scientific literature, and we looked at homepages, reports and statistics. Finally, we interviewed 18 actors from the Icelandic energy sector (5), politicians (5), and experts from NGOs (3) and academia (5). 

We found that the two projects were the outcome of an aggressive industrialisation strategy driven by successive Icelandic governments over a number of decades, which have essentially used the country’s renewable energy sources to prop up other environmentally damaging industries.

This strategy entailed minimum environmental regulations, guaranteed low-energy prices, and an industry-friendly tax regime, designed to attract heavy industry, in particular power-intense aluminium smelters to Iceland.

As an incentive, the Icelandic government, together with the country’s publicly owned power company Landsvirkjun, promised to provide the required energy from renewable sources, namely hydro and geothermal, to companies that agreed to set up factories in the country.

This “clean” energy option was offered at very competitive rates and with a guarantee of supply for several years.

In the study, we investigated the impacts of two large-scale power projects in Iceland: the Kárahnjúkar hydropower project in east Iceland, and the Hellisheiði geothermal plant in the southwest. They are the biggest power plants of their kind in the country. (Image: Forskerzonen / ScienceNordic. With graphics from Vecteezy.com)

Let’s look at each project in turn to see what went wrong and what lessons can be learnt.

 

1: A mammoth hydropower project in a small country

In the early 2000s, large amounts of public money went into the energy sector to live up to the promises made to private sector investors.

One of the following projects is the Kárahnjúkar hydropower project. It consists of several reservoirs, tunnels, and the Fljótsdalur power station. It generates approximately 5,000 GWh per year, accounting for more than one fourth of all electricity produced in Iceland in 2016. All of this energy is used to power a big aluminium smelter built by the global company, Alcoa, on the east coast of the country.  

The project serves as an illustrative case for two phenomena: First, it shows how the green label of renewable energy can be misused to justify a costly and arguably quite destructive industrialisation. Second, it shows what can go wrong if a small country makes deals with a big transnational company whose decisions are predominantly driven by the hunt for economic profits.

 

Destruction in the name of progress

The power plant and the power-intense aluminium smelter must be seen as interlinked projects, because Alcoa’s commitment to build the smelter was the precondition for the power project going ahead, and vice-versa.

The Icelandic government at that time hoped that the development would boost the regional economy in the East of the country. To support this goal, the minister of the environment overrode the environmental impact assessment that vetoed the hydro energy project because of its destructive impact on the local environment.

With the Kárahnjúkar project, unique geological formations and landscapes in and along the Hafrahvammagljúfur canyon were irredeemably lost and downstream ecosystems suffered negative impacts that are yet to be fully understood. For example, the local fish population in Lake Lagarfljót collapsed and Iceland’s wild reindeer population lost part of its grazing and breeding grounds.

 

Who benefited from the projects?

The contract between Landsvirkjun and Alcoa turned out to be unfavourable for the state-run energy company. The energy prices paid by Alcoa are extremely low and tied to the volatile global market prices for aluminium. This makes revenue for Landsvirkjun very low and unpredictable.

In addition, Alcoa practiced a model of transfer pricing in Iceland to avoid paying the dues taxes in Iceland. This means that the local operation owes a great deal of money to its parent company based in Luxembourg. And so far, the local smelter has not generated any taxable profits, as all revenues are used to pay off the immense debt.

As a result, Iceland has not yet benefited from tax revenue from the smelter. This is particularly scandalous, as Alcoa has described the smelter in its 2012 annual report as a “profit leader” due to the low local energy prices.  Read More

Michael Chapman

When it comes to loving where you’re from, Iceland has a fantastic international reputation for its widespread use of renewable energy, its untouched landscapes and its sustainable environmental policies. But just how true is Iceland’s positive attitude to the environment?

How are phenomena such as climate change, heavy industry and tourism affecting the landscape, the wildlands, the glaciers and the seasons of the country? Most importantly, how are the Icelandic people responding to these threats, if at all?

There can be no denying, nor any hope of denying, Iceland’s staggering aesthetic beauty. Icelanders themselves are quick to point out their spiritual connection to the land, understandably proud and protective of their country’s many highlights; its geological marvels, breathtaking panoramas and stunning natural scenery.

