What's the deal with Iceland?

Iceland aims to be the world’s first carbon-neutral nation;
thanks in large part to hydropower and geothermal, it’s well on
track to meet that goal by 2040. In this episode, Halla Hrund
Logadóttir of the Iceland Energy Authority reflects on the
country’s energy history and looks to its ambitious future.


(PDF
transcript)


(Active
transcript)


Text transcript:


David Roberts


Iceland is an island just south of the Arctic Circle, perched
directly atop a rift where two tectonic plates are drifting
apart, exposing the magma below. It is a small country
(physically about the size of Kentucky, with a population a
little larger than Cleveland, Ohio’s), but what it lacks in size
it makes up for in drama. It is a land of glaciers and volcanos,
ice and fire, wind and rain and snow — and deep heat that makes
them bearable.


I was there for four days last week, meeting with
sustainability-related businesses, hearing about everything from
micro-algae to grid monitoring to carbon recycling to using 100
percent of the fish. There’s an incredible amount of innovation
going on there, and to my unending delight, a great deal of that
innovation is in some way or another in a symbiotic relationship
with geothermal, the heat and power that Icelanders pull from
underground.


Iceland’s electricity is entirely carbon-free — roughly 70
percent hydropower and 30 percent geothermal — and so is its
heating, 90 percent of which is geothermal. Overall, 85 percent
of its energy consumption is carbon-free, and it is aiming for
100 percent by 2040.


To hear more about all this, I visited the Reykjavik office of
Halla Hrund Logadóttir, who runs Iceland’s National Energy
Authority, overseeing the country’s electricity system. She used
to teach at the Iceland School of Energy at Reykjavik University
and now teaches at the Harvard Kennedy School, where she
co-founded the Arctic Initiative and founded the Arctic
Innovation Lab.


There’s no one with a better sense of the overall state of
Iceland’s energy situation. We talked about the country’s history
with geothermal, its current energy mix and policies, and its
race to become the world’s first fully carbon-neutral nation.


I'm here with Halla, who — I'm going to call you by your first
name. Will you say your name for us?


Halla Hrund Logadóttir


So I'm Halla Hrund Logadóttir. One of these Icelandic simple
names.


David Roberts


Yes, extremely. That is extremely Icelandic. And you're head of
the National Energy Authority? National Energy Authority here in
Iceland. And I've been visiting Iceland here for the last three
or four days, visiting lots of startups and sustainable
businesses of various kinds, and have found it absolutely
fascinating, much more than I expected. Such a unique — so many
things about Iceland in general, but Iceland's energy situation
that are just absolutely unique and fascinating. So maybe the
place to start is you could just tell our American audience,
which is, you know, Americans are not known for their deep
knowledge of other countries —


So maybe we could just start by a little history of Iceland and
geothermal, which is, I think, the sort of origin story of
Iceland's current situation. Maybe just tell us what happened
back in the 60s and 70s and why and sort of what the result is.


Halla Hrund Logadóttir


Absolutely. And I think just to kind of start where we are at
today and then looking back: Today, nine out of ten houses in the
country are heated with geothermal, and overall, 85% of our
primary energy use comes from renewables. So the hydropower is
the other main source of electricity production, basically. But
the heating mainly comes from geothermal and it is a unique
situation, but it is a story that goes way back. It started with
bathing that is kind of from the Vikings coming here, staying
warm in this cold country. But then in the early 1900s, there was
a farmer that found a way to connect his farm to a neighboring
hot spring here in Mosfellssveit, which is close to Reykjavík,
where we're sitting now, and a few others did the same.


And so it was a story of entrepreneurship and innovation. Then
municipalities noticed this technology and it became a part of a
policy, to make a long story short. But then the first drilling
for geothermal was done in the early 1900s and 1928 here in
Reykjavík. And I think such an important part of this story is
the fact that those were small projects, but they were used to
heat key buildings like the hospital you can still see downtown
and a primary school that we have downtown. And this was really
important because it made the technology, the fact that it
worked, very visible to people and made the buy-in for the
technology — you always need buy-in from voters and so forth.


