First published in Grapevine. Based on a 2010 article entitled “Í landi hinna klikkuðu karlmanna.” (“In the Land of the Mad Men”). Translated in part by Haukur S. Magnússon.

After the election, we see the old parties of economic mass destruction are coming back to power. Giving enormous promises of easy money to be wrestled from evil vulture funds, debt relief and tax reduction, The Progressive Party doubled in size after a few years of hardship. There is a jolly good feeling between the two young new leaders of a brave new Iceland, and when a radio host called them up and offered to play them a request, they asked for Duran Duran’s ‘Wild Boys.’ I Googled the lyrics, not quite remembering the lines, and got a nice chill down my back:

Wild boys fallen far from glory
Reckless and so hungered
On the razors edge you trail
Because there’s murder by the roadside
In a sore afraid new world

They tried to break us,
Looks like they’ll try again

Sounds quite grim. This, coupled with the new government’s announcement that it would be effectively dismantling the Ministry for the Environment and Natural Resources and that there will be no Minister for the Environment, gave me a strange flashback feeling. I decided to revisit the state of mind that we used to call normal in 2006. When the economic policy, the energy policy, the expansion of our towns, the mortgages on our homes—almost all aspects of our daily life had become totally mad. This is not my own diagnosis; if you search the homepage of the IMF for the phrase “Collective Madness,” you’ll find this:

“’Iceland, in the decade and a half leading up to the crisis, was an example of collective madness,’ said Willem Buiter, chief economist at Citigroup, a remark that elicited spontaneous applause from the more than 300 participants, many of them Icelandic policymakers, academics, and members of the public.”

In our daily lives, we usually sense what is normal and what is over the top. Sometimes the discourse will blind us; PR and propaganda can create a kind of newspeak. It can be a good exercise to try to talk about things in a foreign language, to view them in a new light. As an Icelander, you could for instance try to tell someone from another country that Iceland’s government sold one state bank and received payment in the form of a loan from another state bank—and vice versa. That the state banks were thereby handed to men that were closely connected to the then-reigning political parties. The manager of one of the parties became head of one of the banks’ board of directors, while the other party’s former Minister of Trade belonged to the group that was given the other bank. That man had access to every bit of inside information about the bank’s standing.

In the meantime, this former Minister of Trade became Central Bank Manager. He went to the US and made Alcoa an offer that the company could not refuse. He had thus set in motion the largest-scale construction project in Icelandic history, greatly increasing economic activity in Iceland—a grand boon for the bank he just finished selling to himself.

If you tell this story in a foreign language, people shake their heads. They gape in disbelief. They use words like “corruption” and “mafia.” They exclaim, full of disbelief and even disappointment, “no, not in Scandinavia!”

THE ACCEPTED INSANITY

It is insane to expand a banking system by tenfold in eight years. We know that now. It isn’t technically possible to grow all the knowledge and experience needed to build up and manage such a contraption in such a short time. Not even by shoving an entire generation through business school. It is impossible.

But the megalomania was not just confined to the banking sector. Energy production in Iceland was doubled from 2002–2007, when the huge Kárahnjúkar dam was built in the eastern part of the highlands—to serve one single Alcoa smelting plant. The energy it produces, about 650MW annually, is enough to power a city of one million people. Doubling the energy production in a developed country over a five-year period is not only unheard of, but it would also be considered ridiculous in all of our neighbouring nations. Most industrialised states increase their energy production by around 2–3% annually. Doubling it would be unthinkable. It has been proven again and again that gargantuan investments generally destroy more than they create.

In Iceland, however, the goal was to double the nation’s energy production AGAIN by building aluminium smelters in Helguvík, Húsavík and enlarging the Straumsvík smelter by more than threefold. The period of insanity was to be succeeded by a total and complete madness. This was to be funded by 4–5 billion dollar 100% loans to Icelandic energy companies from foreign banks. Nearly 20,000 dollars for every single Icelander—every loan directly connected to aluminium prices and secret energy prices. The media reported this as your everyday act of government job-creation. It was regarded extremist to ask critical questions. Many regarded it unthinkable for the survival of the nation NOT to do this.

Now we know that we did not only sacrifice our nature for the economy, we sacrificed nature and the economy. Again, we do not have to seek out the websites of activists or environmental groups for this information. We just go to the IMF reports:

“Executive Directors observed that the Icelandic economy is at a difficult turning point. The long economic expansion, initiated by aluminium sector investments, sustained by a boom in private consumption, and fuelled by ready access to external financing, contributed to a build-up of macroeconomic imbalances and financial vulnerabilities.”

COCAINE IN THE HOT WATER?

The madness made itself clear in the business of geothermal energy, making itself known in the form of financial troubles and enormous debt of the energy companies. The geothermal field had enjoyed an even and stable development since it got started in the early twentieth century. During the great depression, the City of Reykjavík created the world’s largest geothermal heating system by pumping hot ground water into the homes in the city. Later they started producing a small amount of electricity by harnessing steam through turbines. But one day it seemed as if someone drilled into a cocaine vein. Out of the twenty high temperature geothermal areas in Iceland, plans suddenly emerged to harness sixteen right away, all for the sake of the aluminium industry. The energy companies applied for permits to do research drilling in most of the remaining ones. In an instant, the field went from a very slow, conservative development to becoming a geothermal wild west.

In the south, a major development of all the geothermal areas from the Reykjanes Peninsula to Þingvellir was planned—a chain of power plants in pristine and delicate areas—to serve a Century Aluminium smelter in Helguvík. But the geothermal plants would not have sufficed—the remaining power would be squeezed from hydro electricity in the Þjórsá river—potentially threatening the greatest stock of North Atlantic Salmon in Iceland—and up in the highlands—threatening the Pink-footed Geese of Þjórsárver.

