Iceland's Visionary Energy Policy

Reykjanesbaer, Iceland -- On this dramatic black lava-lain and volcano-dotted peninsula, the sub-arctic Atlantic mist can chill the air even on a sunny spring day. So I strip off my clothes, don my favorite bathing trunks and jump into the steaming wastewater of the local electric power plant.

No, I don't risk harming my health in any way. The effluent pool -- known as the Blue Lagoon and frequented by locals and transcontinental travelers alike -- is pollution free. So is the adjacent Sudurnes power plant.

As I bask up to my neck in the turquoise, silica-rich water, I curse the fact that no one in America will be swimming in utility effluent any time soon. That is, if the Bush administration has its way.

Compared to the what Icelanders have been doing for the past several decades, the Bush administration's national energy plan seems nothing more than a vintage example of bad linear thinking. Build, drill and burn is the mantra of the plan, which was unveiled in May and is now working its way through Congress. There's an energy crisis, the administration argues, and what we're doing today isn't working, so we ought to do even more of it. Caribou be damned, we need petroleum from the Arctic National Wildlife Refuge. Global climate change be damned, voters in key swing states have coal to sell. The American lifestyle is sopping up unprecedented quantities of electrons, so we must build 1,300 new power plants! Build, drill and burn.

But the Blue Lagoon and the Sudurnes power plant that feeds it are proof that there is vast potential for creativity in the energy sector if we're willing to look beyond fossil fuels.

The plant produces cheap, reliable and sustainable electricity by tapping geothermal steam from thousands of feet below the Earth's surface to drive its turbines. Unlike conventional utilities, it doesn't burn anything. You could live next door, breathe the air, and bathe in its effluent for decades without worrying about the lung disease or nerve damage that you might get from one of the dirty coal-fired power plants that generate most of America's energy.

In addition to generating electricity, the Sudurnes plant makes hot water for local communities. It does this through "cogeneration," a simple technology which heats fresh water using the waste steam. In the U.S. most utilities discard this steam, and as a result they are only about half as efficient as Sudurnes. In other words, an American power plant burns about twice as much fuel per unit of energy produced.

Sudurnes is not unique in Iceland. Reykjavik Energy, which powers the capital, also exploits geothermal energy and makes hot water. Not only do residents pay low energy rates for their clean energy, but the company has enough water left over to supply an extensive network of heated public pools -- complete with Jacuzzi-like "hot pots" where, legend has it, most of the country's important decisions are made.

Iceland has spent the last half century doing precisely what the Bush administration's plan treats as a far-fetched dream of eco-quacks: reducing pollution; weaning itself from fossil fuels and building a sustainable, locally self-sufficient energy infrastructure. In recent years, every electron that has coursed through Iceland's grid has been produced without fossil fuels. The country is prospering, not in spite of, but because of these efforts, which have been good for the environment, but also for national security and the economy. This resource-poor country no longer spends billions importing stuff to burn.

Skeptics might point out that, thanks to its location on the crest of the volcanically active Mid-Atlantic Ridge, Iceland has extensive geothermal capacity. But Icelandic engineers argue that any project in their country is complicated: imagine what it's like on a sparsely populated island on the Arctic Circle and in the middle of the Atlantic that has almost no natural resources. There's hardly even a tree to be found.

Icelandic engineers can only dream of the vast resources we have in the U.S. There's huge potential in the ceaseless wind of the Great Plains and the irrepressible sun of the Southwest. There are the mass-production economies of a market nearly 270 million people strong -- a thousand times bigger than Iceland. And then there's the human capital of MIT, Stanford, the National Renewable Energy Laboratory and a other great research institutions. It's not that Icelanders have been dealt a plum hand, engineers say. It's that they've made the most of the hand they were dealt.

Maybe it's time for Vice President Dick Cheney to lead a fact finding mission here.

Engineering an End to "Hydrocarbon Man"

Having conquered power plant pollution, Iceland last year declared that it intends to be first in the world to convert to a hydrogen-based economy, and to eliminate its net emissions of greenhouse gases. That means doing away with the country's last remaining major source of pollution: the engines in automobiles. How will they do this?

An hour's drive through the lava fields from Sudurnes, in a barren second floor office in an industrial section of Iceland's capital city, Jon Skulason busies himself engineering the transition from Hydrocarbon Man to Hydrogen Man. Commercially viable hydrogen fuel cells, Skulason says, are within reach, and are poised to replace the fossil fuel-burning internal combustion engines that revolutionized life in the 20th century.

Hydrogen fuel cells promise to be no less revolutionary. They harness electricity generated when hydrogen gas is exposed to oxygen. Since hydrogen and oxygen form water, there is no pollution, Skulason explains. And these highly efficient motors are quiet and powerful.