The benefits were very obvious from these two key examples and
from these small successes the big transition, the big story,
begins, which also I think is interesting now when we think about
the overall energy transition, it usually starts with small
pilots that then become added up to a major success. Then we had
the First World War that was a driver for the government to look
closer at local energy resources. But then, as you mentioned, the
big change was in the 60s and the 70s during the oil crisis in
the world and we're an island, it was extremely expensive to
import oil and gas, which were the main types of energy used here
in Iceland at that time.


So the government started building incentives for this transition
and the major part of that incentive is the Iceland Energy Fund.
Do you know of that fund? So just to share a bit about it, it's a
fund that was established to help mitigate risk of drilling for
geothermal.


David Roberts


Oh, I did hear about that, yeah, I've had a couple of people talk
to me about it. So they can loan a village money and if the
village finds geothermal, they pay it back. But if they don't,
the loan is just canceled, right?


Halla Hrund Logadóttir


Almost as good as that. Yes, about 50% is canceled, but
definitely the main features of it. And this is what allowed
small municipalities in Iceland to really focus on exploring
geothermal in their regions and about 20 district heating systems
were built across the island during this time from 61 to 1983 or
so. And the beauty is that these are the same systems, the same
infrastructure that we're still using today. So it proves as well
how stable the geothermal resource is and how important it is
when we're looking at the energy transition is to make the right
bets when it comes to building infrastructure because it has such
a long lifetime.


So these are the main factors of our history. And I think it's
important to highlight this is long before climate change became
a major issue, the research was not where it is today, but it was
about economics, it was about energy security and then clean air.
I mean, you can see pictures from Reykjavík very close, from
where we're sitting now, where you have this thick smoke looming
over the city and just imagining that a few decades later it
would be one of the cleanest cities in the world.


David Roberts


Yeah, stable and stable prices too, right? All of a sudden prices
are not going to spike or fly around. So that's an undersold
aspect of renewables, is they're the same price now; they're
going to be the same price in a week, in a year, and two years.
We should say, I'm not sure everyone knows exactly why there's so
much geothermal power in Iceland, so maybe just say real quick
about the continental plates, which I've been learning a lot
about this week.


Halla Hrund Logadóttir


Yes, we are situated on the boundaries of two tectonic plates
that are drifting apart 2 centimeters per year. So you can say
that you are either in Europe or North America when you're in
Iceland, depending on location. But because of that, we have a
lot of geothermal activity, we have a lot of volcanoes in
Iceland, and because of the high temperature, we can both use our
hot water that comes from the ground for district heating. So
we're basically almost using the water directly, if you will, or
we can use it for electricity production. And I think it's
important to note that the planet has huge potential for
geothermal and particularly when you look at using the water
directly for district heating.


And very interesting things are happening in that space across
the planet. When you look at areas that have high temperatures
that you can produce electricity as well, those places are fewer,
but there's definitely a lot of potential there as well. But as
soon as you start to look at the source as simply a heat source,
then it's just fascinating to look at the potential and to
witness — I mean, we at the National Energy Authority, we partner
with a lot of countries in Europe. We're working now,
particularly with countries in Eastern Europe that are trying to
get more energy independent after the war in Ukraine.


And there's resources there maybe with between 40, 60, even
70-degree temperature. These are not volcanically active areas,
but they have potential to heat millions of homes and they just
haven't been looking at that potential because it's been so much
cheaper to import gas from Russia.


David Roberts


Well, I have a question related to that. So the government
decided, I mean, it's a pretty cool story, the government decided
we're going to move our country's heating over to geothermal and
then just did it in like a decade. You don't hear a lot of
stories about large-scale, ambitious, successful government
initiatives these days. But the population of Iceland was
relatively small. Today, 380,000-ish, but I assume it was even
smaller back then. So a lot of your current housing stock and
buildings have been built with district heating under them. So
it's easy to do district heating if you're building a new
development.