So what was referred to as “moderate development” when the parties of The Wild Boys were last in charge of our energy sector? Their plans went like this: A new Alcoa smelter in the east, a new Alcoa smelter in Húsavík, a new Rio Tinto Straumsvík smelter beside the old one, an expansion of the Century smelter in Hvalfjörður and a new Century smelter in Helguvík. Amounting to a total of 1.4 million tons of aluminium. Each one of them needing energy that could serve one million people in their daily lives. Each one of them demanding sacrifice of great natural wonders, wild rivers and pristine geothermal areas.

How did they fare? The Alcoa Smelter in the East has been built, with the destruction of two glacial rivers, Lagarfljót and 50 km2 of highland beauty. The expansion of the Rio Tinto smelter was stopped and the Húsavík smelter did not go through, however, a skeleton of the Helguvík smelter is currently rising—with no power in sight.

The Alcoa smelter in the north would have required all the harnessable power in the northern part of Iceland, only excluding Jökulsá á Fjöllum. Close to Mývatn, we have the Krafla geothermal area. After a long and often struggling forty-year development period, the available power from the area reached about 60 MW. Now, the goal was suddenly to quadruple the area’s energy production—expanding it by 150 MW in just a few years, and harnessing the beautiful Þeistareykir area to its utmost capacity—up to 200 MW. They also had their eyes set on Bjarnarflag and Gjástykki, delicate areas that should be regarded as national heritage sites. All this was to serve a new Alcoa factory they wanted to build close to Húsavík, the famous whale watching and fishing village in North Iceland. Having done all that, however, the energy production would still not reach the 600 MW that Alcoa really needed—the harnessing of two more glacial rivers would have been necessary: Skjálfandafljót with the waterfall Aldeyjarfoss and the glacial rivers running from Hofsjökull.

The interesting thing is not how crazy this seems in hindsight, how extreme, how mad this reality was — but that outsiders did not see this plan as collective madness. The scheme was praised in international media as being a progressive plan for “clean” energy, and we still have members of parliament that regret that this did not happen. And the fact that our labour unions and politicians have referred to this when they say that “nothing is happening” in terms of business and job creation in Iceland. Or that they refer to this when they say “we have still only harnessed X% of our energy.” They are talking about this as a normal feasible future state of Iceland.

Why are people so crazy? Is it or was it a good idea to indebt the nation by a total of 5 billion dollars to place two Alcoa smelting plants in the same constituency? To surround the Faxaflói bay, where 70% of Iceland’s population resides, with three smelters? The answer is simple: The mad men still think so. One of the new Independence Party MPs, Brynjar Níelsson, has no regrets for the death of the river Lagarfljót in service of Alcoa. He said it was apparent that protectionists loved a few fish more than they did people.

But you can still ask like a fool: Did Iceland really have enough accumulated knowledge and manpower to multiply all our energy companies in the space of ten years? Was there never a doubt in the geologist’s mind when he found himself in a magical place such as the Torfajökull area above Landmannalaugar, Kerlingarfjöll or the steam areas around Reykjavík? Did they really want to do drill, pipe and harness EVERYTHING, right away? And do it all for the sake of a single industry—the aluminium industry. Did it have to be the role of a marginalised group of a few activists to use their spare time to criticise this?

OF “REYKJAVÍK” KNOWLEDGE

I was once at a meeting in Húsavík, where I screened my film, ‘Dreamland.’ At that meeting, the local geothermal plant manager claimed he could easily harness 1,000 MW out of geothermal areas north of Mývatn. I asked if it wasn’t correct that scientists are concerned about overexploitation of the country’s geothermal areas. The scientists’ criticisms were quickly blown off the table as “Reykjavík knowledge,” and in that instant every alarm bell went off.

Now we understand that power is not as plenty as the hype promised, and now most Icelanders understand that energy production on the banks of Lake Mývatn in Bjarnarflag might just jeopardise the ecosystem in that wonderful lake. But you wonder if the people developing our most delicate areas possess good enough judgement to work close to natural wonders. It seems like they are ready to take the risk, to see what happens.

I found an interview with the aforementioned plant manager from 2002. At that time, he had drilled a big hole for 170 million ISK because a Russian company potentially wanted to build an aluminium oxide factory and a giant aluminium plant in Húsavík.

If one sets aside minor ethical facts, such as the Russian aluminium industry being run by the mafia at that time, one is still left to ponder the fact that almost no industry in the world produces as much and as toxic waste as aluminium oxide production (or alumina, as it is called). Those that followed the horrible events when a red slush toxic lake in Hungary broke should know what comes with an alumina refinery. But this local hard-working man had spent more than one and a half million dollars looking into the feasibility of such a plant in Húsavík. Things have been so good here that people think they are untouchable.

Even though the companies engage in malevolent practices in other countries, they would never do that here. Sure.

THE HOLY LOCAL

It seems that for some reason the most unbelievable hogwash gets promulgated without any critical thought. We enter a boom after boom and never learn from mistakes. We can look further back in history to see how madness is mixed up with ambition, how extreme and unrealistic views of the future are presented and taken seriously.

In an edition of Morgunblaðið from March 1987, one can read a prediction of the impending evolution of local fur farming until 1996. At that time, thirty fur farms were operated in Iceland. Morgunblaðið cites a report that predicts Iceland will foster 600 mink farms by 1996. They assume a twenty-fold growth in ten years, as if nothing were more natural. A month later, this optimistic story ran: “The mink stock will double this year.” Only three years later, in April of 1990, we find this dramatic headline in a copy of Morgunblaðið: “Fur farming: The industry is on its last legs. Many farmers on the edge of despair.”

In this country everything is considered normal if a “local” wants it. Nothing in Iceland is as crazy as the holy local is when he wants a smelter or an oil refinery, no matter how large or out of proportion. He has the sacred right to that, especially if he uses “job creation” as an argument. Numbers that would be considered sizeable in large nation’s economic statistics, energy resources and infrastructure that are earmarked by the world’s superpowers as being “strategically important” are subject to “the will of the locals.” The nation’s energy resources and nature are in the hands of a smattering of district councils that have no staff and no expertise while the majority of Icelanders that reside in the capital area seem by default “local” to nowhere.

