Petrol and diesel will become a part of history


Iceland has everything it takes to make the shift from energy dependence to energy independence. Our goal is to be among the first in the world to achieve zero net carbon emissions or at least, by no later than by 2050.

“Iceland has everything it takes to make the shift from energy dependence to energy independence. Our goal is to be among the first in the world to achieve zero net carbon emissions or at least, by no later than by 2050. Petrol and diesel-powered vehicles must become a part of our history, replaced by alternatives such as electricity and hydrogen. Taking these steps will enable us to fulfil society’s future energy needs in a sustainable manner” said Þórdís Kolbrún Reykfjörð Gylfadóttir, Minister of Tourism, Industry, and Innovation, at Landsvirkjun’s open meeting on new, green energy opportunities.

The Minister referred to Iceland’s new Energy Policy, published last October, which gives a clear picture of Iceland’s sustainable energy future. “The development of the Policy was supported by cross-political consensus and close cooperation with the various stakeholders, as we become increasingly aware of the necessity of creating long-term plans for energy development and the environment. We are pleased to see that Landsvirkjun is exploring many exciting opportunities in line with the new Energy Policy. We already utilise various natural resources such as waterfalls, wind, and geothermal energy to produce green energy, but we need to prepare for a complete energy transition on land, air, and sea.”

Hörður Arnarson, Landsvirkjun’s CEO, stated that Iceland could lead the way to a potentially fossil-free world and that its energy industry should be at the forefront of progress. “We have a strong foundation because 80% of our primary energy is already sustainable. However, we must also remain committed to seeking out innovative ways to utilise green energy. I agree with the Minister when she says that the Energy Policy, developed with broad consensus, is of tremendous importance. The policy promises us the full support of the government throughout the next decades of this energy transition, ensuring a clean, green future.”

Data centers, batteries and food production

Klemenz Hjartar, a partner at McKinsey & Co, stated that Iceland’s advantage in the energy sector could be compromised by the ongoing development of increasingly cheaper renewable energy options such as wind energy. Competing with these options will require innovation, new regulatory frameworks, and job opportunities. Icelanders must decide if they wish to maintain control of their energy matters or become mere puppets, reliant on the decisions of others.

Ríkarður Ríkarðsson, Executive Vice President of Landsvirkjun’s Business Development and Innovation, stated that Iceland had previously undergone an energy transition when geothermal heating was first introduced in the early 20th century and that cross-political consensus has now been reached on achieving zero net carbon emissions in Iceland by 2050. He drew attention to the fact that the current energy system represented Iceland’s largest contribution to this goal and emphasised the numerous possibilities ahead.

Haraldur Hallgrímsson, Director of Sales and Business Development at Landsvirkjun, noted that Iceland purchased 680 thousand tonnes of fossil fuels in 2018 at a cost of ISK 50 billion. He commented that boldness and cooperation at both the national and international level could incentivise Icelandic green programs such as hydrogen production, creating a new export industry.

Vala Valþórsdóttir, Business Development Manager at Landsvirkjun, spoke about the energy-intensive data center industry. She drew attention to the fact that Iceland offers the industry access to 100% renewable energy sources and lower energy use than elsewhere due to the cold Icelandic climate. She stated that the industry is expected to grow by 9% each year and Landsvirkjun could face fierce competition.

Dagný Jónsdóttir, Business Innovation Manager at Landsvirkjun, said that there was a significant increase in the demand for batteries, mostly due to the rapid rate of vehicle electrification worldwide. A tenfold increase in electric vehicles is expected by 2030, which would mean a rapid decrease in carbon emissions. She commented that Landsvirkjun has seen a growing interest in battery production and the industry could become a key market for Iceland, due to its ideal geographical location.

Sigurður H. Markússon, Business Innovation Manager at Landsvirkjun, said that global food production has reached a plateau. The industry utilises 37% of the world’s vegetation and 70% of its freshwater resources and future production will be controlled by a high-tech environment. He commented that sustainable food production could provide Iceland with various opportunities, but the industry would need to focus on export, much like the Icelandic fisheries industry, as it is currently too small-scale to justify the cost of production.