But a lot of other countries, Eastern European countries, US,
there's already so much building stock existing. So is it more
difficult to retrofit existing buildings with this than — is that
a major barrier?


Halla Hrund Logadóttir


It's definitely an issue. It is much more expensive if you need
to transition the whole system. But if you are using, you know,
in many countries in Eastern Europe, for an example, you have
like gas, you just have to change the heat source. The
infrastructure are pipes. So in these cases, it can be
particularly economical to just change the heat source from gas
to geothermal. So those are kind of the low hanging fruits where
you have existing infrastructure. Then if you look to countries
for an example like China, that has been expanding quite
dramatically, they have geothermal in 70 cities now.


There you're looking at China using a lot of it for new buildings
as well. Right, and we're talking about then heat down to maybe
50 degrees Celsius. And there the design of the building is also
using floor heat and so forth to make the biggest use of the
lower temperatures. But I will add to this that of course
geothermal is many things and in terms of lower temperatures and
in terms of where you don't have like a centralized district
heating system, you can still do a lot with if you combine
different solutions with heat pumps and so forth, that also take
advantage of geothermal heating in a different way.


David Roberts


Yes, this is one of my favorite projects in the US. I did a
podcast about this last year, the sort of geogrid, they're doing
a test up in Massachusetts where they're doing little boreholes
every 50ft or so and then have heat exchangers with each house.
Very excited about that. So that's heating, which is now almost
all of Iceland's building heating. So when did geothermal
electricity take off? It's now 30% of your electricity and the
other 70% is hydro, which I assume is just rivers.


Halla Hrund Logadóttir


Yeah, glacial rivers mainly. Right, and that's another story,
really. So the electricity production comes much later with the
bigger plants. I know little, you visited one of them. And with
geothermal you have to make sure that you manage the resource
well. And as you have witnessed, one of the elements is
electricity production, that we use it where it's high
temperature today. But we also use different streams of the hot
water for greenhouses, for drying fish, for heating sidewalks
during our snowy season, which is long, I can tell you. And for
all kind of our cosmetics for food supplements.


So there's a big industry like an innovation happening around the
geothermal resource in general. And I would say it's very
integrated in people's culture. Also, through bathing, there's
not a weekend that you don't go.


David Roberts


We went to Sky Lagoon on our first night here.


Halla Hrund Logadóttir


Yeah, that's the fancy stuff.


David Roberts


Pretty amazing. Yeah. But there are little pools all over the
place.


Halla Hrund Logadóttir


I challenge you to visit one of them. It's like a standard thing
to do for a family in Reykjavík is to go to visit one of the
pools. So it ties into also just the general healthy way of
living, which I think has contributed to so many different
aspects of the Icelandic society.


David Roberts


I meant to say, the thing that surprised me most in the last four
days is I knew there's lots of geothermal here, I knew there's
geothermal electricity here. But as you say, there's this entire
ecosystem of businesses that are symbiotic with geothermal. They
use the water for different things. The cold water, the hot
water, the steam, they say eat the whole animal. It's like every
bit of that heat and water and steam and every bit of that
geothermal is used somehow, somewhere. It's amazing.


Halla Hrund Logadóttir


Yeah. It's the circular economy kind of thinking. And I have to
say, because you come from the States and you have this
incredible Silicon Valley that is the hub of technology in the
world. We have two resource parks, one here in Reykjanes area and
one here not so far from Reykjavík. These are resource parks that
exactly work with the ideology that you described. So many
companies in renewable energy working together. Carbfix, it has
this major potential in the world of simply turning CO2 into
stone, where you have basalt rock in the world and then
Climeworks —


David Roberts


I talked to them yesterday.


Halla Hrund Logadóttir


Right. So you have these kind of ecosystems, and I sometimes say
that these are tiny, tiny little Silicon Valleys that have so
much potential to grow.


David Roberts


So much cleverness and so much innovation. It's really
surprising, all the thinking that goes on around that. So this
raises a question that I get a lot from people whenever I talk
about geothermal, which is, how renewable is it? Is it possible
to exhaust a geothermal field? Or is it if you manage it well, is
it effectively renewable forever? Is there any worry about
running out?