So, the locals of the east destroyed their highlands, the locals of the south want to dam the wonders of the Skaftá area, the lower part of the Þjórsá river and the locals of the southwest are ready to harness almost every single geothermal area. And this seems to be a global problem—rural communities losing their youth and talents to the cities of the world are willing to sell off their forests, their mountains, their rivers and valleys for some hope of development and a future.

It is strange to see that one of the major driving forces behind this development resides within our labour leaders, who have been demanding extreme leverage and risk on behalf of public energy companies. If there should be a hesitation in the risk taking, the responsible parties are “dragging their feet.” The labour unions’ “stability agreement” with the former government entails that “every obstacle be removed” that somehow hinders the proposed Helguvík aluminium plant. It is exactly this kind of thinking that lead to almost 200 foreign workers being left disabled and unemployable as a result of working on building the Kárahnjúkar dam. Conditions of workers were severely compromised to make the dam construction process cheap enough. Every obstacle was removed to provide Alcoa with energy prices that save them 200 million USD annually. That amounts to the combined yearly wages of more than 10,000 teachers.

The noble cause of creating jobs becomes quite grim if it involves harming the work capacity of so many. The PR people talk about a ‘multiplication effect’ of every job in a smelter—but wouldn’t it be polite to subtract the disabled workers? People will go so far to satisfy their prince charming that they behave like the ugly stepsister in the fairy tale, cutting their toes off to fit the glass shoe.

HOUSE OF CARDS

The Helguvík aluminium smelter close to Keflavík Airport is a symbol of how poorly run Iceland can be; the Helguvík aluminium smelter is already being built, even though nobody knows where we can scramble together its required 600 MW of energy. The Helguvík smelter is a symbol of how weak the nation’s administration can be, of how shattered professionalism and long-term thinking can become, and how the media all but encourages unlawful activities in their headlines, if job creation is at stake. They started to build the smelter without access to power sources, and without the necessary power lines planned or agreed upon by landowners.

Why start building, then? Because in 2006, the Wild Boys were in power, showing their ambition and “competence” by signing long term sales agreements for cheap energy before the energy sites had been researched, planned or developed. Now Reykjavík Energy and HS Orka are bound by agreements that neither company wants to fulfil due to foreseeable losses from selling the energy below its production costs.

The sharks were very aware that they were taking advantage of a country with mad politicians in a rare period in our history. When they were willing to sell almost everything, anything, anywhere to anyone. In a remarkable investor report called: “Harnessing unlimited power and profit from the world’s most progressive energy program,” an analyst made this great comment:

“It works out great for Iceland, too. It is very cheap for Iceland to deliver power to Century. The Icelandic power companies will make extraordinary profits on that power if aluminium prices stay strong. And if aluminium prices weaken, Iceland is not biting the hand that feeds it.”

This is how politicians build an elaborate house of cards that combine risk, debt and commitment that collapses if only one of the cards falls. Thus, the hands of future city governments have been tied and an insane construction binge in important areas has been commenced, all to benefit one company that’s lacking most of the needed permits.

Could anyone recount the details of the Century Aluminium Helguvík Smelter project at an international conference without being booed off the stage as a fraud? At an aluminium conference, however, such a man would actually bring more lust than an exotic dancer.

Despite being in the hands of extreme capitalists, the labour movement has not called for professionalism or long-term thinking in energy affairs. It simply demands that “every obstacle be removed.” Get the trucks rolling immediately.

In 2006 we were in the middle of a revolution, but the Wild Boys did not call themselves “The Aluminium Revolutionary Front”—they defined themselves as the norm, even though their scale was insane. If they were criticised, they started thinking of themselves as persecuted. Warlords are always persecuted moderates when they’re merely conquering neighbouring nations in the name of peace.

THE CORE OF THE PROBLEM

Throughout the years, polls have shown that a large part of Icelandic males aged 40–70 have been in favour of the collective insanity seen in the energy policy of 2006. The biggest problem seems to be with male voters of The Independence Party, where a vast majority has even considered the most extreme energy policy as the sole basis for the continued survival of Icelanders. That explains the great emotional attachment they have to dams and smelters. To secure their survival, the majority of them wants to cut back on our environmental regulations, and they have no standards whatsoever on the ethical background of the corporations coming to Iceland.

Therein lies Iceland’s most serious political ill. If everything were normal, our males would be conservative, moderate, aversive to risk, frugal, orderly and even a bit boring. This is an important group of people in every society. It contains a lot of average household fathers; it contains pillars of society, company directors, influentials, MPs and even journalists and editors. These are men that have the power to define what is normal and what is abnormal and/or excessive.

OF RESPONSIBLE PUNKS AND SURREALISTS

It is harmful for communities when a critical mass of their important males starts adhering to revolutionary and completely reckless ideas, adopting a blind belief in them. This group is not fit for governing anything while the situation lasts, and it is therefore no coincidence that the city of Reykjavík is now governed by the punkers and surrealists of the Best Party. A moderate mixture of surrealism and punk rock is a down to Earth, conservative and responsible policy when compared to the delusions and anarchy of the crazed men. They have proved very moderate and responsible, and have now moved the policy of Reykjavík Energy, Reykjavík’s energy company, into a more sustainable and modest direction. And the Left Green Social Democrat government did the same with Landsvirkjun, the national energy company.

