This is the content of Saving Iceland’s first round of brief monthly news from the struggle over Iceland’s wilderness and connected struggles around the world.

Hellisheiði: Asthma, Sulphur Pollution and Effluent Water Lagoon

Those who promote large-scale geothermal energy production as green and environmentally friendly, are once again forced to face another backlash as a recent research suggests a direct link between sulphur pollution from the Hellisheiði geothermal plant and asthma among the inhabitants of Reykjavík. The results of this particular research, which was done by Hanne Krage Carlsen, doctorate student of Public Health at the University of Iceland, were published in the Environmental Research journal earlier this year, showing that the purchasing of asthma medicine increases between 5 and 10 percent in accordance with higher sulphur pollution numbers in the capital area of Reykjavík.

Adding to the continuous unmasking of the geothermal green myth, environmentalist Ómar Ragnarsson recently discovered and documented new lagoons, created by run-off water from Reykjavík Energy’s geothermal power plant in Hellisheiði. At first Reykjavík Energy denied that the lagoons’ water comes from the company’s power plant, but were forced to withdraw those words only a few days later. Ómar had then brought a journalist from RÚV, the National Broadcasting Service, to the lagoons and traced the water to the plant. Despite the company’s withdrawal, they nevertheless rejected worries voiced by environmentalists, regarding the very possible pollution of ground water in the area, and insisted that this is allowed for in the plant’s license.

According to the plant’s license the run-off water should actually be pumped back, down into earth, in order to prevent polluting impacts and the creation of lagoons containing a huge amount of polluting materials. Ómar’s discovery shows that this is certainly not the case all the time, and additionally, the pumping that has taken place so far has proved to be problematic, creating a series of man-made earthquakes in the area, causing serious disturbances in the neighbouring town of Hveragerði.

In an article following his discovery Ómar points out that for the last years, the general public has not had much knowledge about geothermal power plants’ run-off water, and much less considered it as a potential problem. Ómar blames this partly on the Icelandic media, which have been far from enthusiastic about reporting the inconvenient truth regarding geothermal power production. One of these facts is that the effluent water, which people tend to view positively due to the tourist attraction that has been made of it at the Blue Lagoon, is a token of a serious energy waste, as the current plants use only 13% of the energy while 87% goes into the air or into underutilized run off-water. These enlarging lagoons — not only evident in Hellisheiði but also by the geothermal power plants in Reykjanes, Svartsengi, Nesjavellir and Bjarnarflag — suggest that the energy companies’ promises regarding the pumping of run-off water, are far from easily kept.

The Fight Over Iceland’s Energy Master Plan Continues

During the last few weeks, the Icelandic Parliament’s Industries Committee received 333 remarks in connection with the committee’s work on a parliamentary resolution for Iceland’s Energy Master Plan. The resolution, which was presented by the Ministers of Industry and of Environment in April this year, gives a green light for a monstrous plan to turn the Reykjanes peninsula’s geothermal areas into a continuous industrial zone.

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 Reykjanes plans. 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 much-debated Þjórsá dams and other hydro power plants were still included in the exploitation category. Saving Iceland has published one of the remarks, written by Helga Katrín Tryggvadóttir, which differs from these two groups as it evaluates energy production and nature conservation in a larger, long-term context.

During the process, the head of the Industries Committee, Kristján Möller — MP for the social-democratic People’s Alliance, known for his stand in favour of heavy industry — ordered and paid for a remark sent by management company GAMMA. The company first entered discussion about one year ago after publishing a report, which promised that the national energy company Landsvirkjun could become the equivalent of the Norwegian Oil Fund, if the company would only be permitted to build dams like there is no tomorrow.

In a similarly gold-filled rhetoric, GAMMA’s remark regarding the Energy Master Plan states that the changes made by the two ministers — which in fact are the results of another public reviewing process last year — will cost Iceland’s society about 270 billion ISK and 5 thousand jobs. According to the company’s report, these amount are the would-be benefits of forcefully continuing the heavy industrialization of Iceland, a plan that has proved to be not only ecologically but also economically disastrous. Seen from that perspective, it does not come as a surprise realizing that the management company is largely staffed with economists who before the economic collapse of 2008 lead the disastrous adventures of Kaupþing, one of the three biggest Icelandic bubble banks.

Alterra Power: Decreases Revenue, Enlargement Plans in Iceland

Canadian energy company Alterra Power, the majority stakeholder of Icelandic energy company HS Orka, recently published the financial and operating results for the first quarter of this year. “Consolidated revenue for the current quarter was $16.4 million compared to $18.9 million in the comparative quarter,” the report states, “due to lower revenue from our Icelandic operations as a result of lower aluminium prices, which declined 13.9% versus the comparative quarter.”

At the same time, the company’s Executive Chairman Ross Beaty stated that Alterra is preparing for an enlargement of the Reykjanesvirkjun geothermal power plant, located at the south-west tip of the Reykjanes peninsula, which should increase the plant’s production capacity from the current 100 MW to 180 MW. The construction is supposed to start at the end of this year and to be financed with the 38 million USD purchase of new shares in HS Orka by Jarðvarmi, a company owned by fourteen Icelandic pension funds.

According to Alterra, permission for all construction-related activities is in place. However, as Saving Iceland has reported, Iceland’s National Energy Authority has officially stated their fears that increased energy production will lead to an over-exploitation of the plant’s geothermal reservoir. Furthermore, Ásgeir Margeirsson, Chairman of HS Orka, responded to Alterra’s claims stating that due to a conflict between the energy company and aluminium producer Norðurál, the construction might not start this year. According to existing contracts, the energy from the enlargement is supposed to power Norðurál’s planned aluminium smelter in Helguvík. That project, however, has been on hold for years due to financial and energy crisis, and seems to be nothing but a fantasy never to be realised.

Greenland: Cheap Chinese Labour and Toxic Dumping

The home rule government of Greenland is split in their stand on Alcoa’s plans to import 2 thousand Chinese workers for the construction of the company’s planned smelter in Maniitsoq. The biggest governing party, Inuit Ataqatigiit, is against the plan as the workers will not be paid the same amount as Greenlandic labour. On the other hand, the Democratic Party, which has two of the government’s nine ministerial seats, is in favour of the plans on the grounds that the workers’ working condition and payments will be better than in China.

In Iceland, during the construction of the Kárahnjúkar dams and Alcoa’s aluminium smelter in Reyðarfjörður, Chinese and Portuguese migrant workers were imported on a mass scale. More than 1700 work-related injuries were reported during the building of the dams, ten workers ended up with irrecoverable injuries and five workers died. In 2010, the Occupational Safety and Health Authority stated that the Kárahnjúkar project was in a different league to any other project in Iceland, with regard to work-related accidents.

At the same time as Greenland’s government argued over Alcoa, Danish newspaper Politiken reported that the Scottish oil company Cairn Energy — a company that, along with Indian mining giant Vedanta, shares the ownership of oil and gas company Cairn India — is responsible for dumping 160 tons of toxic materials into the ocean in the years of 2010 and 2011. The dumping is linked to the company’s search for oil off Greenland’s shore and is five times higher than the amount of comparable materials dumped in 2009 by every single oil platform of Denmark and Norway combined.

Treated as the Master Plan’s trash can, the unique geothermal areas on the Reykjanes peninsula get a particularly harsh deal. Out of the peninsula’s nineteen energy potential areas, only three are listed for protection while seven are set for exploitation in addition to the four that have already been harnessed. Five additional areas are kept pending, more likely than not to be set for exploitation later. Existing plans for energy production outline how the peninsula is set to be turned into a single and continuous industrial zone, and the power companies seem to be simply waiting for a further green light to exploit the area. All this in order to further feed the aluminium industry.

In this overview we take a look at nine of these nineteen areas — those from the west of Gráuhnúkar — of which only one is to be protected according to the Master Plan. We look at the plans on the drawing board, their current status, the key companies involved, the already existing power plants, the threatened areas, and at last but not least: possible targets for direct action. On the map below, these areas are marked from number one to nine. Obviously the map only shows the areas at stake and the reader has to use her or his imagination to fill in power lines and the rest of the necessary infrastructure. Most of the following photos are taken by Ellert Grétarsson — click here and here for more of his photos.

Unmasking the Geothermal Myth

In a world increasingly concerned about carbon emissions,” Jaap Krater and Miriam Rose state, “the clean image of hydroelectric and geothermal energy is appealing.” This has certainly been the case in Iceland, where the highly polluting aluminium industry has attempted to re-model their dirty image by powering their production with so-called ‘green energy’. However, this greenwashing has not entirely worked as the eastern highland’s Kárahnjúkar dams — fully built in 2007 to power an Alcoa aluminium smelter in Reyðarfjörður — have proven to be as ecologically and economically disastrous as environmentalists warned. As a result the aluminium companies have now mostly moved from hydro and instead are increasingly focussing on geothermal energy.

One of the companies is Norðurál, subsidiary of Century Aluminum, who claim that their planned 360 thousand ton aluminium smelter in Helguvík will be one the world’s most environmentally friendly smelters. Why so? Because according to the company, the 625 MW of electricity required to run a smelter of this size is supposed to come only from the peninsula’s geothermal energy sources. However, environmentalists and scientists consider the estimation of geothermal energy believed to be extractable from the peninsula to be highly over-estimated, and claim that additional hydro power plants would be needed to power the smelter. This would most likely come from the much-debated and now temporarily halted dams in the river of lower Þjórsá.

Last year, unable to access the necessary geothermal energy in north Iceland, aluminium company Alcoa was forced to withdraw their six years long plan to build a geothermal powered smelter at Bakki, Húsavík. We predict that if Century cannot force through the damming of lower Þjórsá a similar situation awaits Helguvík. But that has not stopped the project’s interested parties, who still state confidently that the smelter will be built, and powered with geothermal energy.

Regardless of the need for additional hydro power, the exploitation of the Reykjanes peninsula’s geothermal areas spells the end of this magnificent nature of the peninsula as we know it. Test drilling and boreholes, endless roads and power lines, power plants and other infrastructure; all this would turn the Reykjanes peninsula — this unique land of natural volcanic wonders, which many scientists and environmentalists believe to be one of the world’s best options for creating a giant volcano park with educational and tourism-related opportunities — into a large industrial zone.

But these are only the very visible impacts of the planned large-scale exploitation. Other environmental catastrophes are in fact inevitable with large scale geothermal industry, becoming increasingly visible to the public as the green reputation of geothermal energy slowly decreases.

Two of Saving Iceland’s spokespersons — ecological economist Jaap Krater and geologist Miriam Rose — have thoroughly analysed the development of Iceland’s geothermal potential in a chapter, written on behalf of Saving Iceland, and recently published in a book on the current energy crisis. While we strongly recommend the piece for further reading about the geothermal myths, a few of their points will be addressed here, with relevance to recent events in Iceland.

Firstly, geothermal gases are rich in a variety of harmful elements and chemical compounds such as sulphur dioxide, whose impacts are systematically underestimated according the Public Health Authority of Reykjavík. Since production began at the Hellisheiði geothermal power plant — often claimed to be the biggest of its kind in the world — in 2006, a 140 percent increase of sulphur pollution has been measured in the capital area of Reykjavík, only 30 kilometres away. Recent studies, conducted by the University of Iceland, suggest a direct link between increased sulphur pollution on the one hand, and increased use of medicine for asthma and heart disease ‘angina pectoris’ on the other hand. However, engineering firms such as Mannvit, authors of many of the Environmental Impacts Assessments for geothermal power-plants, have so far ignored these studies and instead based their assessments on so-called prediction models. (Read more about the sulphur pollution here and here.)

Secondly, at the end of last year it was revealed that for two years energy company Reykjavík Energy — who own and operate the Hellisheiði plant — had on occasions been pumping waste water containing hydrogen sulphide into drinking water aquifers. Sulphides are far from being the plants’ only damaging effluents entering our water system; Krater and Rose mention that “geothermal fluids contain high concentrations of heavy metals and other toxic elements, including radon, arsenic, mercury, ammonia, and boron.”

Thirdly, it is suggested that depletion of one geothermal reservoir can result in the drying up of surrounding hot spring areas. While large-scale exploitation in Iceland is probably too young to witness these effects, environmentalists and geologists have warned that exactly this will happen in the Reykjanes peninsula if the existing plans go ahead.

The Key Companies Involved

HS Orka

HS Orka is an energy company that owns and operates two geothermal power plants on the peninsula — Reykjanesvirkjun and Svartsengi — the majority of who’s energy goes to Norðurál’s aluminium smelter in Grundartangi, Hvalfjörður. HS Orka’s majority shareholder is Magma Energy Sweden A.B., a puppet company of the Canadian firm Magma Energy, which was established to get around laws that prevent non-Europeans from buying Icelandic companies. After Magma’s 66,6% share, the remaining 33,4% is owned by Icelandic pension funds.

Before privatisation HS Orka (then called Hitaveita Suðurnesja) was owned fifty-fifty by the Icelandic state and several municipalities on the country’s south-west coast, but in 2007 the state’s share was sold to a private company named Geysir Green Energy (GGE). Following laws passed in 2008, regarding the separation of private energy production from competitive operations, the company became two different firms — HS Veitur and HS Orka — of which the latter takes care of energy production and sales. Bit by bit, GGE bought up two thirds of HS Orka’s shares. In 2009, GGE sold extra 10% to Magma Energy, which at the same time bought 32% from another energy company, Reykjavík Energy, and the nearby municipality of Hafnarfjörður. At this point GGE owned 55% of HS Orka and Magma owned 43%.

Harsh criticism arose over these deals which were effectively privatisation of Iceland’s natural resources, including a campaign led by pop-singer Björk and Eva Joly, the recent French Green Party presidential candidate, who at that point served as the Icelandic center-left government’s special financial advisor, following the general elections in 2009. Asked if the company was considering majority stake in HS Orka, Magma’s CEO Ross Beaty replied with a straight “no”. He then emphasised that the company would not buy more than 50% of the shares, as had officially been accepted by Iceland’s government, calling this “a rather awkward business position but certainly something that we feel can be workable.”

However, in 2010 Geysir Green Energy sold all their shares to Magma, which now owned 98.5% of HS Orka. A year later Magma sold 25% to Jarðvarmi slhf, a company owned by fourteen Icelandic pension funds, which a little later bought additional 8.4%. At last, Magma bought the 1.5% still owned by four different municipalities. Thus Magma holds 66.6% of the shares today, while Jarðvarmi owns 33.4%. The land use rights held by Magma allow for 65 years exploitation with an option to extend this for another 65 years.

Alterra Power

Just as the name could not have been coloured with more controversy and scepticism, Magma Energy merged with Plutonic Power and became Alterra Power, a company traded on the Toronto Stock Exchange. The new company’s Executive Chairman Ross Beaty, said that the merger would “strengthen both companies and […] create a larger, more diversified renewable energy company.” He further stated: “Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company’s shareholders.”

Alterra Power already operates geothermal, hydro and wind power plants in Nevada and British Columbia, which together with the Iceland plants have the energy capacity of 570 MW. In the company’s own words, they have a “strong financial capacity to support [their] aggressive growth plans,” which include geothermal plants in Chile and Peru. Such Latin-American adventures are certainly not new to the company’s key people, as Ross Beaty founded and currently serves as Chairman of one of the world’s largest silver producers, Pan American Silver, with some of its mines in Peru.

For the last three decades in fact Beaty has founded and divested a series of mineral resource companies, but has now shifted his focus to the ever-enlarging economy of ‘green energy’. As he explained himself: “This time around I wanted to build something green, so I looked at geothermal and it was just perfect, it just fit”. When confronted with the possibility that he and his company were taking advantage of Iceland’s economic collapse — a theory supported by the words of John Perkins, the author of ‘Confessions of an Economic Hitman’ — he called such ideas “ignorance and complete nonsense.” Only a few months later, he nevertheless said to Hera Research Monthly, an online investment newsletter, that “going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.”

Norðurál

Norðurál is a subsidiary of North-American aluminium producer Century Aluminum, whose largest shareholder is commodity broker Glencore International, a company that controls almost 40% of the global aluminium market. Glencore is mostly known for its many tentacles of corruption and worldwide human rights and environmental violations — most recently manifested in the exposure of child-labour in the company’s copper mines in the Democratic Republic of Congo, as well as the dumping of acid into a river at another site in the same country.