Halla Hrund Logadóttir


Yeah, I mean, definitely, you have to manage the resource well.
You have to make sure that you're not pumping more out from the
resource than flows into it, if you will. So there's definitely a
sustainability management. But as I mentioned, we've been using
our resources for decades and we are looking at developing more
sites in Iceland now because there's so many tourists, there's
more people, so the demand has grown a lot. But it's definitely a
resource that you can count on for a long time and is renewable
in the sense that if you manage it well, it maintains itself over
time.


But I will also say that because one of the hidden elements of
geothermal in the renewable energy category is the fact that it
is baseload. You have baseload heating from geothermal, while if
you look at solar and wind, these are dependent on the weather.
And then as well, it has a very low footprint in terms of
visibility. And we see with the energy transition across the
world that visibility is usually when it relates to wind power,
for example, a big factor. So geothermal has these secret
elements not to add to that, it's also the price factor.


We have not had any major shifts in energy prices for heating our
homes during the European energy crisis. Yes, so there's a lot of
benefits that come together and of course, the fact that it is
green, it's our luck that we've transitioned. So now when we're
looking at closing the energy transition gap, we have a renewable
energy component for the heating and heating and cooling is about
50% or up to 50% of the world's primary energy use. So once we've
tackled the heating and cooling crisis in the world, we have
tackled such a big part as well of the climate crisis.


And that's why geothermal is an important solution to keep as one
of the puzzles. It will never be the puzzle, but it can
definitely play a much bigger role than it's playing now.


David Roberts


I've said as much, many, many times. I mean, you're so lucky here
that you have the two forms of renewable energy that are not
variables. You have not had to deal with that kind of the same
kind of worries about flexibility and balancing and everything
else that you have with wind and solar. Although this does raise
a question that I've had several times. One of the notable
features of the climate here is extremely windy everywhere, all
the time and so it's a little puzzling that there's no wind
turbines anywhere. Was that a conscious decision? And is that
going to stay that way?


Is there any talk about bringing wind or offshore wind? Because
it's extremely windy out there.


Halla Hrund Logadóttir


Yes. So right now, as I mentioned, we have like 85% of our
primary energy use covered by renewables. So we're looking at the
final 15% to close the gap. And if we think about what is
included in these final 15% —


David Roberts


Cars. Cars. Cars. Cars.


Halla Hrund Logadóttir


It's cars. So it's transportation on land, basically, and then
it's our shipping fleet. We're a big fishing nation and then it's
aviation and we are quite far along when it comes to
transitioning with our transportation on land. Basically, if you
look at what the public is doing it's around 65% of newly
registered cars are electric in Iceland. If you count the car
rentals, which are pretty big in Iceland, the proportion is
lower. But we're number two in the world after Norway when it
comes to being the fastest one and transitioning our car fleet.


When it comes to our shipping vessels a lot of things are
happening, but it's happening slower because you need to retrofit
the ships. You need to make sure that they can be the end user of
e-fuels, for example. And this is where we look at, it's not
about — you can't plug the ships in like you can with your
electric cars. You need e-fuels. And this is where energy demand
comes in. And one of the areas thus where wind power is being
discussed is how to use that resource to help us with the energy
transition.


David Roberts


To make e-fuels.


Halla Hrund Logadóttir


To make e-fuels. And I will say the energy mix in Iceland is
really interesting because it's only 4% to 5% that are homes, the
end consumers. Then you have 15% that are like normal businesses
and then 80% —


David Roberts


Yes, I was going to discuss this, this was also a very great
surprise to me. 80% of electricity consumption is industry. Big
industry, which is not necessarily what you'd expect to find on a
little island in the middle of nowhere. And not just big
industry, but a relatively small handful of really big plants.
Aluminum. Right. Aluminum —


Halla Hrund Logadóttir


Yes. So this became a strategy of the government earlier on.
Iceland became independent in 1944 and we were looking at ways —
this also ties into the geothermal story — we were looking at
ways to basically become independent, diversify our economy and
so forth. So attracting the aluminum industry and others to
locate in Iceland was a part of the strategy to gain revenues and
build up our economy. But it's definitely an unusual energy mix
and keeping in mind as well that we are an island system. We do
not have an interconnector to anywhere. So our way of exporting
electricity, if you will, is through aluminum.