Those that are worst off in this group of mad men share a mutual admiration for Einar Benediktsson (1863-1945). The Icelandic National Myth is perhaps best embodied in the figure Einar Ben, our poet of progress. His most recent biography gives a good picture of the kind of man he was and the impulses that motivated his actions:

What drives Einar Benediktsson on to undertake this long journey […] is his unshakeable belief in his own abilities to be of use to his impoverished fatherland in countries abroad. His dream is to furnish the money that will transform Iceland into a modern country, with towns, factories, railways, roads, harbours and large-scale farms. He carries nothing with him except his belief in himself…

Einar Benediktsson had great dreams for the future of Iceland, replete with hydroelectric dams, factories and railways. While his generation on both sides of the Atlantic saw their dreams become a reality, and sometimes a nightmare, Einar was to be disappointed in all his great hopes and ambitions. Henry Ford was born a year before Einar Benediktsson, and Sam Eyde, the founder of Norway’s Norsk Hydro was born three years after him. But Iceland failed to industrialize in the way Einar envisaged. Whether Iceland was fortunate or unfortunate to have missed out on the Industrial Revolution is something we can argue over. But the failure of Einar’s dreams left an unfilled space in the Icelandic soul. Iceland’s wealth came from fishing, but Einar’s ideas still hovered in the air, leaving a sense of a task left unfulfilled—the unfinished Icelandic dream. The Americans could move on from Ford to Gates. The Icelanders were still lacking a Ford.

One of the first bubbles in Iceland happened when businesspeople travelled the country buying rights to harness waterfalls in the beginning of the 20th century. Einar Ben had the Norwegian engineer Sætersemoen draw up a row of power plants spanning the entirety of Þjórsá. The drawings of the proposed power plants look magnificent and enticing and would without doubt be considered among Iceland’s most beautiful buildings had they been constructed. But how realistic were the plans? They had planned for harnessing Þjórsá to produce 600–800 MW—in 1918, nota bene. This does not include the rest of the water rights these men had secured for themselves, including Dettifoss and Gullfoss. In comparison one could note that today, one hundred years later, the City of Reykjavík uses 200 MW—on Christmas Eve, with every electric appliance running at full steam.

What did Einar plan on doing with all this energy in 1918? Aluminium production was barely on the horizon as a feasible industry, and televisions and freezers were but distant dreams. What were they planning to do with all the power? Produce fertiliser? The Gufunes fertiliser plant used around 20 MW when it was running at its peak. Who was to use all the energy and pay for the series of power plants? The answer is likely simple: No one. No one in the world could have found use for this energy.

Of course Einar could easily have harnessed a small stream to light up a small village, maybe even a cowshed or two. But there is no glory in that. The act would not appease the deranged men’s need for conquest and magnitude. There’s much more spunk, gusto and vigour in lining all of Þjórsá with power plants, even if the energy produced is way beyond what the nation can use one hundred years later. To this day, a lot of people think that Iceland’s government at that time was backwards, afraid of foreigners and somehow prevented the founding of a great and profitable company and “foreign investment.” But it’s enough to look at the numbers to see that the whole thing was a sham.

It’s so weird to think that, ever since, a certain group of Icelandic males have harboured a strange sort of national grief. It’s as if Einar’s unrealistic ideas have been haunting later generations of Icelanders. Not as fantasy, but as real, attainable goals or lost opportunities: “The dreams of our turn of the century poets have finally come true.” Remarked former PM Geir Haarde as he signed a deal with Alcoa in 2002. Yes, finally, the nation was dragged into a century old illusion.

THE MAD MEN VS. THE WISE GIRLS

The mob seems tolerate nothing worse than young, educated women who that use words like “professional” or “process.” Even if aluminium production in Iceland has been tripled over the last ten years, a lot of the crazy guys think that Iceland’s economic problems stem first and foremost from a lack of aluminium smelters.

Supporters of a new Century Aluminium smelter in Helguvík spent millions in advertisements campaigning against departing Minister for the Environment Svandís Svavarsdóttir, who delayed the building process with demands of a sober overview of the energy demand and environmental impact. The blogosphere went wild when Left-Green MP Kolbrún Halldórsdóttir spoke up against deep-sea oil drilling in Icelandic waters. One sensed a lynch mob in the making as former-Minister for the Environment Þórunn Sveinbjarnardóttir met with locals in Húsavík advocating for a full environmental impact assessment for a new Alcoa smelter—the audience was only lacking the pitchforks. The decline of The Independence Party is very evident in the fact that Katrín Fjeldsted lost her seat in parliament. She is a well-educated, intelligent and logical doctor and the only party MP who questioned the insanity. Every obstacle shall be pushed out of the way.

Icelanders harvest 1% of the world’s fish. We receive more tourists per capita than most nations. Iceland has harnessed five times the amount of energy that the nation needs to function, and we currently operate three aluminium smelters. But we have ALREADY harnessed five times more energy than our neighbouring countries. We are already an energy superpower—if everything were normal, such an investment should yield a fair bit of profit to the nation, if we don’t blow the proceeds and resources in another round of debt. But the discourse is so crazy. People act as if “NOTHING IS PERMITTED” when the energy production is already five times more than the nation can consume. Of the energy we produce, 90% already goes to smelters.

We already have everything a modern society needs. We just need to tend to what we have already built, to reap some profit from the power plants we have already constructed and take better care of what we’re currently fishing. People get insecure when interest groups moan: “Who will support us in the future?!?” as if Iceland is a country without foundations. The fear that is purposely spread is resulting in Iceland acting like a man that demands radiotherapy, chemotherapy and surgery to fix his headache. The truth is that the treatment will never cure him—but it might kill him. He will in the best-case scenario grow addicted to the drugs.

THEY TRIED TO BREAK US…

We are a small community and we need peace and room to work. That Björk should need to take time off work to fight the insanity is just a small example of the disturbance that thousands of Icelanders suffer every day because of this crazy nonsense. Living here will become unbearable if something like the reckless policy from 2006 goes full speed again. It is maddening that we cannot seem to leave our most beautiful areas alone. We are a small community where co-dependency is the norm and people are polite.