Strewn across his desk are the plastic folders with correspondence from multinational corporations: Ballard Power Systems, which engineers fuel cells, DaimlerChrysler, which has incorporated them into vehicles, and Shell Hydrogen, which will provide the fuel. The project will start modestly. Next year, three fuel cell buses will ply the streets of Reykjavik. Skulason shows me a schematic for the first fuel cell filling station, which will produce the hydrogen gas on location, eliminating the need to transport fuel.

Hydrogen is not an energy source per se, but rather a means of storing energy produced elsewhere. It must be manufactured, which requires a raw material and energy, and therefore can produce some pollution. Iceland, however, will use its clean electricity and water, so running vehicles on hydrogen fuel cells will be pollution free. (In contrast, using coal-generated electricity and methane as a raw material would produce pollution, but considerably less than gasoline powered engines.)

In 2004, Iceland will begin buying cars from DaimlerChrysler. Initially the cars will belong to businesses or government fleets that can be fueled centrally, before enough of the country's 250 filling stations provide hydrogen. Eventually, Skulason sees Iceland building the world's first fuel cell fishing vessels. The country earns 70 percent of its export revenues from fishing, so converting the ships to hydrogen will help cut greenhouse gas emissions.

Moving beyond fossil fuels has long been an urgent matter for Iceland, and for good reason.

In geologic time, Iceland is a mere infant. At 2 million years of age, the volcanic island is among the world's youngest landmasses, so there are no fossil fuels. Importing every hunk of coal and drop of petroleum was a strain on the economy in the first half of the 20th century, and became particularly risky during World War II. Moreover, Reykjavik had a major smog problem, and the pollution was harming the vital fishing industry.

The U.S. today suffers from problems similar to Iceland's: our energy consumption is environmentally destructive, and we are precariously dependent on foreign sources of fuel. While the Bush administration has largely been hostile to the first issue, its energy plan makes the latter one abundantly clear, with multiple graphs projecting yawning excesses of demand and shortfalls of capacity.

Fossil fuels are the bedrock of our economy and lifestyle, and right now that bedrock is crumbling. Formerly the world's biggest oil producer, we now import more than half of what we consume, contributing more than $90 billion in 2000 to the $375 billion trade deficit, far more than any other single import. That hands OPEC a choke collar around the U.S. economy.

The prospects for natural gas aren't much better. Prices are already volatile, and while no one knows how much we have left, the imported portion is growing each year, leading analysts to ask whether we will soon be precariously dependent on foreign suppliers.

Coal is cheap and abundant. But miners must resort to increasingly desperate measures -- like removing the tops of whole mountains in West Virginia. Worse yet, it is an implacable source of air pollution, contributing to smog and, more than any other fuel, to climate change.

The administration also advocates nuclear power (perhaps because the industry generously supported President Bush's campaign). But no one has filed a permit application for a new nuke in 20 years, and it's unlikely that, in the deregulated market, any investor could raise financing for this dangerous and costly technology. Meanwhile, the nation already faces a nuclear waste disposal tab that will exceed $50 billion -- that is, if a long-term solution is ever really found.

By the administration's own estimates, energy demand will grow 32 percent by 2020. That means that the environmental and economic problems from fossil fuels will only get worse. Imagine how bad the situation will get if, as the energy plan suggests, we build a conventional power plant every week for the next 20 years, yoking future generations with last century's technology. Building, drilling and burning might forestall the problem, but it won't solve it.

Instead, the administration would do well to take a close look at Iceland's accomplishments.

For starters, the federal government could help bring hydrogen vehicles to market. Washington supports some research, but it lacks a national policy to promote fuel cell commercialization, like California's zero-emission vehicle standard, which will no doubt be needed as a catalyst.

Moreover, the country could exploit more geothermal energy. Karl Gawell, the executive director of the Geothermal Energy Association in Washington, D.C., points out that with today's relatively crude know-how, the U.S. could economically increase tenfold the 2,200 megawatts of geothermal energy we currently tap. And with some basic research we could increase that supply far more. Gawell laments that the federal government spends only $20 million per year on geothermal research (a pittance compared to the 15-year, $5.4-billion "clean coal" boondoggle or other breaks for the fossil fuel industry). Yet, the Bush administration has actually tried to cut funding for these technologies, preferring to pour billions into a missile defense system (betting, of course, that when the next generation of oil-wealth-spoiled Osama bin Ladens vents its "implacable hatred for the U.S." they choose missiles rather than dinghies).

Iceland has an energy policy, and the Icelandic people are better off for it. Bush has offered us a fossil fuel promotion policy that entrenches the status quo. Americans are worse off for it.

And yet the administration's policy is hardly surprising, guided dutifully as it is by the compass of the fattest campaign contributors. If this were the end of the Stone Age, and stone magnates were the biggest political donors, Bush and company would no doubt advocate on their behalf as well.

David Case is executive editor of

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