We export it through production.


David Roberts


Right. Use the clean energy to make aluminum and then export the
aluminum.


Halla Hrund Logadóttir


Yes, but there's been discussions in the society about how much
more should be developed. There's continuous dialogues about what
for and so forth. But the government is now working on and we are
contributing to a holistic policy because you have also elements
of us wanting to protect nature as well as developing energy
resources. Both resources, nature and energy, renewable energy
are increasing in value, if you will. So it's important to find
balance. Offshore is not as far in the policymaking world as
onshore. We have unusually good conditions in both areas but
offshore is more difficult than in some other locations in
Iceland because you have deep waters, so you need floating in
many cases.


And the technology is not completely cost competitive, but as I
said, it is an ongoing dialogue.


David Roberts


Has the public sort of weighed in on wind turbines yet? They love
geothermal. Do they have feelings about wind?


Halla Hrund Logadóttir


I think it's a much more difficult subject. In general, there's
always been debate about any big projects that have an impact on
Iceland's nature because we have one of the most diverse sets of
nature in the world, ranging from lava to black sanded beaches,
to glaciers to greenfields. It's really —


David Roberts


It's dramatic. Everywhere you go, everywhere you look, there's
something dramatic.


Halla Hrund Logadóttir


Yeah. So people are conscious about making sure that there is
this value that definitely plays a role in our economy as well
and is important for the future, is kept at the same time that we
continue to grow our potential by utilizing our green resources.
So this is where long term policy making comes into play. And we
certainly do have policy measures that aim to tackle exactly
that. And right now, if you want to build a wind farm, it goes
through Parliament, through a process called the Master Plan. So
it's quite a heavy process, but whether you look left or right in
the political sphere, people are in full agreement about
finishing the energy transition.


David Roberts


So, transitioning to net zero is not politically controversial?
More or less everyone's on board?


Halla Hrund Logadóttir


Yes, and I mean, it's a unique opportunity. We may be small, but
it would be a proof, and this is the exciting part, it would be a
proof that you can actually run a whole economy completely on
renewables. And if we can't do that with 85% of our primary
energy already coming from renewables, then the question might
be, who can then?


David Roberts


Right, one thing before we move on from surface transportation —
this is a big issue in the US that we come back to again and
again — is electrification of vehicles the only policy or is
there any talk about trying to bring in public transportation,
biking and walking infrastructure, just reducing the amount of
driving because it is pretty driving dependent here, similar to
most American cities.


Halla Hrund Logadóttir


Yeah, definitely. I mean, there's been much more focus on biking
in the recent decade or so and I would say with electric bikes
that can kind of support you during the wind you mentioned.
There's been a big shift for people actually using that as a part
of commute and there are kind of bigger projects that relate to
public transportation that needs to be improved in Iceland for
sure, must be a part of the solution. So all of these factors are
playing a role. And speaking of the energy fund that I mentioned
earlier, the role of the fund now has been to help Iceland with
the final 15% and a part of that has been to support building
infrastructure for electric cars across the island because
Icelanders — you know they like to drive, they need to be able to
take their car and go somewhere. I think it's a similar mindset
as in the US. So making sure that there is infrastructure
everywhere in the island so it doesn't become a barrier for
people to actually take that step and invest in an electric
vehicle.


David Roberts


In terms of the huge role industry plays, aluminum in specific so
there's like three giant aluminum smelters and then like two
other, I think big industrial facilities. So that 80% of
electricity demand is basically five, I think big factories or
big — Do you worry, like if one of those closed all of a sudden
you'd have a relatively giant surplus of electricity? Are you
worried all how big a role they play in the electricity system or
in the energy system that there's some vulnerability there? How
confident are you that these industries are happy and going to
stay?