Norðurál currently operates an aluminium smelter in Hvalfjörður, which was fully built in 1998 despite harsh opposition by the fjord’s inhabitants. The smelter has been enlarged in a few phases, seeing the production capacity going from the original 60 thousand tons per year, to the current 278 thousand tons. Since 2004, the company has invested 20 billion ISK into building another Iceland smelter, in Helguvík on the north-west tip of the Reykjanes peninsula. According to the project’s Environmental Impact Assessment (EIA), the smelter is supposed to be powered solely by the peninsula’s geothermal energy — a claim that environmentalists and geologists have seriously questioned.

In April 2007, HS Orka signed a contract with Norðurál, promising the latter company 150 MW of energy for the Helguvík smelter’s first phase, supposed to be extracted by the planned expansion of the Reykjanesvirkjun geothermal power plant. Three years later, when no energy had been made available, the aluminium company filed charges against HS Orka for non-compliance. The conflict ended up in an arbitration court in Sweden, the registered home country of HS Orka’s owner, Magma Energy Sweden. Officially the conflict was presented to the public as a matter of energy prices but in late 2011 the court ruled that HS Orka is obliged to provide Norðurál the originally agreed-upon energy, suggesting that the conflict had to do with more than prices.

Already Existing Power Plants

Reykjanes

Reykjanesvirkjun is a 100 MW plant, owned by Alterra Power, whose energy partly powers Norðurál’s smelter in Hvalfjörður. It is located on 410 hectares of land located at the south-west tip of the peninsula. The company has plans for at least an 80 MW expansion of the plant, which is supposed to take place in two 50 and 30 MW phases, that according to HS Orka should both be completed in 2013.

However, following conditions set by Iceland’s National Energy Authority (NEA) last year, the expansion plans have become a bit more complicated. In order for it to happen, at least 30 out of the 50 MW included in the first phase have to come from another area than currently planned. Further extraction in the already exploited area would simply be unsustainable and decrease the area’s capacity. Geologist Sigmundur Einarsson actually believes that the field is already over-exploited. His claim is based on studies from 2009, by the very same NEA, which state that the area’s long-term sustainable production capacity is hardly more than 25 MW.

Svartsengi

The Svartsengi plant is operated by HS Orka and is located on 150 hectares of land owned partly by the municipality of Grindavík and partly privately. Next to it stands the Blue Lagoon, a tourist attraction created by the brine pollution from the power plant. The plant is a combined electricity and heat plant with a current electric power capacity of 75 MW, of which most goes to Norðurál’s smelter in Hvalfjörður.

The Threatened Areas

Eldvörp

The Master Plan gives a green light for the exploitation of Eldvörp, a 15 km long row of craters, located four km south-west of Svartsengi. Svartsengi and Eldvörp are thought to share a geothermal aquifer, which many claim to be fully exploited already. Thus even the smallest energy production would be unsustainable. Alterra Power still has plans to build a 50 MW power plant in Eldvörp, for which both research and utilization leaves have been granted. The planned plant is on land owned by the municipality of Grindavík, which apparently is about to finish the required land use plan enabling the project to take place.

The geothermal field is situated at the heart of the row of craters. There are only a few signs of geothermal activity on the actual surface, only fumaroles the lavafield and steam wisps when the weather is mild. One single borehole has already been constructed close to one of the craters at the centre of Eldvörp. It’s environmental impact is very limited compared with the impacts of the planned over-all drilling and the appendant pipelines, power lines, roads, powerhouse separator building. Such construction will have enormously destructive impacts on both natural and cultural relics in the area, including the row of craters and the Sundvörðuhraun lavafield.

Stóra-Sandvík

Stóra-Sandvík is a unique geothermal field in a coastal area close to the municipalities of Grindavík and Hafnir, as well as to the Reykjanesvirkjun plant, which in itself should be reason enough to move it from the exploitation category and instead to protection.

Krýsuvík

This geothermal area consists of four subfields — Sandfell, Trölladyngja, Sveifluháls and Austurengjar — which all connect to the same volcanic system, usually just named Krýsuvík. The geothermal activity is located at the margins of the system’s fissure swarms, while the Núpshliðarháls tuff ridge lies closer to its centre, with thousands of years old lava flats and eruptive fissures on both sides. Where the tuff has tightened due to geothermal transformations, small streams flow on to the lavafields and have thus created vegetated areas such as Höskuldsvellir, Selsvellir, Vigdísarvellir and Tjarnarvellir. As from the west of Hellisheiði, hardly any water runs on the surface of the whole Reykjanes mountain range, save the above-mentioned areas of Krýsuvík.

Interestingly, Krýsuvík is directly linked to what many consider to be the origins of environmentalism in Iceland. A geologist and environmentalist named Sigurður Þórarinsson, who had often voiced his concerns regarding Icelanders’ treatment of the country’s natural environment, had become seriously alarmed by what he witnessed by the Grænavatn maar in Krýsvík. It was, Sigurður said, used as a trash can for construction projects in the nearby area. At a meeting at the Icelandic Ecological Society in 1949, Sigurður suggested the creation of a legislation regarding nature conservation. Shortly afterwards, he was asked to take part in designing the legislation, which was passed in 1956 — the first in Iceland’s history. (Read about Sigurður Þórarinsson here.)

Out of the four Krýsuvík areas, the Energy Master Plan allows for the exploitation of Sandfell and Sveifluháls, while Trölladyngja and Austurengjar are supposed to be pending until the results of drilling in the two former areas are known. The National Energy Authority claims that these combined 89 km² of land should have the production capacity of 445 MW of energy for 50 years, and as such be Iceland’s third most powerful geothermal field after the Hengill and Törfajökull areas. However, independent scientists and environmentalists have seriously questioned these figures, believing the area’s maximum possible production capacity to be 120 MW for 50 years.

Sandfell

Sandfell area is a semi-unspoiled volcanic area of lavafields and tuff mountains, large vegetated flatlands, and beautifully formed craters. It is a uniquely colourful area, which will be permanently altered if HS Orka’s planned 50 MW power plant will be built. The company has already been granted permission for test drilling and one borehole has been test-drilled, but no results have yet been published.

Sveifluháls (Krýsuvík)

Sveifluháls is a 20 km broad and 150 to 200 meter high compounded and mostly non-vegetated tuff ridge. The 2-3 km long geothermal area of fumaroles, mud springs and muddy hot springs — usually referred to as simply ‘the Krýsuvík geothermal area’ — lies a little east of the Krýsuvík fissure swarm. Despite drilling done in the second half of the 20th century, the area is relatively unspoiled and could easily be brought back close to its natural state. Due to the tuff transformation, the area is especially rich in colour and contains unusual geothermal salt deposits and gypsum. The area is unique due to its many maars, for instance Arnarvatn and Grænavatn (pictured above), of which some show signs of Holocene volcanic activity. Sveifluháls is a popular stopover as well as an outside school-room for geology. It also contains historical relics of human residence, as far back as Iceland’s original settlement.

There are plans to operate a 50-100 MW power plant in the area — a construction that would include somewhere between 10 and 20 boreholes, road construction, pipelines and power lines to connect the plant to the national energy grid. HS Orka has a research leave in the area but has not been able to guarantee the utilization rights, which are owned by the municipality of Hafnarfjörður.

Austurengjar

The geothermal area of Austurengjar is about 1.5 km east of lake Grænavatn — a relatively flat and mostly unspoiled area of mud pots, hot springs and dolerite ridges, which slopes north to lake Kleifarvatn. As a result of earthquakes in 1924, the geyser activity increased dramatically and since then, Austurengjahver has been the area’s most powerful spring. This colourful geothermal area is special as it lies completely outside of Krýsuvík’s volcanic system and shows no signs of Holocene volcanic activity. The plans for a 50 MW power plant at Austurengjar, including 10 to 15 boreholes and a whole lot of power lines, would directly impact the whole area and change the face of lake Kleifarvatn, which is today a wild and unspoilt lake, surrounded by mountains.

Trölladyngja

Trölladyngja is one of the three mountains (the other two being Grænadyngja and Fífavallafjall) that together make up the north-east end of a 13 km long tuff ridge called Núpshlíðarháls, which lies within Krýsuvík’s volcanic system. The geothermal area is about three km long and seems to be partly connected to extension fractures in the system. South of the mountains, a small stream called Sogalækur has shovelled out a considerable amount of clay and thus formed a colourful canyon called Sogin. The stream deposited the clay into the lava below and formed the vegetated field Höskuldarvellir. HS Orka has for many years had plans to build a power plant in Trölladyngja and three holes have been drilled already, resulting in very limited success but a lot of disruption. The Trölladyngja area is partly included in the Natural Heritage Register.

Protected Area(s)

Brennisteinsfjöll

Only one out of the peninsula’s nine potential energy generating areas will be protected if the Master Plan goes through parliament unaltered. Brennisteinsfjöll are a row of mountains, considered an impenetrable part of the Krýsuvík area, and do in fact constitute the largest untouched wilderness around the capital area of Reykjavík. As highlighted by Krater and Rose: “Wilderness areas are becoming rare globally, with over 83 percent of the earth’s landmass directly affected by humans, and the Icelandic wilderness is one of the largest left in Europe.”

Possible Targets for Protests and Direct Actions

The Ministry of Environment
Skuggasund 1
150 Reykjavík

The Ministry of Industry
Arnarhváll by Lindargata
150 Reykjavík

HS Orka
Brekkustígur 36
260 Reykjanesbæ

Jarðvarmi slhf
Stórhöfða 31
110 Reykjavík

Norðurál Grundartangi ehf (smelter and offices)
Grundartangi
301 Akranes

Norðurál Helguvík ehf (only offices)
Stakksbraut 1
Garður
232 Reykjanesbæ

Helguvík Smelter
See location on map here.

Century Aluminum Company (Corporate Headquarters)
2511 Garden Road
Building A, Suite 200
Monterey,
CA 93940
USA

For a list of more offices and smelter click here.

Alterra Power Corp. (Corporate Offices)
600-888 Dunsmuir Street
Vancouver, BC
Canada V6C 3K4

For a list of more Alterra Power offices click here.

Glencore International

Registered Office
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES

Headquarters
Baarermattstrasse 3
P.O. Box 777
CH 6341 Baar
Switzerland

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Main Sources

Áhugahópur um verndun Jökulsánna í Skagafirði, Eldvötn – samtök um náttúruvernd í Skaftárhreppi, Félag um verndun hálendis Austurlands, Framtíðarlandið, Fuglavernd, Landvernd, Náttúruvaktin, Náttúruverndarsamtök Austurlands (NAUST), Náttúruverndarsamtök Íslands, Náttúruverndarsamtök Suðurlands, Náttúruverndarsamtök Suðvesturlands, Samtök um náttúruvernd á Norðurlandi (SUNN), Sól á Suðurlandi. Umsögn um drög að tillögu til þingsályktunar um áætlun um vernd og orkunýtingu landsvæða. 11. nóvember 2011. (Download PDF here.)

Krater and Miriam Rose on behalf of Saving Iceland, “Development of Iceland’s Geothermal Energy Potential for Aluminum Production — A Critical Analysis”. In: Abrahamsky, K. (ed.) Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. 2010, AK Press, Edinburgh. p. 319-333. (Download PDF here.)

Various information from Náttúrukortið (The Nature Map) on the website of environmentalist NGO Framtíðarlandið (The Future Land).

Sigmundur Einarsson, Hinar miklu orkulindir Íslands, Smugan.is, October 2009.

Sigmundur Einarsson, Er HS Orka í krísu í Krýsuvík?, Smugan.is, November 2009.

Sigmundur Einarsson, Ómerkilegur útúrsnúningur iðnaðarráðherra, Smugan.is, November 2011.

Sigmundur Einarsson, Er HS Orka á heljarþröm?, Smugan.is, December 2011.

Catharine Fulton, Blame Canada? Geothermal energy, Swedish shelf companies and the privatisation of Iceland, The Reykjavík Grapevine, October 2009.

Catharine Fulton, Magma Energy Lied to Us, The Reykjavík Grapevine, May 2010.

Volcano Park to Open in Iceland? Iceland Review, July 2007.

Various information from the websites of Alterra Power, HS Orka and Norðurál.

During a recent meeting of chairmen from all the member unions of the Icelandic Confederation of Labour (ASÍ), Hörður Arnarson, the director of the national energy company, Landsvirkjun, said that due to the current situation on international markets it would be enormously difficult for Norðurál to finance the 250 billion ISK smelter project. According to Vilhjálmur Birgisson, who attended the meeting, chairman of the Labor Union of Akranes (near to Grundartangi, where Century’s currently operating smelter is located),  Hörður spoke of the Helguvík project’s likelihood as very negligible. Another representative at the meeting, Kristján Gunnarsson, chairman of the Labour and Fishermen Union of Keflavík, stated that when asked about the possibility of Landsvirkjun selling energy to Norðurál, Hörður answered saying that no energy is really available for the project.

While it certainly is true that Landsvirkjun has, especially in the nearest past, had problems with financing, due to the international financial crisis as well as the Icelandic economy’s instability, the latter point – that no energy is actually available for Helguvík – is of more importance here. Environmentalists have, from the beginning of the Helguvík project, stated that the plans to harness energy for the smelter in geothermal areas on the Reykjanes peninsula, are not sufficient, for two reasons. Firstly, as the alleged size of the energy extraction is not sustainable and is more than likely to drain these unique natural areas for good. Secondly, because even if fully exploited, the geothermal areas would not produce enough energy for the smelter. Another energy source will be essential in order for the smelter to operate and even though Reykjavík Energy (OR) has promised Century some energy from a planned enlargement of their power plant in Hellisheiði, the aluminium producer still faces a serious lack of electricity for Helguvík.

It is here that Lower Þjórsá enters the picture. In November 2007 Landsvirkjun announced that the company would not supply any further energy to aluminium smelting in the South-West of Iceland, meaning Rio Tinto Alcan’s smelter Straumsvík, Century’s smelter in Grundartangi and the one planned in Helguvík. But many have doubted the truth behind this statement. In early June of 2008, when Saving Iceland activists gate-crashed Century Aluminum’s lack-of-permission-party in Helguvík, Saving Iceland highlighted the obvious lack of energy and asked if the planned damming of the river was meant for the smelter. Though Landsvirkjun has always denied those suggestions, several different signs have suggested the opposite.

Geologist Sigmundur Einarsson has  for the last couple of years repeatedly called attention to the inaccuracy concerning geothermal energy’s alleged sustainability and efficiency. In a new article about Reykjanes’ energy resources, Sigmundur once again points out the real energy figures and reveals that even if H.S. Orka is able to go ahead with its energy plans for Reykjanes – as mentioned above currently on hold due to an arbitration conflict between H.S. Orka and Century regarding energy prices – the Helguvík smelter will still lack between 310 and 390 MW. Sigmundur theorises that Century has from the beginning been aware of its slack energy situation, but used the cheap trick to simply start construction and thereby create expectations among the inhabitants of the Reykjanes peninsula. “Shallow-minded Icelandic politicians,” says Sigmundur, “were then supposed to bite the bait and sort out the energy by ordering Landsvirkjun to dam Lower Þjórsá (c.a. 200 MW) and sell it to Norðurál [Century] for a price accepted by the aluminium company.”

Not only does this theory full confirm Saving Iceland’s and other environmentalists’ repeated warnings not to let Century start construction of the Helguvík smelter, but now it also seems that at least a few high ranking officials have come to the same conclusion. Following Alcoa’s recent announcement about the company’s withdrawal from its years long planned Húsavík smelter, both Katrín Júlíusdóttir, minister of industry, and Hörður Arnarson, Landsvirkjun’s director, stated that Alcoa and other interested parties had created unrealistic expectations way ahead the establishing of the project’s key foundations. Thus it should not take them long to put two and two together, realizing that the same story applies to Helguvík – something that neither of them has been willing to seriously address until now.

To officially state the dead end of Century’s Helguvík dreams, Landsvirkjun would have to confirm that the planned Þjórsá dams are not meant for the smelter but for quite a while the company has been unwilling to openly discuss the Þjórsá project. The Þjórsá conflict actually splits the sitting government: While favored by the social-democrats of Samfylking, of which the minister of industry is a member, it is opposed by the Left Greens (VG). When asked about Þjórsá, Landsvirkjun now cites the Master Plan for the exploitation and protection of Iceland’s natural resources, currently in making, of which conclusions the company will wait for before any further comments. In a draft for a parliamentary solution regarding the Master Plan, the three planned Þjórsá dams are given a green light for construction. But this might change due to strong local opposition to the dams as well as the comments of a considerable number of people who protested against the project during a three months long open reviewing process, which was a part of the Master Plan’s making.