With rolling black sand beaches, mist-wreathed mountainscapes, cerulean glacier tongues and bubbling hot springs, Mother Nature has candidly outshone herself decorating this small, Atlantic island. Read More

In April this year, Iceland’s Ministers of the Environment and of Industry presented a parliamentary resolution for Iceland’s Energy Master Plan, in which the controversial plans to dam river Þjórsá are put on hold while the unique geothermal areas of the Reykjanes Peninsula are set for a monstrous exploitation — one that will turn the peninsula into a continuous industrial zone. For the last weeks, the resolution has been in the hands of the Industries Committee of Iceland’s parliament — a process that included more than 300 letters of remarks, sent in by individuals, associations, institutions and corporations.

The remarks can generally be split into two groups based on senders and views: firstly, individuals and environmentalist associations who above all protest the afore-mentioned plans for the Reykjanes peninsula; secondly, companies and institutions with vested interests in the further heavy industrialization of Iceland who demand that the Master Plan’s second phase goes unaltered through parliament — that is, as it was before the parliamentary resolution was presented, in which the planned Þjórsá dams and other hydro power plants are included in the exploitation category.

One of the remarks sent in differs from the others as it evaluates energy production and nature conservation in a larger, long-term context. That remark, written by Helga Katrín Tryggvadóttir, MA in development studies, is published here below, translated from Icelandic by Saving Iceland.

I find myself inclined to make a few remarks regarding the Industries Committee’s discussion about the Energy Master Plan. My remarks do not concern particular natural areas but rather the comprehensive ideas regarding the scope and nature of the protection and exploitation of natural areas. Since the making of the Energy Master Plan begun, much has changed for the better as researches and knowledge on energy production and nature conservation continuously advance. The social pattern as well as opinions on nature conservation have also changed rapidly since the first draft for an Energy Master Plan was published, and the emphasis on nature conservation constantly increases. With this in mind it is necessary to take into account that during the next years, this emphasis on nature conservation is likely to increase even further. Therefore it is important for the Industries Committee to remember that keeping natural areas in pending does not prevent future utilization, whereas areas exploited today cannot be protected tomorrow.

Unsustainable Utilization

The many negative impacts of geothermal and hydro power plants have not been discussed thoroughly enough in Iceland. This can probably be explained by the the fact that these are renewable energy sources and thereby, people tend to view them as positive options for energy production. Thus we often hear that it is better to operate energy intensive industries here, using renewable energy sources, rather than in countries where the same industries are powered by electricity produced by coals and oil. However, when these issues are looked at it more accurately, we have to be aware of the fact that despite hydro and geothermal power’s renewability, their current utilization in Iceland is by no means sustainable.

Using the hydraulic head of glacial rivers, hydro power plants require reservoirs which deplete vegetated land, the reservoirs get filled with mud and by time the area becomes an eroded land. When it comes to geothermal areas, exploited for energy production, the seizure of fluid is much greater than the inflow into the geothermal reservoir and therefore the geothermal power dries up by time. At that point the area has to rest for a time still unknown in the geothermal sciences. Thus it is clear that although we are dealing with renewable energy sources, they do not at all allow for infinite energy production, and additionally the power plants themselves entail environmental destruction. It is clear that the utilization of these resources has to be executed very carefully, and preferably, all further utilization plans should be put on hold until it is possible to learn from the experience of the plants built in the very recent past.

CO2 Emission

A lot of emphasis has been put on the idea that Iceland possesses huge amounts of “green energy,” meaning that this energy does not burn fossil fuels. Thereby it is assumed that no CO2 emission takes place. This is, however, far from the truth: in 2008 the CO2 emission from geothermal plants in Iceland amounted to 185 thousand tons, which is 6% of the country’s total CO2 emission¹. Hydro dams also add to the amount of carbon in the atmosphere: big reservoirs cause the drowning of vegetated land, wherein rotting vegetation emits methane gas, increasing global warming. It is estimated that about 7% of carbon emitted by humans come from such constructions². The sediment of glacial rivers affects the ocean’s ecosystems and nourishes algae vegetation by the seashore. Marine organisms play an important part in extracting carbon from the atmosphere; it is estimated that such vegetation extracts about 15 times more of CO2 than a woodland of the same size³. Annually, the ocean is believed to extract 11 billion tons of CO2 emitted by men⁴. By damming glacial rivers, entailing disturbance of their sediment and of algae vegetation, Icelanders are not only threatening the fish stocks around the country, and thus the country’s fishing industry, but also further contributing to global warming in a way which is more dangerous than deforestation, though the latter has undergone much harsher criticism worldwide than the destruction of oceanic ecosystems.