The new leaders are young and nice guys; Sigmundur Davíð loves old buildings and has good ideas for city planning. But behind them is a crowd of mad men, “fallen far from glory, reckless and so hungered.” Were four years from power enough to sober up the mentality in terms of the energy policy? What will come out of the “rethinking” of the Energy Master Plan? Will we be strapped up into another rollercoaster, just to take another ride of boom and bust? “They tried to break us. Will they try again?”

As from 2005 Alcoa, along with national energy company Landsvirkjun, Húsavík’s authorities and – to begin with – the Icelandic authorities, has been working on the project, which would have required at least 400 MW of energy, produced by harnessing geothermal areas and glacial rivers in the North. In 2008 a Memorandum of Understanding (MOU) between Landsvirkjun and Alcoa expired, and a year later the same happened concerning a MOU between the aluminium producer and the Icelandic government, the latter not willing to renew it.

Since then Landsvirkjun has signed a few other MOUs, regarding geothermal energy commerce, with possible buyers such as data centres and silicon factories, in some ways meeting with a popular demand for less destructive and more “green” use of the geothermal energy. Regardless of what one finds about the alleged “greenness” of such enterprises this development has inevitably raised the question if Landsvirkjun would be able to feed both Alcoa’s planned smelter and at the same time these smaller, less energy intensive factories.

Environmentalists have warned of the over-exploitation of geothermal energy. In fact, as early as in 2008, when Landsvirkjun’s official plan still seemed to include only Alcoa’s smelter, Saving Iceland insisted that the damming of one or more of the glacial rivers in the North was crucial if Landsvirkjun was to provide energy for a the smelter. At that time Alcoa had already stated that a 250 thousand ton smelter would be “unsustainable” and that the company would want to build at least a 346 thousand ton smelter in Bakki. For a smelter of that size 400 MW would have been needed in addition to the already planned 400.

In 2008 Þórunn Sveinbjarnardóttir, then Minister of Environment, ruled that the project needed to undergo a joint Environmental Impact Assessment (EIA), taking into account not only the impacts of the smelter per se but the whole infrastructure around it, including the power plants and energy transportation. The company’s response, as well of others in favor of the smelter, was that the minister’s ruling was a political attack against the project, only meant to delay the process.

The first draft of the joint EIA report was ready in the spring 2010 and a few months later Iceland’s National Planning Agency published its comments on it. The Planning Agency’s comments were damming, stating that the projects impacts would be high and could not be mitigated; its greenhouse gas emissions would constitute 14% of Iceland’s total and 17,000 ha of pristine wilderness would be affected. Most importantly, as pointed out by Jaap Krater, ecologial economist and spokesperson of Saving Iceland, the Agency highlighted the “uncertainty on the full impact of the planned power plants and particularly on how much geothermal energy can be sustainably produced. Finally, the assessed energy projects will not be able to fully power the smelter, with 140 MW of capacity missing.”

This energy crisis – similar to the one Century Aluminum is facing, regarding geothermal energy for their planned smelter in Helguví, South of Iceland – is no doubt the main factor leading to Alcoa’s withdrawal, though the company and other interested parties blame the joint EIA and the current government’s energy policy. As mentioned before this has been clear for a long time – in January this year business newspaper Viðskiptablaðið reported that Alcoa was about to withdraw from the Bakki project due to energy uncertainties. The final straw, according to the paper’s sources, was Landsvirkjun’s discussions with a company called Carbon Recycling, which plans to build a methanol plant run on geothermal energy from the North. This was, however, rejected by the company only a week later. Alcoa said that the smelter was still on their drawing table and that a permit for at least 500 MW of geothermal energy existed.

Though Alcoa’s representatives, as well as Húsavík’s authorities and other parties favouring heavy industry, have since yesterday acted as Alcoa’s withdrawal is somewhat of a shocking news, Katrín Júlíusdóttir, Minister of Industry, says that it is of no surprise to her. Alcoa has, according to Katrín, had a head start on all other possible energy purchaser, which it has not used in its own favour.

In a two pages interview with newspaper Morgunblaðið today – free from even a single comment from an environmentalist or other critical perspective – Tómas Már Sigurðsson, Alcoa’s director in Iceland, does not admit that the actual energy uncertainty, addressed by environmentalists and the National Planning Agency, has been the company’s main hindrance. Tómas, however, hints at it when stating that Alcoa has from the start been clear about its thirst for more then 400 MW, given that more than that can be harnessed in the North.

Tómas also says that the price that Landsvirkjun wants for the energy is not “competitive” – or in other words: too high. For the last year Landsvirkjun has been heavily criticized for prizing its energy seriously low, mapping Iceland out as a cheap energy haven for the aluminium industry, which makes it especially interesting that now Alcoa – an international corporation and of the world’s biggest aluminium producers – claims it cannot pay for Icelandic energy.

Now, as Alcoa’s dream of a smelter in Bakki is over – after six years process, including an investment of two billion ISK (17,3 million USD) – Tómas says that the company will continue its plans of further projects in Quebec, the New York state, Norway and Saudi Arabia. Also, as repeatedly reported by Saving Iceland, Alcoa recognizes Greenland as its next Iceland, from a social and economic perspective – i.e. easy exploitable society and cheap energy – and plans to build at least a 400 thousand ton smelter there in the nearest future.