Albeit not necessary being the project’s one and only fundamental foundation, the protection of Lower Þjórsá would almost certainly mark the end of Century’s fantasies of a smelter in Helguvík. Until then the myth might live a bit longer.
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For more information about Century Aluminum, its operations in Iceland and the Helguvík crisis, see:

Century Aluminum Energy Questions

From Siberia to Iceland: Century Aluminum, Glencore and the Incestuous World of Mining

Believes Aluminium Plant Is Poisoning Sheep

National Energy Authority Fears Overexploitation of Geothermal Areas in Reykjanes

One of Iceland’s proudest assets is its energy grid. Geothermal energy, by 2010 figures, accounts for just over 26% of the country’s electricity, as well as 86% of its heating and hot water. Iceland’s geothermal energy technology has been shared with countries around the world, and has attracted the interests of foreign investors.

However, as comparatively cleaner for the environment geothermal power is not without its problems. One of these is the main elephant in the room: geothermal energy is not a renewable energy source. Boreholes that tap into the massive steam vents below the surface do not last forever. When Ross Beaty, CEO of Magma Energy (now a part of Alterra Power Corp.) made the specious claim that geothermal energy lasts for centuries, scientists such as Stefán Arnórsson and Sigmundur Einarsson were quick to point out that geothermal power in the Reykjanes area — where Magma sought to drill — only had enough power to last about 60 years at best. Although this point was seldom, if ever, brought up in any previous discussion about geothermal power in Iceland, more recent events have shown that geothermal energy is not just non-renewable; it can even pollute.

DON’T DRINK THE WATER

First of all, the steam that geothermal energy taps does release a number of harmful emissions. The International Geothermal Association released a report in 2002 showing that these emissions can include carbon dioxide, hydrogen sulfide, methane and ammonia. These emissions are linked to global warming, and can do extensive environmental damage. Even the water itself can be poisonous — the scientific journal Environmental Contamination Toxicology published a study in 1997 which showed that waste water can contain chemicals such as mercury, arsenic and boron.

In order to reduce the amount of pollutants that geothermal power produces, it is necessary to take a number of precautions, such as recycling the steam through a series of compressors and pumps. The waste water needs to be channelled deep back into the ground, to prevent it from poisoning drinking water tables. Both of these precautions were outlined in the 2007 scholarly article ‘Strategic GHG reduction through the use of ground source heat pump technology’. This last point has been the centrepiece of the controversy surrounding one such plant in Iceland, Hellisheiðarvirkjun.

The largest power plant in Iceland — and slated to be the largest in the world once it reaches its full capacity — it is located in the geologically active Hengill area of southwest Iceland, comprised primarily of a chain of three volcanoes. The up-side of this is that a tremendous amount of power can be generated here: the plant estimates 400 megawatts will be reached once the two additional turbines added earlier this month as in full swing. The down-side is: geological activity means earthquakes.

The sheer amount of geological activity in the area cannot be underemphasised. Hundreds of tremors were reported in the Hengill area on a single day last September, and concerns were immediately raised that these tremors — some of them measuring 3 or higher on the Richter scale — could do damage to the pipeline that pumps waste water back into the ground, below drinking water tables. Steinunn Jakobsdóttir of the National Weather Service told Stöð 2 news at the time that larger quakes could not be ruled out.

The plant itself had already been targeted by environmentalists as damaging to the environment, from a developmental standpoint, with Saving Iceland trying to bring attention to the plant’s overall effects on the landscape. The notion that poisonous waste water could be broken free from pipes, and spilled into drinking water, turned the dial up on the anxiety.

NOTHING CAN POSSIBLY GO WRONG!

These concerns were immediately addressed by Bjarni Bjarnason, director of Orkuveita Reykjavíkur (Reykjavík Energy), the power company that oversees the plant. He told RÚV earlier this month that he did not believe waste water pipes were in any danger of being damaged by earthquakes, and added: “We see no danger [of waste water poisoning ground water] so long as we pump it at least 800 metres into the earth.”

But research done on the drilling does not necessarily support Bjarni’s claim. An environmental assessment conducted on the plant in 2006 by the South Iceland Health Supervisory Authority arrived at the conclusion that they “put a great deal of emphasis on closing the construction of the waste water disposal system and the area used to dispose of the water,” meaning that the area itself for pumping waste water back into the ground was far from ideal. Research conducted by the nearby municipality of Ölfus in March of this year concluded that there were not enough controls in place to even be able to handle the regular amount of waste water being produced under normal circumstances.

Despite these warnings, construction steamed ahead, and any criticism of waste water polluting drinking water was dismissed as alarmist. That is, until it was discovered that that’s exactly what happened.

STRANGE BREW

Only weeks ago, it was discovered that Hellisheiðarvirkjun had been pumping waste water containing hydrogen sulphide into drinking water tables, on and off, for two years. The reason? Before a new waste water borehole was completed last September, another one at the Gráuhnjúkar area had been used instead. This borehole did not have the capacity to deal with the amount of waste water it had to contend with, and so it released it, through a valve intended only for emergencies, into the drinking water tables.

Residents of nearby Hveragerði were less than pleased with this news, and called a town meeting demanding an explanation. They have been assured by Orkuveita Reykjavíkur that with the new waste water borehole in place, this practice will not continue. They also emphasised that their scientists do not believe the pumping of waste water into the ground will increase the risk of earthquakes. No mentions were made, however, on how well these pipes could hold up in the event of a strong enough quake — and strong earthquakes are not exactly uncommon to the area.

WHERE DOES THIS LEAVE US?

If geothermal power — Iceland’s crown jewel of green energy — is neither sustainable nor non-polluting, does this mean we need to turn exclusively to hydropower, which comprises the remainder of the country’s power source? What about oil, which is believed to lie beneath the seabed in Drekasvæði, the northern corner of Icelandic fishing waters?

There might not actually be a dichotomy at all — other green resources may exist. While Iceland is far from ideal when it comes to solar energy, and wave power is still proving to be both expensive to build and maintain, anyone who has ever visited the country can attest that if there is one thing Iceland has plenty of, it’s wind.

A research group assembled by Landsvirkjun in 2010, working in conjunction with Icewind — a pan-Scandinavian team looking to develop wind power in the Nordic countries — has concluded that wind power is a very realistic option for Iceland. They believe that building wind turbines in the southwest would be the best option.

Úlfar Linnet, an energy expert at Landsvirkjun, told Fréttablaðið that the matter should be explored seriously. “The goal is to have Iceland in step with the other Nordic countries,” he said in part. “We’re starting at zero, as a windmill has never been raised in Iceland. But we’re making progress.”

In fact, just last July Icelander Haraldur Magnússon successfully raised a 30 KW windmill on top of Hafnarfjall mountain, which immediately went into operation. MP Mörður Árnason — who is also the chairperson of the National Energy Authority Research Fund — believes that while figures do not seem to indicate that wind power is a competitive option at the moment, that it would be hasty to dismiss the option altogether. Indeed, there are many vast, uninhabited and perpetually windy areas in Iceland, particularly in the Highlands, which would make ideal grounds for a wind farm.

Whether the Icelandic government devotes more time and energy into exploring wind power remains to be seen. In the meantime, Hellisheiðarvirkjun is inadvertently repeating the point that geothermal power is not as green as it seems, and that it may be time for Iceland to put its pride and joy to rest.
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For further information and analysis see:

Saving Iceland’s Increased Sulphur Pollution in Reykjavík Due to Geothermal Expansion in Hellisheiði.

Miriam Rose’s and Jaap Krater’s Development of Iceland’s Geothermal Energy for Aluminium Production – Download as PDF.

Anna Andersen’s Reykjavík Energy in Deep Water: The Untold Story of Geothermal Energy in Iceland.

The Energy Master Plan is a framework programme, meant to result in a long term agreement upon the exploitation and protection of Iceland’s glacial rivers and geothermal areas. Its making, which since 1999 has been in the hands of special steering committiees, established by the two above-mentioned ministries, reached a critical status in July this year when its second phase was finished and presented to the ministers who in mid August presented their proposition for a parliamentary resolution. Before it will be discussed in parliament the proposition will be open to comments and criticism from the public, as well as interested parties, energy and aluminium companies on the one hand, environmentalists on the other.

Twenty-Seven Energy Options Put on Hold

The proposition lists natural areas into three categories; protection, exploitation and hold. The last-mentioned includes areas that, according to the steering groups and ministers, have not undergone enough research for a decision to be made upon weather to protect or exploit them. Included in this category are, among other, the glacial rivers in fjord Skagafjörður as well as other rivers such as Skjálfandafljót, Hvítá, Hólmsá and Farið by lake Hagavatn in the south-west highlands. Also geothermal areas such as Trölladyngja and Austurengjar in Krýsuvík and certain areas around mount Hengill where the heavily indebted Reykjavík Energy (OR) already operates Hellisheiðarvirkjun, a sulphur polluting geothermal power plant. The 27 areas of the waiting category will be revised in five years, given that satisfactory studies have been made at that time.

Þjórsárver Wetlands to be Saved

Delightfully, the protection category features the uppermost part of river Þjórsá where Landsvirkjun wants to construct Norðlingaölduveita, a dam that would destroy the Ramsar listed Þjórsárver wetlands. River Jökulsá á Fjöllum, which has been seen as an energy potential for a new Alcoa aluminium smelter in Bakki, is also listed protected. The same applies for certain parts of river Tungná, in which Landsvirkjun is already building the Búðarháls dam that will provide energy for increased production in Rio Tinto Alcan’s aluminium smelter in Straumsvík.

The protection category also features geothermal areas such as the ones around Brennisteinsfjöll mountains on the Reykjanes peninsula, as well as Gjástykki, close to volcano Krafla and lake Mývatn. The same goes for the Grændalur valley and Bitra, which are located close to the small town of Hveragerði and have been particularily desirable in the eyes of energy companies. Bitra was saved by a local campaign in 2008 whereas Grændalur was recently threatened when Iceland’s National Energy Authority allowed a company called RARIK to operate test drilling in the valley, in complete contravention of previous rulings by the Ministries of Industry and of Environment.

Krýsuvík, Þeistareykir and Þjórsá to be Destroyed

The exploitation list features geothermal areas Þeystareykir, Bjarnarflag and Krafla in the north of Iceland, as well as Hágöngur in the mid-highlands west to glacier Vatnajökull. Also certain parts of the area around mount Hengill and finally geothermal spots in Reykjanes, Krýsuvík and Svartsengi, all three on the Reykjanes peninsula. Rivers Hvalá, Blanda and Köldukvísl are then all categorised as exploitable. And most critically the Energy Master Plan proposition allows for Landsvirkjun’s construction of three dams in the lower part of river Þjórsá.

Environmentalists Threefold Response

The most common response from environmentalist so far has been threefold. Firstly there generally satisfied by the protection of areas such as the Gjástykki, Jökulsá á Fjöllum and Grændalur, let alone the Þjórsárver wetlands. Shortly after the publication’s release, Iceland Nature Conservation Association (INCA) stated that, if approved by parliament, the Master Plan will mark the end of environmentalists’ forty years long struggle to save Þjórsárver from destruction. Though listed by the international Ramsar Convention on Wetlands due to its unique ecosystem, the wetlands have been on Landsvirkjun’s drawing table as a potential for construct a large reservoir, meant to produce energy for a planned expansion of Rio Tinto Alcan’s aluminium smelter in Hafnarfjörður, which was later thrown off in a local referendum. The plan has always been met with fierce opposition, no matter of Landsvirkjun’s repeated attempts to get it through by proposing a smaller dam and reservoir.

Secondly environmentalists are critical of the fact how many invaluable areas, such river Skjálfandafljót, are kept on hold instead of simply been categorised protected. Thirdly there is a clear opposition to the planned exploitation of certain wonders of nature, one example being the geothermal areas on the Reykjanes peninsula. Ellert Grétarsson, a photographer who has documented these areas extensively (his photos are here aside), fears that the drilling in Krýsuvík – covering between five and eight thousand square meters of land – will simply kill the area. And as a matter, says Ellert, the whole Reykjanes peninsula will be riddled with energy construction. Hjörleifur Guttormsson, former Left Green MP and a genuine environmentalists, shares Ellert’s worries and has asked for an integral study of Reykjanes before any decisions are made.

Þjórsá, the Bone of Contention

As as mentioned before the biggest concern regards Þjórsá, which has for a long time been the bone of contention between the two clashing arrays fighting for or against nature conservation. The struggle over Þjórsá has been especially tough, actually to such an extent that the government can be reputed to stand or fall with that conflict in particular. Guðfríður Lilja Grétarsdóttir, MP for the Left Greens, demonstrated, during parliamentary debate last April, her full opposition to the construction of dams in Þjórsá. At that point, three Left Green MPs, who up until then had been increasingly critical of the government and its lack of left-leaning policies, had just recently departed from the party, leaving the government with only one person’s majority in parliament. And as most members of the social-democratic People’s Alliance (Samfylkingin), which makes up the government along with the Left Greens, have not shown a sign of objection to the damming of Þjórsá, it wouldn’t be surprising if the river will be up for a heavy debate in parliament.

In fact it is more than sure that Þjórsá will be among the main matters of argument in parliament. The right wing Independence Party, which was in in power from and is largely responsible for the neo-liberalisation and heavy-industrialisation of Iceland, has always been one of the driving motors behind Landsvirkjun’s plans to dam Þjórsá. When the Master Plan’s proposition was presented in August, Ragnheiður Elín Árnadóttir, a MP of the party, called for the immediate starting of construction in Þjórsá. She also said she grieved the long period of which the project has been stuck within bureaucracy, referring to the attempts of Svandís Svavarsdóttir, current Minister of Environment, to halt the construction of one of the three proposed dams by refusing to include the dam, Urriðafossvirkjun, in a land-use plans for the parishes of Flóahreppur and Skeiða- and Gnúpverjahreppur (rural districts along Þjórsá) made by them at the request of Landsvirkjun.

Three Dams: Threat to Society and Ecology

The conflict in parliament mirrors the actual conflict in the Þjórsá region where locals have for a long time fought over the river’s fate. There Landsvirkjun hasn’t only used bribes in its attempt to get its plans through local administration, but also threatened farmers whose lands are at stake will the dams be built, by stating that if the farmers do not negotiate with the Landsvirkjun, the company will attempt for a land expropriation. This conduct has created a complete split within the local community, clearly demonstrated in last March when young locals from the region published a statement, in which they demanded a permanent halt to all plans of damming Þjórsá – thereby an end to the social conflict associated.

As a matter of fact two members of the Master Plan’s steering committee recently stated, when interviewed on state radio station RÚV, that due to the serious lack of studies regarding the social impacts of the planned Þjórsá dams, those plans should without any doubt have been put on hold. This is exactly what Guðmundur Hörður Guðmundsson, chairman of environmentalist organization Landvernd, said in last July following the publication of the Energy Master Plan’s second phase report.

Þjórsá’s position in the Master Plan proposition, yet shouldn’t be of any surprise. In the second phase report the three planned dams are not considered to be a great threat to the ecology of Þjórsá and its surroundings – contrary to the opinion of environmentalists who have voiced their worries concerning the dams’ impacts, for instance on the river’s salmon stock. Orri Vigfússon, chairman of the North Atlantic Salmon Fund (NASF), recently stated that “never before in the history of Iceland has there occurred such an attack on a sensitive area of wild salmon.” As is considered that the salmon’s spawning and breeding grounds are mosty located above waterfall Urriðafoss, where one of the three dams is planned to be built, Orri believes that the stock of salmon and salmon trout are likely to vanish.

Energy Companies Unsatisfied as Expected

As one could have imagined, Icelandic energy companies and other adherents of large-scale power production for heavy industry, are everything else than happy about the Master Plan’s proposition. Following its release Eiríkur Hjálmarsson, Public Relation manager of Reykjavík Energy, opposed the protection of Bitra on the ground that the company has already harmed the area with three examination boreholes, roads and electricity lines – but most importantly, spent 785 million ISK on the project. As reported earlier this year by Anna Andersen, journalist at the Reykjavík Grapevine, the foolhardy business operations of Reykavík Energy during the last decade or so – including large-scale geothermal projects associated with heavy industry – have brought the publicly owned company a debt of 233 billion ISK (2 billion USD or 1.4 billion Euros). Despite this financial collapse the company still advocates for the continuation of the agenda that brought it down.