Geothermal Power Plants

In the Energy Master Plan’s second phase, possible geothermal power plants are listed in 20 out of the 25 highest seats of exploitation. If the planned hydro dams, Hvamms- and Holtavirkjun, in river Þjórsá will be kept in pending — which I rejoice as a resident of the Skeiða- og Gnúpverjahreppur region — geothermal power plants will occupy 22 out of the 25 seats. Due to the fact that so little is known about the long-term impacts of geothermal power plants, this ordering is a matter of concern. Before further construction takes place, it is necessary to wait until more experience is gained from the already operating geothermal power plants. Many of the problems connected to these plants are still unsolved, for instance the dangerous material in the plants’ run-of water as well as their polluting emissions. This has to be taken into consideration, especially near the capital area of Reykjavík where sulphur pollution is already very high⁵.

It also has to be taken into account that geothermal energy production is not sustainable, as an geothermal area’s heat supply eventually dries up. Their usage allows for 50 years of production, which of course is a very limited amount of time. If the plan is to use such energy for industrial development it has to be kept in mind that 50 years pass very quickly, meaning that the jobs at stake are no long-term jobs. At the same time, such a short-term utilization encroaches on future generations’ right to utilize the geothermal energy sources, not to mention their right to utilize these areas by protecting them for outdoor activities and creation of knowledge, as Iceland’s geothermal areas are unique on a global scale. For the last weeks, we have witnessed how the already exploited geothermal areas, or those where test-drilling has taken place, have not at all been utilized in a way that goes together with tourism and outdoor activities, as the areas’ appearance and environment have been damaged on a large scale⁶.

Economical Arguments

When it comes to economical arguments, people often tend to call for short-term employment solutions, stating that it is important to construct as many possible power plants in the shortest time in order to create as many jobs as possible. The fact, however, is that a construction-driven economy will always lead to instability, and such instability is indeed the Icelandic economy’s largest bale. Above all, Iceland’s economy needs stability and a future vision that sees further than 10 years into the future. For a stable future economy to be built, it has to happen in a sustainable way, whereas continuous aggressive exploitation of the country’s natural resources will simply lead to an era of regular economic collapses. By putting such strong emphasis on the aggressive exploitation of hydro and geothermal resources, with the appendant construction bubbles, a situation of unemployment will be sustained, broken up by occasional and differently short-lived boom periods in between. Read More

Google Earth Tour Reveals How a Global Dam Boom Could Worsen the Climate Crisis

International Rivers and Friends of the Earth International have teamed up to create a state-of-the-art Google Earth 3-D tour and video narrated by Nigerian activist Nnimmo Bassey, winner of the prestigious Right Livelihood Award. The production was launched on the first day of the COP 17 climate meeting in Durban. The video and tour allow viewers to explore why dams are not the right answer to climate change, by learning about topics such as reservoir emissions, dam safety, and adaptation while visiting real case studies in Africa, the Himalayas and the Amazon.

By Jaap Krater

Last spring ALCOA released the first draft of the joint environmental impact assessment for the proposed Bakki smelter and power plants at Krafla and Theistareykir. Recently Iceland’s National Planning Agency commented on the draft assessment in a damning commentary.

The agency stated that the environmental impacts of the project are high and cannot be mitigated. 17,000 ha of untouched wilderness will be affected. Greenhouse gas emissions of the project would constitute 14% of Iceland’s total. There is a great deal of uncertainty on the full impact of the planned power plants and particularly on how much geothermal energy can be sustainably produced. Finally, the assessed energy projects will not be able to fully power the smelter, with 140 MW of capacity missing.

This confirms three key points of critique on the smelter that we have been voicing for several years now. Read More

By Tord Björk

Social Forum Journey / Malmö-Belem-Istanbul

Abstract: This article looks at how the national mass protests against neoliberal regimes in Iceland, Tunisia, Egypt and other African and Arabic countries and the Wisconsin in the US are linked with the climate justice movement. Both national protests and the climate justice movement are developing unevenly. National protests in some hot spots, the climate campaigning more even all over the world. By looking at how countries like Denmark and its organized civil society acts it can be possible to understand how the struggle both for defensive goals and constructive solutions can strengthen each other by what lacked in Denmark but exists on the global level. That is solidarity against repression and building resistance which enables solutions uniting anti-neoliberal struggles in general and specific areas. Read More

November 25th, the joint Environmental Impact Assessment (EIA) on Alcoa’s planned 346 thousand ton aluminum smelter at Bakki, Húsavík, was finally published. In response, Iceland’s National Planning Agency released an extremely critical commentary regarding the planned smelter and the geothermal plants that are supposed to power it.