Halla Hrund Logadóttir


So we have the ones you mentioned and then you have data centers
and more kind of a bit more diversified set of buyers. The
situation as it is today is that we have much more demand that we
can produce. So if there would be such a risk that one of these
players would close of course it would temporarily have an
impact. But with the massive demand for renewables in the world,
with the energy need that we have for our transition there would
definitely be opportunities in that space.


David Roberts


Right, so there's one, e-fuels, there's one current methanol
plant making green methanol. Are there more of those on the way?
Is that a big growth area?


Halla Hrund Logadóttir


Yeah, one of the things that we've been doing through the energy
fund is investing in the shipping industry to co-invest with
companies in retrofitting ships because you need to have the user
—


David Roberts


The demand, right?


Halla Hrund Logadóttir


Yeah. And that has been kind of the challenge. You establish the
production and if you don't have the demand there's a difficulty
in matching these two factors. So right now there are some plants
that have also gotten support from the energy fund that are on
the horizon. But it is an interesting market in a big transition
globally. There's so many questions around how will the market
look like? What will be the key fuels that will be used for
different sectors? Where will Iceland be most competitive in what
type of production? There are many types of e-fuels so likely we
would not be producing all of them.


What needs to be the size of these projects to be cost
competitive? So a lot of these questions are also reflected in
the development of this industry globally and it's important to
Iceland to stay tuned to be in the forefront. But also it means
that there are some more risks involved.


David Roberts


Yeah, all these chicken and egg questions, although it does seem
like there's going to be I think I've least read of several
shipping companies that have sort of stated goals. So it does
seem like there's definitely going to be some demand.


Halla Hrund Logadóttir


And we have very ambitious goals when it comes to completing our
energy transition in the near future when it comes to
transportation on land and when it comes to our shipping fleet.
And these are also the sectors that are really important to focus
on when it comes to EU legislations because one can say that
these are emissions that we're also critically responsible for.
Where it comes to aviation —


David Roberts


Yeah, I was going to ask what is that answer to aviation? Do you
guys have one?


Halla Hrund Logadóttir


Well, I can tell you, if we start by looking at domestic flights.
One of the most exciting co investments of the energy fund last
year was the fact that we purchased, together with multiple
parties, the first e-plane, which is basically an electric plane
that you can plug it in as your phone. Or your hairdryer. And you
can take off in weather like we have today. A sunny, still
weather where there's almost no wind. But you can fly for half an
hour. But if you look at how the technology is developing here,
you can see that there's likely going to be around up to ten
passenger planes, maybe a bit more, that can fly short distances.


And those would be perfect for domestic flight in Iceland because
the distances are relatively short and because if it's electric
planes, the infrastructure would be much less difficult. The
transition, the cost of electricity would be lower. So it could
actually mean a lot of interesting things for development for
different towns in Iceland. So it's quite —


David Roberts


Make them more accessible.


Halla Hrund Logadóttir


Right, so it's a very exciting area to follow. But when it comes
to aviation between countries, we're talking about the European
Union has its goals, we're talking about different paths there
and it's much more likely not one country will kind of lead the
way. But these are international standards, so we will follow
these standards and be at the forefront. But it's, you know, in
aviation you need to follow the rules, obviously.


David Roberts


And I suppose you could be a big producer of aviation fuels too,
sustainable aviation fules.


Halla Hrund Logadóttir


Right, that's also a possibility. Right.


David Roberts


Yeah. One question I got when I was discussing this on social
media about Iceland is, as you say, you don't have a grid
intertie with anyone else. So you're somewhat unique. Well,
similar to Hawaii, actually, in being a full, self contained grid
with no external connection. In Hawaii, that's an endless
challenge because there's so much variable solar wind involved.
Is it a challenge here because hydro and geothermal are both
pretty stable and predictable. So does that make managing the
grid pretty easy or do you have these balancing challenges as
well?


Halla Hrund Logadóttir


You're right that it's much more stable. And definitely if we
look at integration of wind and solar here in the future, it's
possible to have solar even in Iceland, at least for some part of
the year.