Other energy companies have responded similarly, mostly complaining about the amount of areas listed as protected or on hold. Landsvikjun’s director Hörður Árnason has said that compared to the second phase report, the parliament proposition suggest that way too many energy options are put on hold. Another company, Suðurorka, owned by Alterra Power (former Magma Energy) and Íslensk Orkuvirkjun, had planned to construct a dam, called Búlandsvirkjun, in river Skaftá – a plan that the proposition puts on hold. The company argues that few energy options have been studied as thoroughly and while the studies might have been done – and might be thorough – not everybody agrees with the company on the impacts. Farmers in the area have opposed the project as some of their most important grasslands will be drowned under the dam’s reservoir.

Energy company RARIK will, due to the Master Plan, loose its grip on geothermal areas in Grændalur valley, as well as rivers in Skagafjörður and Hólmsá river – projects that the company claims to have invested in with 300 million ISK. Using the same monetary argument, HS Orka, also owned by Alterra Power, has been vocal about its 700 million ISK investment into their proposed, but now delayed if not entirely halted, geothermal plants in Trölladyngja. Finally representatives from Reykjahlíð, a small town that holds the good part of Gjástykki’s property rights, have stated that if the area will be protected, billions of ISK will be demanded as compensation.

The Predominant Strategy

Those arguments do in fact manifest the predominant strategy of those involved in the heavy industrialization of Iceland. Instead of waiting for all necessary contracts to been signed, all needed permissions to be granted, and all required energy to be ensured, the energy and aluminium companies have simply started major construction immediately when only one or a few permissions have been granted. And when criticised, not to mention when forced to stop, they have stated that because these projects have been announced and vast amounts of money put into them, they should be allowed to continue. If needed, they have also pointed out that because the natural areas at stake have already been harmed (by themselves), there is “no point” in preserving them.

One example would be Helguvík, where a framework for a proposed Century Aluminum smelter has already been built but hardly any construction has taken place there for two year. With every day that passes it becomes clear that not only has the company failed to ensure the energy needed to operate the smelter, but also that the energy simply doesn’t exist.

Geologist Sigmundur Einarsson has, for the last years, pointed this out and stated that the amount of energy needed for the Helguvík smelter cannot be found and harnessed on Reykjanes, like stated by the parties involved. For instance he believes that no more than 120 MWe can be harnessed in Krýsuvík, contrary to the official numbers of 480 MWe, and has repeatedly demanded answers from the authorities about where from the rest of the energy is supposed to come. Just as Saving Iceland’s questions about the whereabouts of energy for Alcoa’s planned smelter in Bakki, Sigmundur’s questions have never been answered, but he claims the Energy Master Plan proofs his theory.

Yet Another Three Kárahnjúkar Dams!

Environmentalists have reacted to the energy companies’ complaints and asked how on earth the companies can still pretended to be unsatisfied. As pointed out by Landvernd, these company’s are about be granted permission to harness energy equivalent of three Kárahnjúkar dams. From 2004 to 2009, Iceland’s energy production duplicated, largely with the construction of Kárahnjúkar dam, and is currently 16,900 gigawatt-hours. If the Energy Master Plan will be accepted as proposed, the energy companies will be able to duplicate the production again in few years, says Guðmundur Hörður, chairman of Landvernd, and continues:

The increase of public electricity usage is about 50 gigawatt-hours per year. The expansion entailed in the proposition would thus sustain that particular public increase for the next 265 years! If this will be the conclusion, the energy companies can be very satisfied. Still they send their agents onto the media, in order to cry and complain. That doesn’t give a good hint for a settlement.

Other environmentalists, Ómar Ragnarsson for instance, have mentioned that the whole discourse surrounding the Energy Master Plan portrays a false image. While the plan regards Iceland’s each and every hydro and geothermal area, potential for exploitation, the areas that have already been harnessed are kept outside of the discourse. Ómar says that it is simply false to state that “only twenty-two areas” have been categorised exploitable, as twenty-eight large power plants have already been built in Iceland. That means that out of the ninety-seven considered in the Master Plan, fifty have already been or will be utilised. In addition to the twenty-seven areas put on hold, another thirty-two have yet not been categorised by the steering committees, which makes the current proportion of protected areas even lower.

Ómar has also pointed out mismatches within the proposition. One example regards geothermal area Gjástykki that is listed as protected, as it is “a part of Krafla’s volcanic system, which has a protection value on a worldwide scale,” like stated in the proposition. But according to Ómar this will depend entirely on definitions. As an energy option, Vítismór, which is a part of Krafla’s volcanic system and is an inseparable part of the Gjástykki-Leirhnjúkur area, is currently listed as an addition to the Krafla power plant and would thus, regardless of its position within the Master Plan, be available for exploitation.

Limnology (or freshwater science) professor Gísli Már Gíslason upholds Ómar’s argument and has stated that half of Iceland’s “profitable hydro power” has already been utilised. One of those rivers is Jökulsá á Dal, harmed by the infamous Kárahnjúkar dam, which in order to be built required disallowing the protection of Kringilsárrani, an extremely important grassland for reindeer. This is not a unique incident as, for instance, the three dams in river Láxá are also manifestations of hydro power plants built in protected areas.

The Coming Struggle

Notably by the above-listed contradictions, which though demonstrate only a small part of the debate about the Energy Master Plan so far, the coming struggle about the fate of Iceland’s nature is going to be harsh and heavy. Armed with the rhetoric of economic crisis, unemployment etc., those in favour of heavy industry – in other words a big part of parliament, the energy companies, the Associations of Industry and Employers, the country’s biggest trade unions, and most recently Samál, a joint association of aluminium producers in Iceland – use literally every opportunity to push for the further development of industry, especially aluminium. In order for that development to occur, the country’s glacial rivers and geothermal areas have to be exploited on a mass scale.

Environmentalists, on the other hand, need to sharpen their knives and both ask and answer a great amount of questions. What, if any, are the actual benefits of heavy industry and its parallel large-scale energy production? And what are its impacts on Iceland’s society and ecosystems? No less importantly, what are its global impacts such as on the atmosphere or bauxite communities in India, Guinea, Hungary and Jamaica? How has it affected the economy and what are its contributions to the current economic situation? What are the impacts of the building of big dams and geothermal power-plants, fuelled by extremely high loans, bringing a temporary pump into the economy that inevitably leads to the demand for another shot? And what is the value of nature per se?

Only by answering all of these and many more questions, one can honestly try to answer the one fundamental question regarding the Energy Master Plan: What actual need is there for yet another three Kárahnjúkar dams, or in fact just a single more power plant?

The companies behind the co-operating forum include energy companies Landsvirkjun, Reykjavík Energy, HS Orka and its owning company Alterra Power Corporation (former Magma Energy), as well as aluminium companies ALCOA and Norðurál, owned by Century Aluminum. Banks Íslandsbanki, Landsbanki and Arion banki are also all involved, the last-mentioned being the forum’s main sponsor. Amongst other parties involved are the Universities of Reykjavík and the University of Iceland, the Federation of Icelandic Industries (SI) and the Confederation of Icelandic Employees (SA), the ministries of environment, of industry, of trade and of foreign affairs, and Mannvit, Iceland’s biggest engineering firm, responsible for both the design and the making of Environmental Impact Assessments for most of the country’s biggest heavy-industry and large-scale energy projects.

To recap, the newly formed co-operating forum manifests that all major parties with direct links and financial interests in the further heavy-industrialization of Iceland and its parallel destruction of the country’s wilderness, have joined forces. And the aim: To increase the competitiveness of Iceland’s geothermal energy industry and its making of capital goods, facilitate the capitalization of geothermal projects, contribute to technological advances and reinforce Iceland’s image.

A Follow-Up of the Plan to Heavy-Industrialize Iceland

During the forum’s establishing meeting, which took place in the headquarters of Arion bank, a new report, titled “The Icelandic Geothermal Cluster – Mapping and Mobilization”, was published, covering “the analysis and the collaboration-formation of the the Icelandic geothermal cluster.” The term business cluster was originally introduced and popularised by the aforementioned Michael Porter, and is, to quote Porter’s own words, a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. According to the idea, the formation of a cluster creates a certain entity, which is supposed to be much stronger than many individual parties each operating separately.

The report – starting with the words of Henry Ford: “Coming together is a beginning, staying together is progress, working together is success” – lays out what it calls “three big growth opportunities”, as the results of the analysis of Iceland’s geothermal cluster. To nobody’s surprise these so-called opportunities consist of bringing energy-intensive industries to Iceland, exporting geothermal energy to Europe through a marine cable, and exporting Iceland’s geothermal expertise. These suggestions are of course no novelty in Iceland but rather a predictable follow-up of the plan to heavy-industrialize Iceland and fully exploit the country’s natural resources – a plan that was well documented in an infamous booklet, titled “Lowest Energy Prices!!”, which was made in 1995 by Landsvirkjun and the ministry of industry, and sent to international energy-intensive heavy industries, offering them cheap energy and “minimum environmental red tape”.

Carefully Chosen Rhetoric and a Private Speech on State Television

Michael Porter has carefully adapted his rhetoric to the current political atmosphere, obviously aware of many Icelanders’ increased doubt and decreased trust towards corporations due to the 2008 economic collapse and many of its following exposures of corruption, as well as the enhanced discussion about the importance of keeping the ownership of natural resources away from private parties. In his forewords to the aforementioned report, he and his co-author, Dr. Christian Ketels, also from Harvard Business School, state that though the “economy has [since the collapse] stabilized at a lower level, and the government has gotten its budget balance so much under control that it is expected to return to the global financial markets later this year […] stabilization is necessary and not sufficient.” And they continue:

Iceland needs to lay the foundations for a new, more sustainable economic growth path. In February 2009, we published an article in the Icelandic press that set out an action agenda for the country. One of its key elements was cluster mobilization as a critical step to build on Iceland’s unique assets and capabilities. We stressed that Iceland had to move beyond a backward looking debate about who was to blame for the crisis to a forward-looking collaboration to improve competitiveness. Clusters are a powerful vehicle to mobilize the private sector and guide the policy choices of government.

The Icelandic geothermal cluster program puts this vision into practice. It builds on Iceland’s unique assets and capabilities in geothermal energy with a clear focus on creating greater value for the Icelandic economy, rather than simply selling power. The geothermal program is grounded in the realization that progress towards this goal will only materialize through collaboration.

Interviewed in Kastljós, a daily news-report show on state-owned TV station RÚV, last night, Porter spoke in a similar way, reminiscent of a memorable Kastljós interview with Ross Beaty, the CEO of Magma Energy (now Alterra Power Corporation), in August 2009. When asked if he understood the public opposition towards privatization after the economic collapse, Beaty said, as reported by Saving Iceland, that he was aware of this but added that Icelanders would have to understand what kind of company he was leading. “We are not a scary company, we want to work with H.S. Orka in building up a stronger company, for the good of Icelanders, ourselves, and actually the whole world,” said Beaty to newspaper Fréttablaðið that same day.

During the TV interview last night, Michael Porter said that he finds Icelanders are “too cautious” when it comes to “using the opportunities that consist in geothermal energy,” and added that there is need for more innovating spirit, aggressiveness and risk-taking. Asked the same the question as Ross Beaty was, a little less than two years ago, Porter answered that the country’s natural resources could still be “owned by the nation” while the utilization rights could be lent to private companies. He also said that though he preferred a mixture of privately and state run businesses, the state-owned energy companies would still have to be run like private companies. This idealisation of privatizing energy companies perfectly resonates a recent encouragement from the Organisation for Economic Co-operation and Development (OECD), set fourth in the institution’s 2011 Economic Survey of Iceland. The interview would better be described as a speech-like monologue as the questioner mostly nodded and occasionally said things like “yes”, “absolutely” and “indeed”. After Porter had described his utopian corporate vision for large-scale geothermal energy production in Iceland, he ended the interview by saying: “Let’s do it!” – followed with an end-note from the presenter: “Let’s hope!”

Fearing Overexploitation of Geothermal Resources

Contrary to the statements about the need for large-scale exploitation of geothermal energy, as mentioned by Porter and the parties of the co-operating forum, environmentalists and Iceland’s National Energy Authority (INEA) fear overexploitation of the geothermal areas that are planned to be exploited to produce energy for aluminium smelter, which in fact constitute all major geothermal areas in Iceland. Recently INEA decided that HS Orka/Alterra Power would have to widen its planned drilling area for the planned enlargement of Reykjanes geothermal power plant and that they would have to supply proof that enough energy can be found on a larger area than already arranged for. The enlargement is meant to provide energy for a planned aluminium smelter in Helguvík, owned by Norðurál/Century Aluminum.

“It is possible to get all this energy on the current construction area, there is no doubt about that,” said energy director Guðni Jóhannesson to newspaper Morgunblaðið in March 2011. But he continued: “But we know it from geothermal areas abroad that if too much construction has taken place in too short time, the capacity of the area can decrease, resulting in the need for reducing the production again.”

Hence, we have it from the horse’s mouth that geothermal energy on a large-scale industrial level is not sustainable.

Iceland’s energy director, Guðni A. Jóhannesson, recently stated 30 out of 50 MW that H.S. Orka plans to produce with the enlargement of the power plant, will have to come from another area then already planned. H.S. Orka’s permission to enlarge the plant is dependent on this, which according to the company makes the investment much more complicated.

In an interview with newspaper Morgunblaðið, energy director Jóhannesson said that he does not doubt the company’s worries about more complicated investment, but that NEA does not give permissions based on the premises of energy companies –rather on the long-term protection of natural resources. “It is possible to get all this energy on the current construction area, there is no doubt about that,” said Jóhannesson. “But we know it from geothermal areas abroad that if too much construction has taken place in too short time, the capacity of the area can decrease, resulting in the need for reducing the production again.”

The enlargement of Reykjanes power plant is meant to provide energy for Century Aluminum/Norðurál’s aluminium smelter in Helguvík, on the Reykjanes peninsula, which has been in construction for a few years now but has been on hold for a while due to financial- and energy-based problems. NEA’s above-mentioned demands to H.S. Orka, strengthen the worries of environmentalists who fear that the geothermal areas on Reykjanes will dry up quickly if the area is overexploited for aluminium production.

Read two recent articles about Helguvík’s energy problems here:

Century Aluminum Energy Questions
The Þjórsá Farce Continues – Are the Dams Planned for Aluminium Production?

Sigmundur Einarsson, a geologist at the Icelandic Institute of Natural History, has written some articles on this matter (in Icelandic). He has tried, amongst a number of other environmental scientists,  to warn the Icelandic government about a new kind of collapse, an energy collapse due to following far too optimistic speculation of irresponsible people.

Einarsson’s first article was named: Iceland’s great energy sources. After the Icelandic economic collapse in 2008 politicians have constantly claimed that the future strength of the country lies in its wealth of power stored within rivers and geothermal areas. Einarsson has pointed out that all available geothermal power in Iceland would not be enough to power two big aluminium smelters proposed at Helguvík in SW Iceland and at Bakki in NE Iceland.

The only answer to Einarsson’s first article appeared in Century Aluminum´s homepage saying that about 1500 MW of energy is available from SW Iceland’s geothermal fields and rivers and that the Helguvík smelter needed only 625 MW. The company´s numbers on energy include all already harnessed geothermal fields along with highly optimistic numbers on areas not yet investigated.

Einarsson who has long experience working on geothermal activity in Iceland answered with more arguments titled Century Aluminum´s dreams of energy . The following table from his article includes every geothermal field in SW Iceland.

The following table shows the amount of technically exploitable power (TEP), already utilized power (AUP) and non-utilized power (NUP) in the geothermal fields of SW-Iceland. The numbers for TEP are Einarsson’s estimates and the numbers in brackets come from a paper by S. Björnsson, a geophysicist at the Icelandic Energy Authority.