It states that:

– Environmental impacts of the project are high and cannot be mitigated.
– 17,000 ha of untouched wilderness will be affected
– Greenhouse gas emissions of the project would constitute 14% of Iceland’s total.
– There is a high amount of uncertainty regarding the full impact of the planned geothermal power plants and particularly their impact of the geothermal energy resource base.
– The assessed energy projects are not sufficient to power the smelter, with 140 MW of capacity missing.

“These reports confirms three key elements of critique that Saving Iceland voiced now several years ago,” says Jaap Krater, a spokesperson for Saving Iceland. Read More

by Aviva Imhof & Guy R. Lanza

Big dams have a serious record of social and environmental destruction, and there are many alternatives. So why are they still being built?

On a hot May day, a peasant farmer named Bounsouk looks out across the vast expanse of water before him, the 450-square-kilometer reservoir behind the new Nam Theun 2 dam in Laos. At the bottom of the reservoir is the land where he once lived, grew rice, grazed buffalo, and collected forest fruits, berries, and medicinal plants and spices. Now there is just water, water everywhere.

Read More

By Jason Slade
Originally published in the Nor easter

The Spectacle

Environmental issues can oftentimes be very complex. Some issues directly relate to climate change, and some do not. However, it is very important to connect the dots between issues because almost all environmental problems are caused, at their base, by capitalist expansion, commodification and privatization. Corporations have used the climate crisis and growing public concern about environmental issues to their advantage. They have learned to use the rhetoric of environmentalism to justify extremely oppressive projects whose sole purpose is to increase their power and to continue the cycle of production and consumption. Incredibly destructive projects, such as hydrofracture natural gas extraction in Upstate New York, are marketed as clean. This absurd spectacle must be stopped.

In Guy Debord’s Society of the Spectacle, he writes, “The spectacle presents itself simultaneously as all of society, as part of society, and as instrument of unification … The spectacle grasped in its totality is both the result and the project of the existing mode of production. It is not a supplement to the real world, an additional decoration. It is the heart of the unrealism of the real society. In all its specific forms, as information or propaganda, as advertisement or direct entertainment consumption, the spectacle is the present model of socially dominant life … It is the sun which never sets over the empire of modern passivity. It covers the entire surface of the world and bathes endlessly in its own glory.” And now the light of that sun is green. The green spectacle is confronting the climate crisis with hollow solutions presented to us in a pleasant, prefabricated package that can be bought if we can afford them and allow us to pollute in good conscience. In an absurd twist, these corporate false solutions cause the poor, and those who resist these schemes, to be blamed for destroying the planet. “It is not the oil companies who are to blame for climate change, but the poor who do not buy carbon offsets when they travel.” Thus, the climate crisis becomes another way to make money and increase corporate power. Read More

By Jaap Krater and Miriam Rose
In: Abrahamsky, K. (ed.) (2010) Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. AK Press, Edinburgh. p. 319-333

Iceland is developing its hydro and geothermal resources in the context of an energy master plan, mainly to provide power for expansion of the aluminium industry. This paper tests perceptions of geothermal energy as low-carbon, renewable and environmentally benign, using Icelandic geothermal industry as a case study.
The application of geothermal energy for aluminium smelting is discussed as well as environmental and human rights record of the aluminium industry in general. Despite application of renewable energy technologies, emission of greenhouse gases by aluminium production is set to increase.
Our analysis further shows that carbon emissions of geothermal installations can approximate those of gas-powered plants. In intensely exploited reservoirs, life of boreholes is limited and reservoirs need extensive recovery time after exploitation, making geothermal exploitation at these sites not renewable in the short to medium term. Pollution and landscape impacts are extensive when geothermal technology is applied on a large scale.

Krater and Rose – Development of Iceland’s Geothermal Energy – Download as PDF
The full publication will be available from Jan. 15, 2010. ISBN 9781849350051.