Albeit the clear fact that Alcoa’s withdrawal from Bakki does not manifest the company’s worldwide decrease in operations, it surely marks a milestone in the struggle against the aluminium industry – not only in Iceland, but also worldwide. More on that later.
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See also:

Alcoa in Greenland: Empty Promises? by Miriam Rose
Alcoa: Where Will the New Dams be Built? by Jaap Krater
Greenland’s Decision: Nature or Culture? by Miriam Rose

In a recent article, originally published on news-website Pressan, Sigurbjörn says that before the municipal elections in spring 2009, the community in Hvalfjörður settled upon an agreement about environmental and industrial affairs. But under the administration of Hjálmar Sveinsson (on photo), who is a vice-councilman of Reykjavík for Samfylkingin, a joint venture of several port authorities in the Faxaflói area, titled the Associated Icelandic Ports, is enabling the way for the construction of yet another two factories at the Grundatangi industrial site in Hvalfjörður, where the two aforementioned factories are located. Sigurbjörn describes the whole process as a very dubious one:

Faxaflóahafnir [the Associated Icelandic Ports] requested that the industrial site at Grundartangi would be enlarged by 70,000 square-meters in order to place polluting industries there. The municipality, lead by the chairman of the parish council who is also a board member of Faxaflóahafnir, managed to put the change, which is now waiting a verdict from the Ministry of Interior, through by shady manners. Around 50 persons and parties made remarks on Faxaflóahafnir’s requested changes, but none of them were taken into consideration. But that wasn’t all: A detailed land-use plan was advertised beside the change of the general plan even before the deadline to make remarks on that particular change passed.

As the authorities have kept silent it is still not certain what companies are involved in those plans. In July this year newspaper Fréttatíminn reported that a Finnish company called Kemira – involved e.g. in paper and fertiliser production as well as biotechnology – which plans to operate a sodium chlorate plant in Iceland for bleach production, is looking at two potential locations: Bakki by Húsavík on the one hand, also a planned location for an Alcoa aluminium smelter; Grundartangi on the other. Such a construction does not require an Environmental Impact Assessment (EIA) by default but needs to be notified to Iceland’s National Planning Agency, which then decides if an EIA is needed or not. The energy needed to run the plant, which is said to be 40 MW, would, according to Fréttatíminn, come from geothermal area Þeistareykir, given that the plant would eventually be built in Bakki. No particular energy source has been mentioned in the case of Grundartangi.

Sigurbjörn and other residents of Hvalfjörður, who have filed repeated complaints against the plans to enlarge Grundartangi’s industrial site, have mostly been met with silence. While this should not necessary be surprising in a state that has still not ratified the Aarhus Convention, the Hvalfjörður residents were astonished to find out that the above-mentioned Hjálmar Sveinsson – who, in his article, Sigurbjörn says “can be remembered as a creative radio personality who one could contentedly listen to, especially due to his own stance on environmental and planning issues” – is one of the project’s key figure. Sigurbjörn states that after weeks, months and years of Hjálmar’s radio talks on environmentalism and democracy, one would have considered it as likely that Sea Shepherd’s Paul Watson would become a whale-hunter in Hvalfjörður as that Hjálmar Sveinsson would advocate for polluting industries and abuse of power. Paul Watson visited Iceland in 1986, along with Rod Coronado, where the two of them famously sank two of the country’s whaling ships and sabotaged a whale-processing factory in Hvalfjörður.

Neither Hjálmar nor any other authority figure responsible for these plans have openly responded to this criticism.
____________________________________________

See also:

Believes Aluminium Plant Is Poisoning Sheep

More Flouride in Animals Around Aluminium Factories than Elsewhere – Environmental Agency Refuses to Investigate

Elkem’s Icelandic Alloys Year Round “Human Errors”

A delegation committee from Alcoa, including John Thurstadt, the head of the company’s aluminium production worldwide, and Marcos Ramos, president of Alcoa in Europe, were in Iceland over the weekend to meet with the government and Landsvirkjun, Iceland’s national energy company. During the meetings, the committee stated that Alcoa is not withdrawing from the project and wants to go ahead with the project.

Less then three weeks ago, on January 20th, business newspaper Viðskiptablaðið, stated that Alcoa would soon announce the company’s withdrawal. The reason, according to the paper, was the obstacles that the current government has put in the way of the project, reaching its climax in September 2009 when Katrín Júlíusdóttir, Minister of Industry, refused to renew a memorandum of understanding between Alcoa, the council of Húsavík and the government at that time. The memorandum was originally signed in March 2006 and had repeatedly been renewed as the speed of the project slowed down. By refusing to renew it, Júlíusdóttir did however not rule out the smelter but most significantly disagreed with Alcoa about its planned size.

After this weekend’s meetings, Tómas Már Sigurðsson, CEO of Alcoa in Iceland, said in the media that the company’s has not changed at all and that the government had sent good messages about the future of the project. Asked about the frequently asked questions about the energy that the smelter is supposed to be run on, Sigurðasson said that he believed there is enough energy for the project: “A permit exists for more then 500 MW of power plants on the north-east corner [of Iceland].”

In the summer of 2008, Þórunn Sveinbjarnardóttir, Minister of Environment at that time, ruled that a joint Environmental Impact Assessment (EIA) had to be made, including the planned smelter, geothermal power plants and energy transportation. Whereas the decision was met with anger by the smelters proponents – some of them calling it a trick to actually stop the smelter from being built – others critisized the minister for not including in the EIA, possible hydro dams in several rivers in north Iceland that would be needed to produce enough energy to run a smelter of this size: at least 346 thousand tons per year (tpy) but maybe even 500 tpy according to the words of Alcoa’s Vice-President Bernt Reitan.

In an article published in the newspaper Morgunblaðið in August 2008, Jaap Krater, an ecological economist and a spokesperson of Saving Iceland, stated:

“A 250,000 ton smelter would require 400 MW of electricity. The energy would be coming from the geothermal fields in North Iceland. If the optimistic estimate of 370 MW for Krafla 2 (drilling into the Viti volcano), Þeistareykir and Bjarnarflag would be realised, which is uncertain, there would still be a deficiency, so 30 MW would be taken from the yet unspoiled and unexplored Gjástykki area, at a huge environmental cost . For a medium sized smelter the deficiency would rise to at least 150 MW and for a large smelter it would be at least 400 MW.”

“Thus, if the Bakki project is pushed through, it is almost inevitable that this will lead to construction of more large dams.”