Geothermal field             TEP (MW_e)            AUP (MW_e)            NUP (MW_e)

Reykjanes 100 (200)             100             0

Eldvörp/Svartsengi 100 (120)             75             25

Krýsuvík (Trölladyngja,             100 (480)             0            100

Sandfell, Seltún,

Austurengjar)

Brennisteinsfjöll (40)             –             –

Hengill (Hellisheiði,             600 (600)             333            267

Hverahlíð, Bitra, Nesjavellir)

Total            900 (1440)             508             392

Reykjanes geothermal field A 100 MW_e power station is already running in the area. The power company HS Orka has requested permission from the authorities (Icelandic Energy Authority) to the enlarge the station to 200 MW_e. The permission has not been granted since the power company has not been able to proof further exploitation to be sustainable (showing that Einarsson’s estimate for TEP might even be too high). In 2006 HS Orka signed a contract with Century Aluminum about 150 MW_e of energy for the Helguvík smelter, partly from this source. This delay is already under jurisdiction in Sweden, home country of  Magma Sweden, the owners of HS Orka.

Eldvörp/Svartsengi geothermal field Preparation for extended exploitation of the geothermal field has not started. The pressure within the reservoir has recently become steady after 28 years of constant draw down so increased exploitation is not likely to be allowed in the near future. Energy for the Helguvík smelter can not be expected from this source.

Krýsuvík geothermal fields This geothermal area which consists of 4 subfields has never bee harnessed. HS Orka has license for research in the total area but has only made agreement for future production with the landowners of the two smaller Trölladyngja and Sandfell subfields. Two deep drill holes in Trölladyngja subfield have proved negative and research has not started in the other three subfields. Scientific views on power potential of the total area are controversial, partly due to lack of data. Energy from these fields seems unlikely.

Brennisteinsfjöll geothermal field is quite small and lies in the mountains south of Reykjavík. This area is not likely to be harnessed in the future.

Hengill geothermal field with the subfields Hellisheiði, Hverahlíð, Bitra, Nesjavellir lies SE of Reykjavík. The area has been harnessed by the power company OR, owned by the Reykjavík municipality. This power company almost vent bankrupt after Icelands financial  collapse. The companies financial plans do not assume any new power stations in the next five years. So energy for the Helguvík smelter from this source can hardly be expected until at least 8 years from now. OR has secured energy for one 90 MW_e power station, but further plans have not been confirmed.

The above mentioned potential origins of power for the aluminium smelter are specified in the EIA report and nothing else.  Einarsson has in his articles repeatedly pointed out that it will never be possible to feed the smelter with energy from these geothermal areas. No answers have ever come from the authorities, neither local or governmental.

The third power company, Landsvirkjun, has prepared three water power stations in the river Thjórsá (Þjórsá) in South Iceland, producing about 230 MW. Landsvirkjun has repeatedly argued that the electricity from these power stations will not go to aluminium smelters. Other power potentials are not in sight in southern Iceland.

See also:

Threatened Areas

Development of Iceland’s geothermal energy potential for aluminium production – a critical analysis

Iceland is a country in constant change. A volcanic kingdom, since the dawn of time a war has waged between fire and ice. The remote island nation lies across a fissure between the continental plates of America and Europe, which are in constant rift, tearing tissues of earth apart and sporadically releasing surges of lava and gushing geysers. Since man learnt to harness this earthly power, the culture of Iceland has changed dramatically.

Suspended from the ceiling of the world, Iceland is a leading light in renewable energy production. A land of magnificent glacier-carved fjords and heat that blisters up through the earth’s core, it produces energy far beyond its domestic needs – all from hydroelectric power and geothermal plants. But this clean, cheap energy brings in polluting industry and international corporations.

A vast 80 per cent of energy produced in Iceland is used for aluminium production. Iceland has traditionally been very environmentally conscientious but now, due to economic desperation and political mismanagement, some Icelanders fear that its future is being determined by international aluminium and electricity companies. With two more smelters being built, environmentalists say that the chance to protect Iceland’s fragile ecosystems and spectacular wilderness is running out.

While some Icelanders are desperate for investment to stoke the economy that went bust in 2008, many are far more skeptical as to whether aluminium is the source of light at the end of the financial tunnel.

Heroin for a dying town

Iceland is a prosperous country, but its prosperity is concentrated in its capital, Reykjavik. Small towns have suffered a much harder blow from the financial crisis and are in steep demise. It is these communities that are most willing to welcome companies, such as American smelting company Alcoa, onto their land to build huge aluminium plants that will employ large numbers of people and keep the towns alive for a few more years. Construction of these projects employs many people, but once that is done, power stations and aluminium plants need relatively few employees.

“Aluminium is like an instant fix, you’re a heroin addict and your economy has been suffering and you need something to fix it right away. Smelting companies outstretch a hand with candy and what do you do?” Says Icelandic political commentator Egill Helgason. In order to provide energy for the factories, the municipality must take out large loans to build power plants. By law, companies are able to approach these communities directly to make deals. Like many people from Reykjavik, Helgason advocates a diversified economy that focuses on sustainability and the growing arts and tourism industries.

The latest controversy in Iceland was the devious acquisition of geothermal fields by Canadian company Magma Energy. The southern municipality of Reykjanesbær has been in monumental debt since the economic crash and has been forced to sell its schools, community centres and investments to private companies.

Head of the Left Greens parliamentary committee, Bergur Sigurdsson explains how the fields were first sold to a private Icelandic company called Geysir Green Energy that soon went broke. They were then sold cheaply to a Swedish puppet company of Magma Energy to evade an Icelandic law that prevents non-European companies from buying Icelandic companies.

The Icelandic community was outraged and an anti-sale campaign ensued, led by singer, Bjork. One month ago, the sale went through and the geothermal fields of Reykjanesbær are now owned by Magma Energy.

Magma CEO Ross Beaty now denies that he took advantage of Iceland’s economic depression, but in May of this year, he told Hera Research Monthly:

“We would have been farther along had (the global economic crisis) not happened, although we may not have had opportunities that we took advantage of. For example, going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.”

Cheap energy, minimum red tape

The aluminium industry began in the 1960s as an attempt by the Icelandic government to diversify its economy from fishing and sheep farming. Back then, the plants were of humble size and provided good revenue to a country that had an excess in electricity.

In 1998, in order to encourage energy and aluminium development, the Icelandic government opened up the law so that power over physical planning rested with local governments. It was called the ‘Cake Slice’ law and each municipality skirting the highlands was given control over their slice of the highlands. This made it a piece of cake for corporations to then come in and wage local deals to build power plants and factories. They also provided incentives, such as funding sports centres, healthcare and schools.

From that seed grew what has become a corporate aluminium empire, where international companies have leverage with local governments and continue to squander electricity from Iceland for the cheapest price in the world.

“You have something cheap- in Bangladesh it’s labor, in Iceland it’s electricity- companies aren’t going to think twice about exploiting you for it,” says head of Icelandic Nature Conservation Association, Arni Finnsson.

While he acknowledges opportunism on the corporations’ part, he believes that the federal government should take more responsibility.

“Irrespective of the owner, you need to have law on conservation, you need to have law on physical planning and you need to have law on environmental impact assessment. These legislations in Iceland are weak,” Finnsson says.

Iceland has three active aluminium plants that collectively produce 800,000 tons of aluminium per year. This makes Iceland the largest producer of aluminium per capita in the world, but because Iceland is so remote, the energy price has no competitive advantage and is cheaper than energy that is sold in Ghana.

The two largest smelters are owned by American companies Alcoa and Century Aluminum. Now, another two plants owned respectively by these companies are under construction, but due to Iceland’s bad economic reputation, they cannot get loans and have consequently both been stalled.

You can’t have your cake and eat it too

Smelters require a huge amount of electricity. In order to create that electricity, hydroelectric dams or geothermal plants must be exclusively built. The last dam built was the Kárahnjúkur Hydroelectric plant for Alcoa to run their smelter. Two glacial rivers were harnessed, and a sweeping fjord in the highlands was flooded to produce enough hydroelectricity.

The municipality of Kárahnjúkur had several prosperous years while the dam was being built -although Alcoa imported most of its workers for cheaper labor- and now the population is again in decline with unemployment on the rise. The municipality is still paying off its debt for building the dam.

Diversity not debt

John Perkins is an economist and author who has studied the practices of corporations across the globe. He says that companies Alcoa and Century Aluminum persuaded officials from municipalities to take out huge loans to build electricity sites to power the aluminium companies at a price that was extremely cheap. So cheap that they ended up in massive debt.

He believes that Iceland could make more money by harnessing its existing power to create different industries that would employ more people.

“From a national standpoint, the country would be way better off if it could find other ways to use its energy resources,” he says.

“They are essentially giving their resources away at a loss. It’s a self destructive mechanism that puts the country in huge debt which they cannot get out of without the assistance of the International Monetary Fund.

Andri Snaer Magnason is an Icelandic writer who published a book and made a documentary called ‘Dreamland’ that puts Iceland’s environmental and economic issues into global perspective. The book has sold 18, 000 copies.

“The plans for new smelters are actually madness, they are a gold rush, a craze, on a scale you’ve never seen in a developed country,” he says.

Geothermal is not strictly renewable

On top of the two planned smelters not having adequate loans to go ahead, the limits of nature are getting in the way. Arni Finnsson is very skeptical of geothermal energy. He says that research is limited and that there are no models showing gerthermal power stations lasting more than 30 years. In that sense, it is not renewable and some scientists think it may take hundreds to a thousand years for the heat to replenish.

“We cannot provide energy without destroying far too much and limiting the options for future generations. This nature is unique, you wont see it in any other part of the world,” he says.

“Sadly, I don’t think the government has power today to stop the new projects. In northern Iceland they’ve realised that Alcoa is pretty much in control.”

Environmental groups, such as Saving Iceland, are worried that more dams will be built, and Mr. Finnsson also argues that hydropower, like geothermal power, is not renewable. Dams have a finite lifespan as well, he said, because over time they fill with silt.

For now, Iceland no longer remains under a cloud of ash, but a cloud of uncertainty as it searches for environmental and economic solutions.

There are countless reasons for Magma Energy not being allowed to purchase HS Orka. Those who have no idea why should quit reading this and get their hands on books like Naomi Klein’s ‘The Shock Doctrine’ and documentaries like ‘The Big Sellout’ by Florian Opitz. They show how the privatisation of natural resources brings about increased class division and poor people’s diminished access to essentials—without exception.

People could also study the history of Ross Beaty, the man that wants to build Magma Energy to being ‘the biggest and best geothermal energy enterprise in the world.’ Ross is the founder and chairman of Pan American Silver Corporation, which operates metal mines in Bolivia, Mexico and Peru, where mining is done by the book: environmental disasters, human rights violations, low paid labour and union restrictions, to mention but a few of the industry standards.

Even though such facts are evident to all, the acceptance of this kind of critique is rare in Iceland. Those who criticise privatisation and marketisation from a radical perspective, analysing the global economic and power structures we live within (as well as institutions like the International Monetary Fund and the World Bank), are often dismissed and their words dismissed as only “one more argument against global capitalism”. Their pleading is thus supposedly belittled. The phenomenae ‘capitalism’ and ‘representative democracy’ have been normalised and recognised as ‘the only right way’ of social organisation; daring to criticise today’s ruling ideologies is seen as banal, uncool, even hysterical. After the collapse of Iceland’s bank casino and the nationalisation of private debts, it took months until the word “capitalism” appeared and was accepted in the critical debate of that winter’s resistance.

The fundamental questions that are never asked

In this discourse about the use of natural resources, the Earth and man, some people must wonder why the fundamental questions are never asked: Is man ‘supposed’ to ‘exploit’ nature just because he can? Is he ‘allowed’ to exploit nature like he does today? Does he ‘own’ nature or does he live with it? Is he not a part of it, does he not depend on it for his existence? These questions were asked at a public meeting on the Magma affair, recently hosted by Attac in Iceland. To begin with they were written off as theological reflections. After few objections the moderator changed his mind and called them philosophical, but did not want the panel to turn into a forum for philosophical reflection on man and his role on Earth. But objections rose again, both by guests and panellists, the latter trying to answer the questions, with uneven success.

God and the rational man

Considering these questions, theological and philosophical isn’t necessarily wrong. In the book of Genesis, God provides instructions for humanity: “Be fruitful, and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and over every living thing that moveth upon the earth.” Those words, like others in the Bible, have often been used as arguments of those in favour of man’s domination of the planet. Hannes Hólmsteinn Gissurarson, Iceland’s most famous spokesman for free market policies and neo-liberalism, used them to criticize James Cameron’s Avatar, saying God’s message is clear: Man is ‘obligated’ to “[…] conquer drought and floods with irrigation and dams and bridging or damming big rivers; to keep whales, elephants and lions at bay with reasonable harvesting, and to exterminate vermin.”

A similar attitude is found widely within Western philosophy. Starting with the ancient philosophers of Greece, man has been placed higher than other living beings on this planet. For instance, French philosopher René Descartes, often referred to as ‘the father of modern philosophy’, claimed our species’ rationality and intellect is what makes us men and separates us from animals. ?These and similar ideas have been debated back and forth. Freethinking philosophy students ponder man’s purpose and existence in this world, tearing through schools of philosophy and re-entering society all erudite. But philosophy has smoothly been separated from reality. It is allowed to wallow in the whole world’s philosophy, asking complicated, challenging questions. But seeing it as a part of reality and as real element in the discussion—e.g. now when Magma’s purchase is being discussed—is not an option. Philosophers can simply dawdle between library shelves while pragmatists argue over the tiny difference between private and state ‘ownership’ of the Earth.

The ‘pragmatist premises’ that surface when philosophy and our alleged reality are separated prevent some of the discussion’s factors to be considered. “Aluminium has to be produced somewhere! Without genetically modified food, humanity will starve! ” With these premises, we jump over few of the debate’s steps so it starts in the middle of the stairway, instead of the beginning. This is called manipulating a debate.

Extremes? Or the real facts?

At the above-mentioned public meeting, the “green socialist” Mörður Árnason stated that independent from his favour of privatising ‘utilization rights’, he could not agree that the man ‘owns’ the Earth. Rather that he is its guardian—from God’s hands or another’s—and one that hasn’t done the job well enough so far. It is easy to agree with him that man has not protected the Earth during the last centuries. But on the other hand, there is a reason to doubt that the opposite is actually possible when the ideas of the man as the planet’s owner or guardian are in the foreground.

In his book ‘Violence’, Slovenian philosopher Slavoj Žižek asks if it is not time to stop ignoring the fact that organised religion is one of the main sources of murderous violence in the world today, by always defining the violence and murders as the work of violent extremists who abuse the noble spiritual message of their creed. The same question can be transferred to humanity’s destructive behaviour, since it is clearly not some extreme fundamental-heavy-industry-moguls who alone bear responsibility for the state of the planet. We are dealing with an entire culture, a whole system of destructive power structures and behaviour patterns that build on the premises of man’s domination over nature.

When Björk says that we should think in terms of the 21st century—which she says is free from heavy industry but full of nano- and biotechnologies—she assumes that lately, man has been on a wrong road but should now head somewhere else on full speed. “To a new place,” like her friend Ólöf Arnalds sang at Björk’s ‘Náttúra’ concert in 2008.

This is a misunderstanding. First of all, there is no new place. There is only one Earth, and it has to be liberated and protected. Secondly, the 21st century way of Björk, Mörður and other progressivists, is in full harmony with the dangerous ways in which humanity has been leading, since the beginning of the industrial revolution, at least. The innovation and high-technology that are offered as real solutions—the new green deal!—do not replace heavy industry and old-school polluting production. They are only additions to what is already there, forming a global, industrial, unsustainable economical system that constantly is built upon. But removing from the bottom is impossible. The system stands and falls with its foundations.

Solutions! But only those who produce money

So often the opponents of environmentalists try to bury the dispute by accusing the latter of not offering any solutions ‘instead’ of the industry they oppose. This is of course nonsense. Anybody who opposes one thing has another to offer. This is self-evident, though the solutions can differ. For instance, the solution to Iceland’s constitutional violence towards refugees could span everything from ‘more just laws’ to a world without borders. The solution to an abusive or violent family father could be him receiving assistance to reform, or him being exiled from his community.

The biggest flaw of the discourse is how it only assumes solutions that fit into the ruling system’s frame. There is no space for other solutions, even though are very obvious, e.g. a healthy culture thriving on a healthy planet.