David Roberts


It seems pretty gray.


Halla Hrund Logadóttir


Yeah, well, but with technology, I mean, it can be again, a tiny
little solution, but not the biggest factor. But it can play a
role, especially in colder areas that do not have access to
geothermal. But there is, of course, a variability still in the
system. Sometimes you have more current in the glacier rivers
because the melting is different depending on how the weather has
been. Has it rained a lot? Has it not? So all of these natural
factors matter and you can compare it to fisheries. Sometimes you
can catch more cod, sometimes it needs to be a bit less.


It's like natural variability as well. But those are a small
percentage of our overall system. And the way that energy
companies manage these variabilities is by selling types of
agreements that can be, you can cut how much you supply when you
have a smaller amount of water in the hydro reservoirs and so
forth. But for the biggest part of it, it's a really stable
system.


David Roberts


So probably there's not a ton of storage. Are batteries, grid
batteries not really a thing that you need?


Halla Hrund Logadóttir


I mean, our reservoirs are really our storage system, but we are
following closely and participating in innovations when it comes
to battery technology, because these types of technologies can
definitely play a role for e-fuel production. They can play a
role for isolated communities. We have a lot of them as well in
Iceland that do not maybe have the same access to the grid. So
there's definitely many use cases for such technology as well.
And to be honest, if you look at the world, big innovation
breakthroughs in battery technology would mean so many things.


David Roberts


Yes, it'd be very helpful for many, many economies.


Halla Hrund Logadóttir


Yeah.


David Roberts


Is there more hydro? How close is hydro to being tapped out?


Halla Hrund Logadóttir


So right now there are a few things happening in the hydro space.
There are new power plants in the making.


David Roberts


Are they controversial at all? Politically controversial at all?


Halla Hrund Logadóttir


So we have this policy framework called the Master Plan. So after
certain steps, projects go through the parliament and are either
approved or not. So you have some hydropower projects that have
been approved and are in development, and one of them is actually
quite close to the final stages of permitting and so forth. So
there's potential in new projects. Some potential, but there is
also potential in updating or upgrading other ones. And that is a
very important factor as well, because in these cases, you've
gone through all the legislative processes, and it's a much
better use of the resource if you just add new equipment and get
more power.


So there's potential there, and then there's been development as
well in smaller hydropower projects. And that is how Iceland's
story and hydro actually started. So you had similar to
geothermal, it was a journey led by farmers, and often you had a
few farmers clustered together having a small hydro project in
one of the kind of neighboring rivers or small streams. So you
had over 200 such systems in Iceland before the overall grid was
built for the country. So we also have some potential in these
smaller projects as well. We have potential when it comes to
geothermal. We have potential, of course, when it comes to wind,
but I would say that there is a clear focus on how we can use
these projects to complete the energy transition.


And there is a big demand from the public to make sure that we're
using the resource well, that we are developing it in sites that
do not impact nature too much and so forth.


David Roberts


Speaking of getting more out of existing facilities, is there
innovation in trying to get more out of existing geothermal
fields? Like trying to go deeper?


Halla Hrund Logadóttir


Yeah, this is a very exciting topic, actually. So you both have
potential in improving geothermal by injecting water, making sure
that the water you pump out, you're repumping water into the
system. So that's something that can extend the lifetime and the
potential of the area as well. So that's one area. But the deep
drilling — we've had projects here in the past that are still
ongoing in terms of drilling much deeper and getting like super
hot conditions. And honestly, these are types of projects that
could really bring a revolution for the geothermal industry. And
what I find fascinating is too if you look at what is happening
in the geothermal industry, is that you're seeing more and more
of oil companies looking at this industry.


Originally, the technology comes partially from that industry. A
lot of the technology, and I should mention because we're talking
about earlier, how the transition went from A to B and so forth.
I mean, it was a major undertaking at the time because at the
time geothermal was not a plug and play technology, it was like a
big innovation project. And we're speaking about Icelanders being
few, we're speaking about not having a very educated workforce.
So it's actually an incredible journey that this actually
happened. But in terms of going back to the field today, the oil
and gas sector is looking at geothermal as a part of their
transition.


