Ávarp á fundi um orkugjafa framtíðar, með fulltrúum frá Evrópuþingi, 05.10.2001


Valgerður Sverrisdóttir
Minister of Industry and Commerce

The Icelandic Energy Policy

Mr. Chairman,
Dear honourable guests from the European Union,
Ladies and gentlemen.

It is a pleasure for me as your host here in Iceland to welcome you to our country and especially to this seminar here to day. The aim of your visit is to outline the Hydrogen Society, specially the Case of Iceland, and I am sure that you will get usefull information on this subject during your three days visit here in Iceland.
The topic of this seminar is the Basic of Icelandic Energy and the Icelandic energy policy is of course one of the fundamental items when we discuss this subject. Geothermal and hydropwer energy is one of Iceland's most important natural resources. In terms of its population, Iceland has considerable untapped reserves of this renewable energy. Further harnessing of these resources for economic and sustainable development is an important task for the future and will probably play a large role in maintaining a high standard of living in Iceland in the near future.
Actual development of the energy resources in Iceland did not start until after the Second World War. The electrification of the country started in 1945-1950, followed by harnessing the first accessible geothermal fields for space heating. In the 1950's the Government decided that as large a part of the population as practically possible should be given access to electricity from public utilities. In the late 70's up to 99 per cent of the population had connection to the public electrical grid.
During 1960}s the first steps were taken by the government to harness the energy resources for power-intensive industry. This started in 1966 by the building of an aluminium plant, owned by Swiss Aluminium, which is now operating with 200.000 tons per year capacity. In 1979 a ferro-silicon plant started production with a capacity of 115.000 tons per year. A new aluminium plant started operation in 1998 and its final capacity is planned 240.000 tons per year. During the last months negotiations have taken place between the icelandic government, icelandic investors and the Norvegian company Norsk Hydro on a new aluminium plant in the east Iceland with a capacity up to 420.000 tons per year.
An interesting development has taken place during the last decades in harnessing the geothermal resources. Following the oil crisis of 1973 and 1979, a great effort was made to explore and harness geothermal resources of energy to replace oil, particularly for space heating. The result of this effort is the fact that fossil fuel has almost disappeared as a source of energy for space heating and is replaced by renewable and sustainable energy resources which are also more feasible and reliable.
This progess shows you that my government regards the harnessing of both geothermal and hydroelectric sources as a priority for economic and environmental development. Actually, the aim of most governments in the recent 30 years has been to utilise our energy resources but with different priority and emphasis on the development of heavy industry. Our government regards products from power intensive industry as a form of export of energy and by producing aluminium in that way we strongly reduce global carbon-dioxid emission compared to the use of fossil-fuel energy resources. In the same way we consider the recent development of geothermal use for space heating extremely impotant both from economical as well as environmental point of view.
Our policy means that we want to harness our renewable energy resources for sustainable development and by that way improve the living standards in the country. One main topic for that purpose has been possible production of clean fuel from our energy resources. Production and use of alternative fuels has been studied here in Iceland for the last two decades. Studies in the early 1990s indicated that the production and use of alternative fuels would not be economically viable. The situation may be different today mainly due to the progress in fuel-cell technology, but many improvements are still needed until hydrogen or other alternative fuels can replace oil in the energy system.
Long-term plans must be drawn up to decide the time frame for producing clean fuel, and how we are to use our renewable and clean energy resources for doing this. Fossil fuel reserves are limited, even though experts disagree about the long-term availability of oil and natural gas, and everybody agrees that the production of clean fuel should be a target for the future. It is therefore important for us to be prepared to use our renewable energy resources to produce clean fuel as soon as this becomes technically and economically feasible. Of course there is no way of being certain about the timing of the start-up phase, but it seems likely that this will depend not only on the price of oil and gas in the future but also on the technical development of fuel cells, hydrogen production and new technology in car batteries. Therefore it has been very encouraging to see the developments in this area over the past few years in decreasing cost of fuel- cells and hydrogen production.
In the year 1999 the former Minister of Industry and Commerce, and representatives of the private company Icelandic New Energy signed a joint venture agreement on co-operation in research on hydrogen as an energy carrier. On that occasion the Government made the following statement:

"It is the Government's policy to promote increased utilisation of renewable energy resources in harmony with the environment. One possible approach towards this goal is production of environmentally friendly fuels for powering vehicles and fishing vessels. Liquid hydrogen is an example of such a fuel. The establishment of a company owned by Icelandic parties and several international corporate leaders in the field of hydrogen fuel techno logy could open up new opportunities in this field.
The Government of Iceland welcomes the establishment of this company by these parties and considers that the choice of location for this project is an acknowledgement of Iceland's distinctive status and long-term potential. The initiative taken by the parties involved in this project deserves to be applauded and respected."

The Government is not directly involved in the studies of the companies but has now decided to provide financial support for the project on hydrogen fuel buses in Reykjavik.
In conclusion, the longterm vision we actually have in Iceland is that hydrogen fuel will in due time be competitive with the fossil fuel which we are to day using to our fishery fleet and transport sector. The Icelandic energy system is based on renewable energy resources to a larger extent than in any other country. Therefore my Government's policy is to promote increased use of our renewable resources. Production and use of hydrogen is in line of our policy when it proves to be economically feasible. Iceland is therefore looking forward to studies, technological development and cooperation with Europian countries in promoting the use of alternative fuels. We look forward to the furure hydrogen development and utilization of our renewable engergy resources with the aim to contribute a cleaner and better world to our children in the future.

Thank you mr. Chairman


Valgerður Sverrisdóttir