Instead, opposing parties fight about where the money should go. It is not discussed whether unsustainable capital ‘should’ be produced, the debate is rather based on the premises that ‘capital production’ is fundamental. Money can be produced from whatever is at hand—Earth itself or the beings living on it. Within this culture—where jobs like entrepreneurial investment, treasury and human resources management have become as natural as a newborn’s breath—money is people’s biggest goal and the central point of all existence and discourse. No matter if there is no real value behind it. The market and industries might have found their ways to put a price ticket on every square centimetre of this planet and every second that passes. But when one comes to think of it, how can human lives be measured with money? And what about mountains, rivers and forests?

The myth about ‘green’ economy and industry

In connection with above-mentioned Coca-Cola-sponsored ‘Náttúra’ “nature concert” and the parallel opening of the Náttúra.info website, Björk stated that she and her comrades were not one more group of “angry environmental guerrillas”. These happy environmental entertainers’ project seemed to be about not challenging the status quo at all, rather to keep on the old track of industry and production—this time under the banner of institutionalised green flags and environmental certifications.

They went all over the country to find solutions in employment affairs, something that could replace heavy industry but still make money. The list became long, all the way from treatment-tourism and exported children’s food, to biotechnology, identification software for law enforcement and the production of solar panels.

In the magazine ‘Dealing with Distractions’, which was published in December of last year, parallel to the resistance to the UN’s climate change conference in Copenhagen, Mikko Virtanen writes about so-called ‘alternative industrialism’ and points at the self-evident facts that environmentalists seem to avoid recognising and discussing: “To build a new green infrastructure of such a massive scale would require a lot of energy and materials, which can only be provided through the use of already existing fossil fuel based infrastructure. […] The production of this new infrastructure will require a vast amount of raw materials, much of which are not renewable themselves, and are environmentally destructive to obtain. […] It has yet to be proven if we even have the raw materials available to make enough wind turbines and solar panels to keep up current levels of energy consumption or any significant level of industrial production at all.”

His result is that we “need to put wind energy, solar energy and other alternative industrial solutions on the list of false solutions along with agrofuels, nuclear energy, and clean coal technology. As soon as possible, we need to start doing the only thing that can halt the destruction of our life supporting systems: reducing our industrial production and consumption to the absolute minimum.”

What about bringing these ideas into the discourse on energy production and nature conservation here in Iceland?

Xenophobia or not xenophobia?

Magma’s opponents have been accused of xenophobia and refused it. But wait a minute… In his writing about Magma, former Morgunblaðið editor Styrmir Gunnarsson says that the Icelandic nation ‘has’ the right to reap profit from ‘its property’. His words mirror almost whatever party that opposes Magma’s purchase. Guðfríður Lilja Grétarsdóttir, group chairman of the Left Green party, says that “the resources should be used for the good of the community.” Though she notes that it does not matter if private pockets are Icelandic or foreign—they should not be filled with money that ‘should’ go into public pockets—she still assumes that nature within political borders belongs to the human beings inside it (or rather those who are accepted by the authorities).

At a recent press meeting, Björk and her comrades who started a petition against Magma’s purchase asked if ‘Icelanders’ should not level the country off and pay ‘their’ debts by keeping full dominance over resources and profit from them. In Reykjavík Grapevine’s last issue, Björk was interviewed and asked about the xenophobia accusations, which she says are an “attempt to sidetrack the discourse.” But she immediately criss-crosses and says: “The real question is whether it is a good idea to privatise and sell of our energy resources at this point. We as a nation are badly burnt after the collapse.” People might argue that the recognition of the political phenomenon ‘nation’ has nothing to do with xenophobia.

But when the discourse is about issues like ownership over the Earth, the actual sidetracking is recognising a nation that has right above others to decide the arrangement of nature. Here, Slavoj Žižek’s question applies again: Should we not stop ignoring the violence that consists in the separation of people into nations, by always focusing on those considered extreme nationalists and racists; Nazi skinheads and racist politicians like Sarkozy, Geert Wilders and Pia Kjærsgaard? While we only see the alleged extremes of political issues, but do not dig after their roots, those who on the surface keep themselves outside the extremes, get a change to build up their prejudiced and often hateful agenda without it being noticed.

The root is left untouched. Because of how extremely Bush Jr.’s stupidity and hatred was displayed, it was enough for Obama to be black to gain some sort of a respect from opponents of U.S. foreign affairs policies. Similarly, he only had to slip the word ‘green’ into his vocabulary, to gain similar recognition from environmentalists.

The Earth without borders

Björk says she cannot separate the protection of Iceland’s nature and her role as an Icelandic artist because of how connected they are. Then she says: “Iceland has given me so much, I feel as if Iceland’s nature was bestowed upon me and all the rest of us as a gift, and I feel a great need to defend it.” This enormous emphasis on this being ‘Iceland’s’ nature and that as ‘Icelanders’, people should protect it—an idea not at all limited to Björk and her partners—makes it impossible to dismiss accusations about xenophobia as sidetracking.

Certainly it is likely that libertarians, who in the same sentence talk about xenophobia and hostility towards foreign investment, are simply not capable of having a discussion about the ownership of the planet. Therefore they follow the footsteps of those who inserted accusations of anti-hedonism into their objection to the opponents of Kárahnjúkar dam. But that does not give Magma’s opponents permission to dismiss all criticism about the integration of environmentalism and nationalist chauvinism. Sigur Rós have especially stated that they are not a political band, but just cannot sit by and watch such heavy industry constructions in ‘their own backyard’. During Saving Iceland’s international conference in 2007, Ómar Ragnarsson—one of Iceland’s best-known environmentalists—said that compared to other nature, the “Icelandic one” is the equal to a Christmas meal in comparison to other meals of the year. And nobody would skip that dinner for another one! Do we really have to argue about if chauvinism and xenophobia are included in such pleadings?

In his 1922 book ‘At The Cafe: Conversations On Anarchism’, Italian anarchist Errico Malatesta simply but sharply explains his objection to nationalism: Why should a worker rather stand with a factory-owner within the same political borders, rather than another worker outside of them? Though the meaning is communistic and primarily regards social defects of borders, these words can simply be implemented with nature at front. Why should the struggle for the protection and liberation of the Earth, which constantly comes under persecutions by the culture of the ‘civilised’ man, be subjected to man-made borders?

It is time for the discussion about borders, states and nations, to be removed from internal debates amongst philosophers and anarchists—it needs to come to the surface as a real discourse.

We cannot eat money

Undoubtedly, some people will oppose internal arguments within the environmental movement, asking those who at least agree that Magma should not own HS Orka—that nature should never be owned by private party, independent from whatever premises that opinion is based on—to drop the debate on ideology, tactics and emphasis, now when the purchase has to be stopped. But that is not necessarily right. If we drop critical discourse, internally and externally, the environmental ideal is bound to stagnate and become one-sided.

Then again, we may ask if these really are internal fights.

The opponents of Magma are obviously not on the same side. On the one hand we have people who ask the public and authorities to do what they demand, so that they can start making music again. Instead of aluminium production they suggest all kinds of production requiring huge amounts of water, the design and production of identification software for law enforcement, nanotechnology solutions and long-term biotechnology researches.

On the other hand we have people who fight for a completely different culture. Free from overproduction. Free from overuse of water and other goods. Free from identification repression and law enforcement. Free from nano- and biotechnologies, which focus on making man even more of a sovereign than he already is. And between these two directions, there are endless views, opinions and facts. Sharing an enemy does not necessarily make us comrades in arms. Though anarchists and right-wingers share their objection to state communism, it is highly unlikely that they will ever stand together in a struggle. The same logic applies here.

In the discourse about Magma Energy, nature conservation, energy production and ownership, there is a need for much wider range of views and opinions. So far, hardly no-one has given convincing arguments, proving that nature is better set in state hands than private ones. So far, none of those who oppose the privatisation of nature have reasoned for the man’s ownership of the Earth to begin with.

An old American Indian proverb says that not until the last tree has fallen, the last river polluted, and the last fish caught, will people realise that they cannot eat money. These foreboding words are something we need to take seriously. We cannot dismiss them as philosophical reflections, important to keep in mind but never supposed to be brought into real discourse and actions regarding the Earth, its protection and liberation.

Small and Cute – For Concerned Icelanders

Ross Beaty, CEO of Magma Energy, has repeatedly been asked if he´s exploiting Iceland´s economic turmoil to claim control over the country´s resources, which he has always denied. On the 26th of August last year when he appeared on Kastljós, an ‘after-news special’ program on RUV (Icelandic National Broadcasting Association), Beaty also denied being interested in more power plants. “No, we´re focusing on this now. This is a small nation and it doesn´t serve our purposes to become to big”.

Because of exactly these comments, the announcement that HS Orka had sought permission to do test drilling in Hrunamannaafrétti, from Flúðir and into Kerlingarfjöll in search of geothermal areas garnered a considerate ammount of attention. Keep in mind that a research permission is not a permission to raise a power plant, but still, just drilling one test hole can cause a considerate ammount of damage on pristine land. Then, just a few days later, RUV news reported that Suðurorka, an energy company owned by HS Orka and The Icelandic Power Company (a consulting company), has plans of building a dam in Skaftárhreppur, the 150 MW Búlandsdam, over the next four years. HS Orka seems therefore to be on the warpath.

Biggest and Best – For the Shareholders

In the interview with Kasljós (26th of August 2009), Ross Beaty stated that he wishes to found the worlds biggest and best company in the field of geothermal energy. He claims to have done so before with another company, Pan American Silver, which he built up and in the year 2007 had become the biggest silver company in the world. In that same interview he also declares himself as a devoted environmentalist. An advertisment from Magma Energy tells us that “Magma intends to exert itself for an increased energy production of HS Orka in Reykjanes and in that way advance job-growth and higher quality of life in the south-peninsula”.

It´s an interesting fact that a devoted environmentalist has spent almost half of his life on running a mining company, whereas such operations fall quite short of being categorised as “sustainable” or environmentally friendly. It will also be interesting to see whether Magma will put more effort into striving for a “higher quality of life” than the CEO´s former company, Pan American Silver, with it´s operations in four countries in the South- and Middle-Americas, including Peru. Strikes and demonstrations are common amongst the employees of the company´s silver mines there. Understandably enough, because the company brags about the unrelenting profits every three months. Authorities have a tendency not to demand any social responsibility towards their employees in the cases of companies like Pan American Silver, for fear of driving them away.

The radio channel RPP (Radio Público de Perú) has described the circumstances in the mines, where it was revealed that the mortality rate amongst the workers is high, the work camps are unheated and there are no sewage lines in place, causing the nearby rivers to become contaminated. The descendants of aboriginals in the Andes mountains have been promised riches for working in the mines, but realise to late that all the promises were nothing but empty words. Those who have sought assistance from labor unions in an effort to secure their right usually end up getting laid off. Last year, more than 4500 people had lost their job because of their affiliation with CGPT, the country´s biggest labor union. Mario Huamán, CGPT´s president, said in a recent interview that “it doesn´t matter how many times we sue. It´s like these companies have absolute immunity.”

A “Strong” Investor – Financed with Public Money

The argument being used for the neccessity of putting HS Orka into Magma´s hands, is the claim that the company is in a need for a strong foreign investor. But it doesn´t look like Magma is so financially strong. The company has financed itself largely through loans from Icelandic partners; when Magma bought Orkuveita Reykjavíkur´s (OR, Reykjavík Energy) share in HS Orka last fall, much of the price was covered with loans from the seller to the buyer. The rest Magma secured with Icelandic currency bought at a so-called “off-land market”, a market where currency can be bought at much lower rates than the official ones. The Icelandic króna does not grow stronger with this kind of trading, but strengthening it is the main argument for calling out to foreign investors.

This time around, a large portion of the selling price is paid through an acquisition of a loan HS Orka had from Reykjanesbær. The web based news-forum Eyjan reported that Magma had announced the companies intentions to seek out Icelandic pension funds to finance further research and development of HS Orka. There’s nothing abnormal about the fact that Magma has to take a loan to pay for the investment in HS Orka, but if the company is as financially stable and strong as it’s representatives state it is, then why doesn’t it take the loans from a foreign party instead of getting a loan from the ones they are buying the shares from?

SA, the Confederation of Icelandic Employers, welcome the decision on Magma’s takeover of HS Orka and specifically states that the change of ownership will grant HS Orka a chance to continue their build-up of the Reykjanes power plant. Although Icelandic power companies are not financially strong at the moment, it’s the lack of harnessing permits, rather than lack of finances, that’s holding back further “development” (ie. enlargement) of the Reykjanes power plant. Said permits are being held back, because according to Orkustofnun (National Energy Authority), the energy in the Reykjanes peninsula is already over exploited.

Recommencing the Sortie: Íslandsbanki’s Export of Knowledge and the Bank’s Role in the Sale to Magma

Magma’s takeover of HS Orka can be traced back to Íslandsbanki’s (Bank of Iceland, formerly known as Glitnir) energy sortie along with the Independance Party’s plans of privatising the energy sector in Iceland. Advances to that end started in the years 2006-2007 and now the results have begun to see the light of day.

The privatisation process of HS Orka began under the joint rule of the Independance Party and the Progressive Party. At that time, Iceland’s economic boom was at it’s peak in the eyes of the public, but in reality the foundations of the banking system had already begun to crack. At the start of the year 2007 the state sold it’s share in HS Orka to Geysir Green Energy, which at that time belonged to FL Group, a holding company directed by Ásgeir Magnússon. He is currently the president of Magma Energy Iceland, a daughter company of Magma Energy.

On the 2nd of February of 2007, Glitnir announced that the bank planned to open an office in New York with the purpose of “strenghtening the operations of the bank in North-America, especially within the fields the bank had specialized in; renewable energy, especially geothermal energy and the food industry, mainly fishing industry.” That office wound up in the hands of Magnús Bjarnason and his co-workers who founded the advisory firm Glacier Partners from that office. That company, along with another of Magnús’s firms, Capacent Glacier, were Magma’s consultants in the takeover of HS Orka.

Íslandsbanki has now wiped the dust from it’s dormant energy sortie, with an announcement made on the 2nd of May this year. According to Channel 2 news from that day, Íslandsbanki is going to open an office in New York which will provide “financial consultation for investors in the fishing- and geothermal energy sectors.” When the Channel 2 reporter asked if Íslandsbanki was preparing a knowledge sortie, the answer from Birna Einarsdóttir, the bank-president of Íslandsbanki was “er, yes…, I would say we were going into export of knowledge”.

An announcement from the bank states that “Íslandsbanki has focused on providing service to companies working in the fishing industry and in the field of geothermal energy. The bank now plans to focus more strongly on the international scene and provide financial consultation to foreign companies wishing to invest in these sectors.” The resemblence of the new plan to the one from 2007, which ended with the canadian company taking over the third largest energy company in Iceland, is mildly said uncanny.

This article originally appeared in the June issue of the independent newsmagasine Róstur.

Following is the announcement from the group behind the petition along with the demands:

Within few days, the final deals concerning Magma Energy Sweden AB’s purchase of HS Orka will get signed. That will give Magma the full private right of utilization over these important and valuable resources for the next 65 years, with a possibility for a further 65 year extension! The company is buying these rights into our resources very cheaply compared to other countries, for an unusually long time compared to other countries and on terms which seem to benefit the buyer in all aspects. Some arguments have been made, stating that we can’t afford not to sell wheras the country needs foreign investors into the country to create employment. But the fact of the matter is that Magma is actually getting the main part of the loans for the purchase in Iceland – on terms which for some reason are not on offer to other companies.

According to reliable economic forecasts, pure green energy is getting more sought, and therefore more valuable, with every passing day in a world threatened by a looming energy resource shortage. If they treat their energy resources responsibly, the people of Iceland should be able to benefit hugely from them.

The sale of HS Orka is a trial of the resource- and energy policies of the coming years.

The times are hard and we cannot afford to purchase HS Orka ourselves, we say. But can we really afford not to?

If the public were given jurisdiction in this matter of high interest to participate in forming a long-sighted and just resource- and energy policie with a referendum – following an honest and transparent debate, the energy could remain as our most solid property – and source of income, including the energy on the Southern Peninsula that’s being given away. A democratic policy making like that could become an important example for the rest of the world.