And there's a lot of win-win through collaboration there because
technology, funding, the research part of it all can play a role.
And you see that if you look at who are the biggest investors in
the geothermal expansion in China, for instance, it's Sinopec. If
you think about other players, Chevron has been investing in
geothermal in Europe, I think Shell had a similar venture.


Drilling is their thing, so —


And the geothermal industry has suffered from — because it's an
upfront cost technology. So maybe there's a potential to make
sure that geothermal takes off as a part of our green transition
by utilizing some of these funds and expertise and at the same
time help cities and towns around the world to become less
dependent on other types of fossil fuels.


David Roberts


Yeah, and so politics, it's the one thing I haven't really looked
into at all since I've been here. I've just been talking to
businesses and so I don't have a good sense of Iceland politics,
but it seems like there's a weird — something I haven't
encountered anywhere else, which is a kind of consensus and
unanimity and long-term thinking and planning. Everyone moving
together, everyone having the same goal. Are there political
controversies around energy? Or is politics just are the fights
elsewhere? Are there controversial things in the energy
transition?


Halla Hrund Logadóttir


So I mentioned that completing the energy transition, different
parties are unified around that goal. And people are extremely
proud of the geothermal history. And actually, geothermal, I
mean, it's been a part of our foreign policy. We've educated
thousands of people across the planet on geothermal. I think we
participated in almost all geothermal power plants that have been
built elsewhere than in Iceland. So it's a big part of our
identity and our expertise, our contribution to energy transition
elsewhere as well. But the controversies, like in other
countries, there's controversies when it comes to development of
projects in terms of nature conservation versus development, even
though it's renewable energy projects.


There's controversies around utilization, what type of end users
should we be attracting, and so forth. So these are examples of
areas that have been debated, and there's an ongoing debate in
many of these fields. But I think the good news is that having
such debates is an important and healthy part of the process. As
long as we're all aiming to the same goal and the same
destination.


David Roberts


What is the statutory goal? What are your targets, officially
speaking?


Halla Hrund Logadóttir


Basically, so our energy policy aims that we become completely
oil-free, if you will, by 2050, and with a coalition agreement
that was actually moved a decade earlier. So that's really soon,
and we're going to see how we manage.


David Roberts


So the goal is to close that 15% gap by 2040.


Halla Hrund Logadóttir


Yeah, but I mean —


David Roberts


That's pretty close.


Halla Hrund Logadóttir


Yeah, that's very close. I think the helpfulness of these
ambitious goals is that it definitely starts to move the society.
And there's so many factors that need to come together for the
final 15% to close. You need the businesses to be willing, you
need the fishing companies to be willing to retrofit or invest in
new shipping. You need the tour industry on board, you need all
of these different players. And then you need to make sure that
the infrastructure is developed, and you need to make sure that
energy producers and sellers are aiming towards the same goal.


And the beauty of having the timelines quite tangible and close
in time is then the goals become real.


David Roberts


That's very real. That's very real.


Halla Hrund Logadóttir


Yeah.


David Roberts


I've encountered quite a lot of pride among the people I've
talked to. One thing I keep hearing is Iceland leads the world in
clean energy per capita, right? Because there's so few people. So
there's relatively so much clean energy and relatively so much
innovation relative to the population really fighting above your
weight class or whatever the analogy is.


Halla Hrund Logadóttir


Yes.


David Roberts


Well, thank you so much for taking all this time. It's been super
interesting coming here and talking to people, and it's been
really impressive. So thanks for wrapping it up for us.


Halla Hrund Logadóttir


Thank you so much. And we'll try to continue the path, hopefully
collaborate with as many as possible. And I think it's punching
above your weight. No?


David Roberts


Punching above your weight. Thank you. It's funny that you know
the Americanism better than I do.


Halla Hrund Logadóttir


Fantastic to have you. Thank you so much.


David Roberts


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