The joint EIA was published in 2010 and in November that same year the National Planning Agency published its comment on the report. The agency’s conclusion was damning and proved three key points of Saving Iceland’s critique: Firstly, the environmental impacts of the drilling in the north will be far more then claimed by Alcoa. Secondly, not enough geothermal energy can be harnessed in the north to run the smelter. Thirdly, the project will highly increase Iceland’s emissions of greenhouse-gases and constitute 14% of the country’s total emission (which is already high above international agreements).

The questions about how Alcoa and Landsvirkjun are going to get enough energy for the smelter and if new dams have to be built, where they will be located, have still not been answered. Both parties are allowed to boldly talk about the project without being faced with these fundamental questions, which were highlighted in a press release from Saving Iceland on November 25th 2010 but ignored by the media, apart from the Reykjavik Grapevine, who’s report can be read here.

The project has been fraught with obstacles since its inception. Most notably, Minister for the Environment Svandís Svavarsdóttir has been an outspoken opponent of the plan. A damning assessment from the Icelandic National Planning Agency concluded that the proposed smelter would also have a “significant negative impact” on the environment not just of the surrounding area, but on Iceland as a whole. A few days ago Landsvirkjun, Iceland’s National Energy company, announced that they would neither fight for or against the protection of the area and that they will not perform “test” drills in Gjástykki (a globally unique geothermal area in the north of Iceland with ravines, faults, lava fields and volcanic craters) until the government had completed the process of protecting the area, even if they had got a go a head to do so by the National Energy Authority. Moreover, it came to light that a company called Carbon Recycling – which converts CO2 into methanol – has been in talks with National Power Company Landsvirkjun to operate in the same area – which, if it were to happen, would mean there could be no smelter anyway, as the energy requirements for both would be too great for the region. The source that Viðskiptablaðið spoke to said that the process of getting the ball rolling for the smelter has taken too long, and that the patience of the investors involved has run out. The final straw, the source said, was the aforementioned methanol plant. Should the story prove true, this could mark a turning point in Icelandic history in terms of the country’s relationship with heavy industry.

It states that:

– Environmental impacts of the project are high and cannot be mitigated.
– 17,000 ha of untouched wilderness will be affected
– Greenhouse gas emissions of the project would constitute 14% of Iceland’s total.
– There is a high amount of uncertainty regarding the full impact of the planned geothermal power plants and particularly their impact of the geothermal energy resource base.
– The assessed energy projects are not sufficient to power the smelter, with 140 MW of capacity missing.

“These reports confirms three key elements of critique that Saving Iceland voiced now several years ago,” says Jaap Krater, a spokesperson for Saving Iceland.

“The first is that the environmental impact of the drilling in the north would be much greater than Alcoa claimed.”

“Secondly, when the joint impact assessment was announced we insisted that possible dams in Skjalfandafljot, Jökulsá Eystri, Jökulsá Vestri (both in the Skagafjörður region) and Jökulsá á Fjöllum should be assessed for environmental impact. Now our calculations that the northern geothermal fields will not produce enough energy for the smelter are proving correct.”

“Thirdly, we have said that carbon emissions from the projects would be extremely high and would make it very difficult for Iceland to meet its international obligations. This is also confirmed,” explains Krater.

“If Iceland wishes to become an EU member, then this impact assessment will surely be the kiss of death for the Alcoa Bakki project.

Saving Iceland’s energy calculations were reported in Morgunblaðið in August 2008 (1), while the greenhouse gas issues were published in a recent international book publication (2).

References

(1) Bakki Impact Assessment Should Include Dams, by Jaap Krater, Morgunbladid, August 22nd 2008, in Icelandic here and English here.

(2) Development of Iceland’s geothermal energy potential for aluminium production – a critical analysis, by Jaap Krater and Miriam Rose, In: Abrahamsky, K. (ed.) (2010) Sparking a World-wide Energy Revolution: Social Struggles in the Transition to a Post-Petrol World. AK Press, Edinburgh. p. 319-333. Also published on Saving Iceland’s website here.

He Guoqiang, party secretary of the Central Commission for Discipline Inspection of the Chinese Communist Party, is visiting Iceland along with a delegation of business personale. They will be meeting with the country´s president, Ólafur Ragnar Grímsson, prime minister Jóhanna Sigurðardóttir and the foreign minister, Össur Skarphéðinsson, along with the heads of certain companies they´re interested in cooperating with.

On the 9^th of June, he and his delegation attended a meeting with heads of Landsvirkjun (National Power Company) where a letter of intent was signed on behalf of Landsvirkjun on one side, one of China´s biggest contracting companies, China International Water & Electric Corporation (CWE) and the government owned Export-Import Bank of China (Exim Bank) on the other. The letter regards participation on tender offers to harness energy in Iceland. The letter does not commit any of these partners to any deals, but Landsvirkjun claims the letter displays their interest in doing business with these partners and CWE´s interest in bidding on the Búðarhálsdam project, with Exim Bank willing to finance some of CWE´s projects for Landsvirkjun.
The delegation will also be meeting with Enex China (geothermal power company) to sign deals about prolonged cooperation on development of heating utilities in China.

At the same time the letter of intent got signed, head of the Central bank of Iceland, Már Guðmundsson, and the deputy managing director of China´s Central Bank, Hu Xiaolian, met in the foreign ministry to sign a currency exchange deal between the two central banks. This deal will make transactions between the two countries easier, which both banks hope will increase trade between the two nations.

In September of 2009 another Chinese delegation visited Iceland where they visited Húsavík, the site of the proposed Bakki smelter. The resource company Chinalco has been rumored to be interested in that project in itself, but Alcoa have a huge head start on them in dealing with the locals. But Chinalco has also displayed interest in Þeystareykir ehf, one of the geothermal companies that will be providing the energy for an eventual smelter in Bakki if it comes to that.