Because of multiple misunderstandings and administrative screw-ups the deal on Magmas purchase could now manage to pass through without us having had the time to value it with proper resources on the whole of the matter and it’s possible consequences. We’re facing decisions that aren’t going to be made by appointed councils or elected politicians. There is full reason to call for the authorities to look into the matter on counts of the 12^th article of laws concerning foreign investment in business activity on Iceland, which states; “If the minister of trade suspects that a certain foreign investment can cause threat to the national security or goes against the general rule, public safety or public health and in the cases of serious economical, national or environmentaldifficulties in specific industries or areas, that seem to be ongoing, he can and may stop that investment…” If the deal truly is as unfavourable as it seems, then there’s more reasons for the government to breach it surfacing every day.

It’s neccessary to point out here that the decisions which led to this case were taken by elected and public officials who got heavily criticised in the parlament’s SIC-report (a report of a special committee investigating the causes of the economical collapse). It’s important that we learn from past mistakes, and that’s why we want to encourage the inhabitants of Iceland to put pressure on the government by declaring their wishes about the future rule for ownership of energy resources.

The signatures of the nation on this petition is a demand of popular will the authorities must listen to.

Björk Guðmundsdóttir, Jón Þórisson, Oddný Eir Ævarsdóttir

The declaration on the petition states:

I demand that the authorities stop the sale of HS Orka, and for the parlament to put out a referendum on the ownership of energy resources in the country and their utilization.
Signed:

The Struggle So Far
The campaign to defend Europe’s greatest remaining wilderness continues. For the past five years summer direct action camps in Iceland have targeted aluminium smelters, mega-dams and geothermal power plants.

After the terrible destruction as a result of building Europe’s largest dam at Kárahnjúkar and massive geothermal plants at Hengill, there is still time to crush the ‘master plan’ that would have each major glacial river dammed, every substantial geothermal field exploited and the construction of aluminium smelters, an oil refinery, data farms and silicon factories. This would not only destroy unique landscapes and ecosystems but also lead to a massive increase in Iceland’s greenhouse gas emissions.

Political Landscape
Saving Iceland has reintroduced civil disobedience and anarchist ideas into Icelandic grassroots and demonstrated numerous methods of direct action, many of which were utilized in a highly successful manner in the ‘Kitchen Utensils Uprising´ of last year, where experienced Saving Iceland activists constantly stood in the forefront pushing boundaries. Saving Iceland and our work throughout the years was a major catalyst in toppling the corrupt pro-heavy industry ‘Alcoa government’.

However, last year´s general elections were a major blow for the environmental movement in Iceland, with the ‘Left Greens’ booting their own minister of the environment out for being genuinely concerned about environmental values. The leader of the party denounced their own environmental policies for being too ‘puritanical’ to be applicable in such times of financial crisis. With this and the continuing of the People’s Alliance in government we are still looking at a heavily fortified pro-heavy industry government, doing away with any pretence of being green or even remotely progressive. On top of this, corrupt labour unions are firmly in the grip of the aluminium lobby calling for job growth regardless of the environmental costs.

The Situation Now
The deep financial and ethical crisis that hit Iceland in the autumn of 2008 caused the energy companies temporary difficulties in obtaining foreign loans for their projects, but the aluminium lobbyists are more bloody minded than ever. Now their argument is that with the economic collapse, Iceland can simply not afford to take note of environmental concerns. This actually exposes the underlying truth that the aluminium lobby have always been aware of the validity of the environmentalists point of view. The aluminium lobby want to further their horrors, on grounds of a crisis which they are largely responsible for having created.

The banking side of the crash tends to be overemphasized while other major drivers of the crash are often ignored. The report of the Special Investigation Commission (SIC), which looked into the events leading up to and causing the financial crash, has however focused on the effects of heavy industry in a key chapter of their report. The expansion of Iceland’s financial system beyond the country’s sustainable limits, is unequivocally traced back to the enormous projects of the heavy industry build-up. This chapter has been ignored by the media, and so has another chapter that stated the media’s own culpability as unquestioning servants of the bank and industrial establishments.

A fundamental problem with the SIC report and the general atmosphere of denial that greeted it is that the report comes from within the very heart of the rotten State of Iceland. As such its real function is to keep all the options for dealing with the huge amount of corruption and democracy deficit safely within the sphere of the courts and parliamentary politics: Firmly under the control of the very establishment that created all this power abuse in the first place.

In case of the financial frauds this will mean years of long, drawn-out court cases which will gradually loose all meaning to the public, which have been left to pay the massive debts generated by the frauds.

In case of the deep rooted culture of corruption and the climate of fear which the aluminium corporations and power companies so thrive in, the promises of transparency and democracy are nothing but a smokescreen for an even greater corporate plunder of the countries’ energy resources. This plunder, supported by restructuring obligations in loan agreements with the IMF, is a continuation of a deeply corrupt policy of privatisation and ruthless industrialisation, the very same policies that created the crisis.

Current action targets
The Century aluminium smelter in Helguvík, targeted by Saving Iceland last two summers, is still slowly being built. Where the electricity for the plant is to come from is still uncertain, but it will require up to eight new power plants, at least seven of which will be geothermal on the Reykjanes Peninsula (HS/MAGMA) and Hellisheiði (OR – Reykjavik Energy). One of the geothermal plants powering Century’s smelter could be in Bitra, close to Hengill, and the eighth power plant will probably be a large dam on the beautiful Þjórsá River that Landsvirkjun (National Power Company) is eager to build as soon as they can. Norðurþing is in negotiations with Alcoa about an aluminium smelter in Bakki/Húsavík with energy coming from fragile wilderness areas in the north. Platina Resources want to do gold and other mining research in the Eastfjords.

Take action!
This year, instead of organizing a summer protest camp, we call for resistance throughout the seasons. We especially call for Icelanders to take action all year round but also environmentalists worldwide to come to Iceland, where we will warmly welcome any kind of individual actions against the aluminium corporations and the energy companies active in destroying the environment.

Symbolic actions have turned out not to be enough to stop the forces of destruction. The aim of actions should be to prevent any further rape of the land. Saving Iceland gives its wholehearted solidarity to any actions that hit the aluminium industry and the power companies where its most effective.

Even if you can not come to Iceland to do direct actions your help to our struggle with solidarity actions, donations, translations and by spreading the word will be invaluable.

For information on targets read:

The Nature Killers

The Saving Iceland European Target Brochure

S.I. European Target Brochure Update

Let’s cut to the chase. The opacity of Icelandic business and politics has done the country, as a whole, no favours. Much hand shaking and back scratching has gone on behind closed doors and such secluded business environments have proved themselves to be breeding grounds for lies, corruption, fraud, swindling, and downright thievery.

With Icelandic bankers being held in local prisons and wanted by Interpol and the once celebrated “outvasion Vikings” having their pants sued off by the Americans, now is a time to usher in a new, honest era of business in Iceland in an effort to get the country and its economy back on track and to restore the trust of the mass populace in the system.

Enter geothermal corporation Magma Energy of Canada

In the summer of 2009 Magma Energy developed an interest in Icelandic energy company HS Orka. As we explained at length in our October 2009 issue, HS Orka was largely owned by FL Group, the investment company of one Jón Ásgeir Jóhanneson (the previously mentioned legally entwined outvader), the municipality of Reykjanesbær (an Independence Party stronghold and loyal donator of funds to the party) and a couple of other municipalities on the Reykjanes peninsula on which Keflavík airport sits.

At that time Magma Energy had created a shelf company in Sweden to skirt Icelandic laws forbidding non-EEA companies from owning any stake in the country’s natural resources and snatched up 43% of HS Orka in two separate transactions in July and October. Geysir Green Energy maintained 55.2% of the company and a couple of surrounding municipalities held on to less than 2%.

Lies, lies, lies, lies, lies, lies, lies

On September 16, 2009, Magma’s founder and CEO Ross Beaty was asked by the Grapevine to respond to the suspicions of some that his company was in Iceland to take advantage of the country’s economic turmoil. He told us “I would suggest that is ignorance and complete nonsense. It’s just because they don’t know what we’re all about and they don’t understand the world that we live in. We’re not in Iceland for any such reason. We’re in Iceland because it has opportunities for long-term benefit where we can deploy capital and we can improve the condition of an Icelandic company for the long term. We would be interested in Iceland under any circumstances, absolutely, even two years ago [in 2007] it would have been unchanged.”

Eight months later, on May 5, 2010, Ross Beaty told online investment newsletter Hera Research Monthly “We would have been farther along had [the global economic crisis] not happened, although we may not have had opportunities that we took advantage of. For example, going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.”

On September 16, 2009, we asked Ross Beaty if Magma had its eye on a majority stake in HS Orka, to which he replied “no, we do not plan on getting a majority. I have no interest in fighting Icelanders, particularly the government, over what is proper energy policy in the country. The government said they would accept Magma going to a 50.0 % interest so long as Icelandic interests had the other 50 %. So that’s neither minority or majority, it’s a rather awkward business position but certainly something that we feel can be workable and we certainly will be striving to achieve, but not increase beyond that. That’s something that we think should be acceptable to the Icelandic government and, we hope, the people of Iceland.”

The Grapevine followed that up by asking if Magma planned on making any further acquisitions in Iceland, to which he replied “No we don’t. No we don’t.”

Lies, lies, lies, lies, lies, lies, lies lieslieslieslieslieslieslies

On May 17, 2010, Magma Energy issued a press release stating the company is “pleased to announce that it has signed an agreement with Geysir Green Energy ehf (“GGE”) to purchase all of GGE’s stake in Iceland geothermal company HS Orka hf (“HS Orka”) resulting in Magma’s stake increasing to 98.53%.”

On May 19, 2010, the Grapevine called up Ross Beaty to ask him a couple of questions about the recent goings on and he rushed off the phone saying “I’m just going through a tunnel and I’m just about to jump onto an airplane.”

Are there tunnels on route to Keflavík now?

Iceland is in serious need of honesty and transparency. These massive deals that put private control of the country’s natural resources in the hands of foreign firms and are only made public knowledge as the i’s are being dotted and the t’s crossed will do nothing for restoring the faith of the Icelandic people in their politicians and businessmen. Neither will politicians crying foul after the fact.

It would be nice if politicians acted in the best interest of the electorate and businessmen actually worked transparently in the long-term interest of the economy. How about we all get started with just a little honesty?

The Canadian energy company Magma Energy will soon own 98% of HS Orka, an Icelandic power company. Leftist-Green MP Ögmundur Jónasson believes the government ought to step in and prevent the sale from happening.

In a nutshell, Magma Energy already owns 46% of HS Orka, a measure approved by the conservative-led city council last autumn. Now Magma is set to buy Icelandic energy comapny Geysir Green Energy’s 52% stake in HS Orka. This effectively puts Iceland’s third largest power company in the hands of a foreign company, with very few returns remaining in the country.

Leftist-Green MP Ögmundur Jónasson believes the government ought to step in and prevent the sale from happening, as otherwise the party has failed to defend the natural resources of this country. He told RÚV that the most important task for the government right now is not to succumb to the temptation to sell our natural resources in difficult economic times. He has called for a special parliamentary meeting on the matter this week.

Minister of Industry Katrín Júlíusdóttir has no comment.

Prior to the buyout, HS Orka was owned for the most part by municipalities in the region. The economic collapse of autumn 2008 has attracted many investors to Iceland, and the approval of the sale of part of HS Orka last fall was conducted before a full gallery of spectators (as seen in the above photo) in city hall.

At the time of the sale, Magma Energy CEO Ross Beaty told the Grapvine, “I went to Iceland earlier this year and looked at opportunities and it seemed that HS Orka could benefit from capital infusion, reorganisation of its shareholding to stronger positions and it looked like there was an opportunity to do something that would help us and help HS Orka and, in the big picture, help the country of Iceland.”

With only 2% of HS Orka’s revenues now remaining in the country, it is hard to imagine just how Magma Energy is helping Iceland.

The third largest power company in Iceland, HS Orka (Southern Peninsula Power Company) is in the process of being sold to the Canadian company Magma Energy. Magma already owns 46% of the stocks in HS Orka and is now set on buying Geysir Green Energy´s (GGE) 52% stock, leaving only 2% of the company in Icelandic hand´s. Magma´s takeover of the company started in july of 2009 when Magma bought an 11% share from GGE. Around the time of the purchase, Ross Beaty, Magma’s director stated that the company did not plan to become predominant in H.S. Orka or meddle with the management of the company’s power plants. Now, barely a year later, those words seem long forgotten.

Members of the left wing in the Icelandic government and environmentalists have been criticising the sale, focusing on the fact that a national resource is slipping out of the populations hands and citing laws forbidding investors from outside the European Economic Area (EEA) to own part of Icelandic power companies. But nobody seems to mind the fact that even before the sale of GGE´s share, the majority of HS Orka had already fallen into the hands of foreign investors, though only partly. How so? GGE owned 52% of HS Orka. Íslandsbanki (formerly Glitnir, formerly Íslandsbanki) owned 40% of stocks in GGE, so whereas 95% of Íslandsbanki was in the hands of foreign creditors, many of whom are from outside of the EEA, aproximately 20% of HS Orka was belonging to these foreign creditors. On top of that can be added the fact that all board members of HS Orka at that time were under Íslandsbanki´s control, the bank now headed by former president of Landsvirkjun (National Energy company) and environmental terrorist, Friðrik Sophusson. Like stated above, Magma owned 46% of HS Orka at that time, making the total foreign ownership of the company aproximately 66%.

The local industrial lobbyists, the same who have constantly obsessed about nationality in their endless rants about the importance of workplaces hiring Icelandic workers first ever since the collapse of the financial system, and who buy advertisments for millions every year campaigning for the locals to shop Icelandic products, have revealed their bottomless hypocricy yet again with their position of defence for the foreign investors. Whereas it´s all important where the labor force comes from now that the country´s experiencing recession, the cash flow can come from anywhere in the world, as long as it means more industrialisation, more jobs for the locals and more environmental harnessing.

At the same time they discount the claims of resources being sold to foreign comapnies with their redundant statements about the resources not belonging to HS Orka directly but are being “rented” out for 65 years alongside the sale. One of the oppositions solution focuses on reducing that time to 40 years, which makes no sense or difference as the deal is still the same; Magma will own 98% in an Icelandic power company and have control of it´s resources for decades to come.

Iceland is now treading a path so many country´s have been forced down before it. After a sudden boom in the financial sector, which a handful of people turn to their benefit ending up bankrupting the rest of the country, the national resources are now up for grabs for anyone with a monetary injection into the system. Takeovers of this sort have been looming over the horizon ever since the former collapse-government struck a loaning deal with the International Monetary Fund (IMF) in the wake of the financial crash. Such deals have seldomly ended with anything else than a total and utter plunder of national resources and a litteral enslavement of the inhabitans through strict bugetary conditions and hostile takeovers layed down and orchestrated through or around the IMF. Icelandic officials, in their usual fit of denial, all swore against any conditions or risks of losing any resources to international companies being bound to the IMF loans. But it didn´t take a long time for the first conditions to break into the daylight as IMF constantly held back evaluating Iceland´s case until Steingrímu J. Sigfússon, minister of finance, signed a memo stating that the Icelandic government recognises and takes responsibility for the debts the collapsed Landsbankinn (National Bank of Iceland) formed in the U.K. and Netherlands through the infamous ICEsave accounts.

Read more about Magma´s sneaky takeover through these older news from the Saving Iceland website:

Canadian Company Wants to Take Over H.S. Orka: http://www.savingiceland.org/?p=4093

Magma’s Purchase of H.S. Orka Approved – Three Arrested in the City Hall: http://www.savingiceland.org/?p=4115

Blame Canada? – Geothermal Energy, Swedish Shelf Companies and the Privatisation of Iceland: http://www.savingiceland.org/?p=4152

Sigrún Elsa Smáradóttir, representative of the Social Democratic Union party in the board of OR announced that the estimated loss because of the stock trade is going to be 4 billion ISKR. There’s reason to believe that the value of the deeds Magma issued is overestimated as well, which will see even further loss come from the sale.

There was huge opposition against the sale from the start and the at the City Council meeting where the voting for the sale took place about 100 people demonstrated and shouted in protest from the balconies. Read more about this here and here.

The majority of the City Council spoke strongly for the sale and the profits that it would reap them, claiming the value to become 6.31 a stock. But the miniorities overlooked critique of the ridiculous loaning agreement has already proven to be true. The 3rd quarter accounts prove this and show that the stock value has fallen to 5.4.

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.

“People were screaming, saying that the politicians were traitors,” explained Jón Bjarki Magnússon, a student who arrived at City Hall just in time for the vote. “It was a weird feeling to see it happen, to see these people down on the floor raise their hands and the decision is made and to see all these angry people above them not able to do anything.”

The September 15th city council meeting stretched on for over three hours, during which time onlookers shouted and boo-ed as city council progressed toward approving the 32.32% sale of Iceland’s HS Orka to the Canadian-cum-Swedish firm Magma Energy Corp.

Reykjavík Energy had agreed to purchase shares in HS Orka from Hafnarfjörður but the Competition Authority prohibits the energy firm from owning shares in competitors, explained the Progressive Party’s Óskar Bergsson. “It is my opinion that the sale was necessary to comply with the law, solve a dispute with a neighbouring municipality and strengthen the financial status of [Reykjavík Energy].”

They had no choice, they said. It was a done deal, they said. It is a wise move for the Icelandic economy, they said. And so the sale was approved; three protestors, including Jón Bjarki, were arrested; and the mayor, along with her councilmen and women celebrated the sale with a champagne toast behind closed doors.

A brief but complicated history of Hitaveita Suðurnesja
“Before this all started, in 2007, the state owned 50.9% of [Hitaveita Suðurnesja], the municipalities owned the rest,” recounts Júlíus Jónsson, CEO of HS Orka. “Then the state [run by the Independence Party] decided to sell their shares to Geysir Green Energy [owned by the FL Group, an Independence Party supporter].”

By July 2007, Geysir and Independence Party stronghold Reykjanesbær each owned roughly a third of the company, Reykjavík Energy and Hafnarfjörður each claimed a sixth and four other municipalities owned just over 1% between them.

In June 2008, Alþingi passed new energy laws that mandated the separation of private energy production from competitive operations thus Hitaveita Suðurnesja was divided into HS Veitur, managing distribution of electricity, water and heat, and HS Orka, taking care of energy productions and sales.

Júlíus continued: “Then in July, 2009 Reykjanesbær sold all their shares in HS Orka to Geysir Green Energy and bought all Geysir Green Energy’s shares in HS Veitur. At that time Geysir Green Energy sold 10.78% to Magma Energy.”

According to press releases heralding this initial transaction between Magma and Geysir, throughout the sale “Magma was advised by Glacier Partners… and its affiliate Capacent Glacier… and Mannvit Engineering provided a third-party evaluation of HS Orka’s operations.” Interestingly, Geysir’s Director of Business Development, Davíð Stefánsson, is also a Partner at Capacent Consulting, focusing on corporate strategy in the energy sector, and Mannvit Engineering is a shareholder in Geysir Green Energy. It’s curious, therefore, how Capacent and Mannvit were deemed suitably objective to advise Magma Energy through their purchase of shares from Geysir Green Energy.

“Then Reykjavík Energy made their contract with Magma and, along with Hafnarfjörður, sold them 32.32%,” Júlíus further explained. So today Geysir Green Energy and Magma are proud owners of 55.2% and 43%, respectively, and four municipalities hold on to just under 2% of HS Orka.

Was it ine vitable ?
This sale to Magma Energy has been in the works for sometime it would seem, with the wheels set in motion with the Independence Party selling the state’s share in Hitaveita Suðurnesja to their cronies—infamous banksters Hannes Smárason, Bjarni Ármansson and Jón Ásgeir Jóhannesson— at Geysir Green Energy to ensure transfer of what is now HS Orka to private hands.

“In the beginning of 2007, the government of the Progressive and Independence parties decided to put the state’s share in Hitaveita Suðurnesja up for sale and barred public entities from bidding,” said Þorleifur Gunnlaugsson, a Left-Green city councilman and Reykjavík Energy board member. “Representatives of those same parties have now sealed the deal in the municipal government.

While it’s true that Reykjavík Energy’s partial ownership of HS Orka contradicted Icelandic competition laws, critics have been questioning the speed at which the deal was passed, the lack of options presented to keep HS Orka in the hands of the public and the overall timing of the deal. Municipalities are, indeed, strapped for cash in these trying economic times, but the value of green energy is such that it would seem to be most sensible to hold on to it for dear life. Or at least to consider doing so.

The guaranteed revenue of owning a stake in a geothermal plant could very well have proved to be a life vest for drowning municipalities — times when the nation is in such a weakened financial state are also those in which interested parties are going to suss out the most lucrative deal for themselves, possibly paying far less than the resources are worth.

Júlíus noted that there were, at one time, as many as thirteen parties interested in purchasing the shares in HS Orka, but only two offers were made and there was allegedly no comparison. No information on the second bidder in this case has been made public, but their offer must have been laughable if not strong enough to rival the appallingly low deal wrangled by Magma, explained below.

Dagur B. Eggertsson, former Mayor of Reykjavík and Vice Chair of the Social Democrats, asserts that “now is probably the worst time in history to sell shares,” and criticizes the majority in the municipal government for failing to investigate alternate solutions.

“It was not inevitable,” Dagur insisted. “During this period we have seen examples of big energy-related deals that have been turned over by the city government but the thing is that the two political parties in power in city hall now are the same parties that gave away Icelandic banks to their friends, so they have a reckless record with privatisation. Not all privatisation is bad but you can privatise in such a manner that everybody is losing, and that is the sad case of a lot of privatisation in Iceland.”

Who is Magma Energy ?
According to their website, Canadian Magma Energy Corp. is a “geothermal pure play focused on becoming THE pre-eminent geothermal energy company in the world.” With its hands in geothermal operations along the west coast of the United States, throughout South Americaand, most recently, in Iceland since its inceptionin early 2008, it would appear that Magma is indeed dedicated to achieving their lofty corporate goal of industry domination.

“I’m an entrepreneur so I’ve started many, many companies, that’s what I do. This time around I wanted to build something green, so I looked at geothermal and it was just perfect, it just fit,” explained Ross Beaty, CEO of Magma Energy, of his foray into green energy following more than thirty years heading up precious metal mining companies. “I went to Iceland earlier this year and looked at opportunities and it seemed that HS Orka could benefit from capital infusion, reorganisation of its shareholding to stronger positions and it looked like there was an opportunity to do something that would help us and help HS Orka and, in the big picture, help the country of Iceland.”

Strike while the nation is poor
However, since Magma’s appearance on Iceland’s radar, their intentions have come under fire, with the general public seeming to doubt the Canadian firm’s interest in helping Iceland, rather than simply helping itself at Iceland’s expense. Earlier this year John Perkins, author of Confessions of an Economic Hit Man, paid a visit to Iceland expressly to warn the nation of what was to come. “You may be the first developed country to really be hit by the hit men,” he said. “Like the people in Latin America [Iceland has] incredible resources, the old fish industry and cheap energy. Energy and water are scarce resources on the planet today. Iceland must protect its resources.”

When confronted with claims that Magma Energy is an economic opportunist, praying on a country that is already on its knees following the economic collapse, Mr. Beaty responded “that is ignorance and complete nonsense. It’s just because Icelanders don’t know what we’re all about and they don’t understand the world that we live in. We’re in Iceland because it has opportunities for the long-term benefit where we can deploy capital and we can improve the condition of an Icelandic company for the long term.”

“We’re here because Iceland is a core geothermal country that has great resources, many of them untapped, and it’s simply a core business for us to get involved with countries like that, be it Iceland, Indonesia, the Philippines or, for that matter, North America,” said Mr. Beaty. “I particularly enjoy the hypocrisy of some people who don’t want foreign companies to be in Iceland but have no problem with Icelandic companies going to other parts of the world to do geothermal development, but that’s a whole different subject. There’s a lot of hypocrisy and a lot of finger pointing in situations like this, but that’s the way of the world I suppose.”

Out with the old and … back in with the old
The general concern that seems to be brewing around Magma Energy’s involvement in Iceland is not unfounded, however, as the deal struck with Reykjavík Energy reeks of the economic wheelings and dealings that led to the collapse precisely one year ago.

The Share Sale and Purchase Agreement entered into by Reykjavík Energy and Magma Energy Sweden AB reads: “Payment of the Purchase Price shall be by: (i) wire transfer of ISK 3,616,988,813… and (ii) delivery to Arctica… of a bond issued by the Buyer in favour of the Seller… evidencing an aggregate indebtedness of an amount in USD equivalent to ISK 8,439,640,562 calculated using the mid rate for the USD/ISK exchange rate as posted on the Central Bank of Iceland’s website at 11:00 2 (two) business days prior to the Closing Date.”

To put it in terms that have become alarmingly familiar: Magma Energy will pay ISK 3.6 billion to Reykjavík Energy upfront, with a remaining ISK 8.4 billion provided to Magma as a bullet loan from Reykjavík Energy, with the sole collateral being a bond in HS Orka reissued to Reykjavík Energy by Magma. Also, according to Magma’s financial statements “the bond is repayable in a single instalment in seven years and bears interest at an effective rate of 1.52% per annum.” Magma will repay Reykjavík Energy in US dollars using the Central Bank’s exchange rate according to the strength of the króna at the time of the deal being signed now, in 2009.

Magma’s financial statements further state the “purchase of the Company’s interest in HS Orka will be financed by cash on hand and the credit facility available to it, or from other sources of capital available to the Company” and that, as of June 30, 2009, cash and equivalents totalled $4.5 million, working capital was $2.7 million and Magma’s undrawn credit was $20 million. This would imply that Magma Energy is some $5 million short of paying even their initial down payment to Reykjavík Energy, contradicting the purchase agreement guaranteeing sufficient liquid assets to complete the transaction and, one would assume, making Magma a poor candidate for a loan for the remaining ISK 8.4 billion.

“I’m very sceptical. It reminds me of what has been going on in Iceland before and to see this happen and stuff like them buying a company with a bullet loan and just using shares in HS Orka as collateral,” worries Jón Bjarki. “How the fuck do they do that? It stinks. The whole thing stinks. I just don’t trust these people anymore. I don’t think anything has changed here. John Perkins came to Iceland and he said that what is going to happen is that we are going to start to sell our natural resources away, you won’t realise what’s happening but that’s what happens after crises like this in Iceland. This may be a small step but it’s a very scary step.”

Wave the red flags
More possible cause for contention, the term of usage rights Magma Energy is purchasing allows for an initial 65 years with the option of renewal for another 65 years. “This poor deal becomes even clearer when we compare it to other contracts that Magma Energy has made,” explains Social Democratic MP Ólína Þorvarðardóttir, referring to Magma’s 10-year term in Nevada with the possibility of extending for another ten.

From a purely business perspective Mr. Beaty argues that such a long-term is proof positive that Magma is invested in building as strong and successful a company as possible. He says: “If you’re building a house and you want to have a really nice house and you have a leasehold agreement that gives you ownership rights for your house—if you have a short leasehold agreement you’re going to build a really crummy house because you know that, after a while, you’re not going to own anything. If you have a decent term you’re going to build a nice house and it’s going to run well and be nice to live in.”

However some critics of the agreement have their doubts about Magma Energy’s dedication to HS Orka and Iceland. “To my knowledge Magma has plans for maybe five to seven years in Iceland and then they want to exit with good profits,” projected Dagur B. Eggertsson. “So they will probably just sell their 130 year contract for their own profit but not for the profit of the people.”

Who is Magma Energy Sweden AB?
Magma Energy Corp. and Magma Energy Sweden AB are, essentially, one and the same. The “Sweden AB” suffix was added when it came to light that Magma Energy Corp. was not permitted to purchase shares in Icelandic natural resources because corporations outside the EEA would not guarantee EEA regulation of resources. Thus a Swedish shelf company was established to skirt Icelandic laws. The listed president of said Gothenburg-based shelf company is Lyle E. Braaten, a long-practicing Vancouver based lawyer and secretary and general counsel of Magma Energy Corp.

Said Mr. Beaty of this: “It’s legal nonsense that comes out of particular Icelandic laws that say the only companies that can be involved in the Icelandic energy business are European community companies. So Canadians, or anywhere else in the world for that matter, can only get involved by incorporating a subsidiary in the EU.”

Due to an agreement between the Canadian and Swedish governments regarding taxation, Sweden was ideal for Magma’s EU P.O. box for the Canadian firm to avoid double taxation.

As for Magma Energy’s operation in Iceland being regulated in accordance with the EEA and Icelandic law, Mr. Beaty doesn’t “know that it really matters. Magma is going to be following the best practices that I’ve followed all my career. All kinds of things that are demonstrably at world standards. We’re not interested in raping and pillaging, we’re interested in doing long-term sustainable development and if you can do that in any industry you can do it in geothermal.”

This raises concern about the ease with which foreign firms can incorporate themselves within the EEA and the purpose of laws prohibiting non- EEA ownership if they are so easily manoeuvred around.

Transparency, please
Throngs of unanswered questions and intense circulation of rumours surround the Magma Energy deal. Halldór J. Kristjánsson and Finnur Ingólfsson (there’s a name that should ring a bell for those familiar with Icelandic corruption and shady deals) are thought to be involved, and some even suspect Ross Beaty of just being the face of a company being run by Icelandic banksters-cum-green energy enthusiasts, all of which feed the fears of the general public that could be calmed through widespread corporate transparency.

Daði Rafnsson, author of the popular Economic Disaster Area blog, while adamant that transparency is the means by which Iceland can rebuild itself as a nation and avoid suspicion, said, “I think it’s going to be really hard. For business here we’re always going to run into situations of knowing somebody on the other side of the table, but too often the same people are on both sides of the table, that seems to be a reoccurring theme. It’s hard to not be connected in some way but people should know about it. That will go a long way in educating people on who to vote for, who to not vote for, who to trust.”

Iceland’s privatised future
In her frighteningly poignant tome Shock Doctrine, Naomi Klein writes “When communities get hit by great shock large corporations and other power blocks use the opportunity to push a pointed policy where public property is given to private parties on a silver platter, for a disgraceful price.”

The partial sale of HS Orka to Magma Energy is, undoubtedly, a landmark in Iceland’s political economy, but that is not to say that it is destined to be a precedent. For the time being it appears to have opened a floodgate, as a Chinese aluminium company has shown great interest in the possible acquisition of 32% of the Þeistareykir geothermal plant in Húsavík—their representatives have already met with Húsavík officials to discuss the possible deal. The future of Iceland at this pivotal point in its history is largely dependent on ongoing critical thought by policy makers on the long-term well-being of Iceland’s resources.

As Noam Chomsky warns: “Privatisation does not mean you take a public institution and give it to some nice person. It means you take a public institution and give it to an unaccountable tyranny.”

For the time being it is likely best that Iceland stops to evaluate its current situation. Many argued that the Magma Energy deal was passed too swiftly, that not enough time was given to contemplate the possible consequences of the foreign privatisation, that the public didn’t know enough or just didn’t care. But contemplation is imperative, the public needs to know and the public must care. Now is not the time to grow complacent.

“It’s weird to see what they do and to feel like you can’t really do anything,” bemoans Jón Bjarki. “After the protests this winter, people who were there feel like ‘what can we do? Nothing seems to change no matter what.’ For a period of time people were doing stuff, trying to let their voices be heard, but nothing changes and it all seems pointless. The thing is, there are so many reasons to be against all this but people don’t even know it is happening.”

Well over 100 people attended the city council’s meeting yesterday to follow the discussion from the balcony of the council’s main meeting hall. Öskra! – the movement of revolutionary students, had amongst other, called on people to show up and protest against the decision making.  People were very angry and expressed their anger in many different ways; mostly by shouting and interrupting the councilors’ speeches, telling them to get out and calling them traitors. The meeting had to be stopped several times because of the disturbance, which lead to the building’s security guards calling for police assistance. Three men were arrested after one of them threw a role of toilet paper down from the balcony on to the floor were the councilors were sitting. When the police attempted to arrest him, two others tried to de-arrest him, which lead to the arrest of all of them. The arrest was quite brutal, enough to shock many of those who attended the meeting. 

The Left Green Party proposed that all decision concerning the contract would be delayed until a committee from the ministry of commerce finishes its research on the issue. This proposal was rejected by the majority. The mayor of Reykjavík, Hann Birna Kristjánsdóttir from the right wing Independence Party, constantly stated the by approving O.R.’ s selling of their shares to Magma, natural resources were not being sold, but only the access to them. The fact is that the contract gives Magma Energy access to the geothermal fields in Reykanes for 65-130 years – a period of time that could see the drying of these areas, especially if thet are going to be harnessed on the big scale that is needed to run Century Aluminum’s smelter in Helguvík.

The privatization of Iceland’s nature has started.