China´s big business is at the moment involved in serious industrial build-up and resource collecting, buying up one mining and metal company after the other along with mining rights across the globe. In 2008 Chinalco acquired 10% share in Rio Tinto, making them the single biggest shareholder of the company, which in turn is the mothercompany of the Straumsvík aluminum smelter just outside of Hafnafjörður.

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.

Tómas Már Sigurðsson, president of Alcoa in Iceland, says the project continues in cooperation with the energy companies and the local council of Norðurþing. They are now working on getting the Environmental Impact Assessment (EIA) done, which was ordered by the ministry of environment last summer. A suggestion for the assessment was given to the Office of the Icelandic National Planning Agency at the end of September this year. Tómas Már is hoping for the results of the assessment in the spring of 2010.

According to Tómas, Alcoa has already spent over 1 billion ISKR on the Bakki project, though the total cost will be considerably higher as Alcoa engineers have been working closely with Icelandic scientists on developing the technology to run an aluminium smelter on geo-thermal energy.

He doesn’t want to comment on the political situation, but VG, the Left Green party of the Coalation government, have often stated that if there was to be an industrial build-up at Bakki it should aim for other projects than an aluminium smelter.

The aluminium smelter Alcoa has proposed to build at Bakki is supposed to have a production capacity of 346.000 tons pr. year, which means it will have energy requirements of approximately 630MW. All the geothermal areas in the north and north-east can just barely cover that requirement, according to a recent assessment published in Mannvit 2009, and only so if no consideration is taken for ecology and nature preservation.

Now the plan is to push through an aluminium smelter in Helguvík with all its appropriate energy construction. Svandís Svavarsdóttir, the minister of environment, recently said that there is not enough energy on the Reykjanes penisula to fulfill the smelter’s energy needs. Others have pointed out that harnessing the geothermal areas there will be such a massive attack that the areas will most likely dry up in a short time. Katrín Júlíusdóttir, the minister of industry, has stated her positive opinion about Landsvirkjun producing energy for Helguvík – and the Þjórsá river comes immadeatly up to one’s mind. She also seems to be willing to renew the memorandum of understanding between the government and Alcoa, which according to the latter’s plans means that the whole geothermal areas in north-east Iceland have to be harnessed and dams built in one or more glacial rivers.

Recent studies about the economical impacts of heavy industry and the beneftits of energy realization to aluminium smelters, give the ideas that all the propaganda about the benefits of the Kárahnjúkar Dam were built on nothing. In a report about the economical impacts of heavy industry, economist Indriði H. Þorláksson says: “The country’s primary benefits of the operations of heavy industry plants owned by foreign parties, are the taxes they pay. It is supposed that the tax payments of an avarage aluminium smelter is around 1,2 billion ISK per year. That is only about 0,1% of the national production.” And a new report made by four economists by the request of the minister of finance, says that the selling of energy to heavy industry is simply not economically beneficial.

Other results – e.g. if the energy selling actually was beneficial – would most likely not impact most environmentalist’s opinions. But these results actuate the pleading of those who have claimed that the government and corporations connected to the heavy industrialization of Iceland are simply lying to people about the economical benefits of the constructions. It really should not have surprised anybody; the title of the Minsitry of Industry’s sale brochure, Lowest Energy Prices, says everything that has to be said about the realization of energy to heavy industry here in Iceland.

Further aluminium smelter construction in Iceland is an experiment to maintain life in an unsustainable economic system, which is based on the idea of constant production. Production that insists that raw materials like bauxite – aluminium’s main material – is constantly mined, transported from one continent to another, processed in many energy consuming steps until in the end, it becomes a product, ready for consumption.

Many of the aluminium adherents in Iceland have restorted to the theory of demand and supply, as an argument for continued and increased aluminium production: while people still buy aluminium, it has to be produced. The theory fits completely to the consumer society we live in, but its premise is that the demand is real and natural, but not made up. The consumer society is built on made-up “needs”, which people are taught to ask for. Capitalism’s constant production and the paralell aggressiveness towards the earth, would not add up if it would not be for these false needs. Therefor, it is absoloutly inevitable that environmentalists’ idealolgy bases on opposition to capitalism’s over-production and over-consumption.

The critique on aluminium production here in Iceland has unforunately often been built on a very shallow ideology. Instead of looking at the aluminium industry as only one part of the extra-ordinary complicated web of global capitalism – and one of its bases – it has been seen as a single phenomenon, which has to be replaced by something else. Words like “green industry” have therefor become leading in the mainstream environmenatlist discussion. But there exists a different critical way of looking at heavy industry and ecological destruction in general.

A critique on heavy industry, based on deep ecological thought, does not need to include any ideas about what comes instead of aluminium if this “instead” means a different kind of industry or other destructive operations. Instead there simply is unspoiled nature, which is enormously necessary for the planet we live on – not from a beauty perspective, but because of the fact that the nature is the premise of life. Deep ecology bases on the idea that the man is not more superior than the ecosystem’s other forms of life, but is rather only a part of the ecosystem and has therefor no rights to deplete it, expect in a completely sustainable way. Sustainability is a difficult consept, which governments and corporations have managed to steal and put into their rhetoric, and therefor been able to sustain lies and hoaxes about the real meaning of it. The fundamental idea of sustainability is that we return to the natural world as much as we take from it.

Protecting the nature, for nature’s sake has thus nothing to do with the economical situation. Claiming that radical ecological ideologies only fit in when enough money exists is a complete absurdity. It is not like the last years of “prosperity” here in Iceland were marked by very ecologically friendly ideas.

By Miriam Rose

The economic issues currently causing mass demonstrations in Iceland have a less publicised ecological cousin, and one which the IMF has recently identified as part of the economic collapse. In 1995 the Ministry of Industry and Landsvirkjun, the national power company, began to advertise Iceland’s huge hydropower and geothermal energy potential. In a brochure titled “Lowest energy prices!!” they offered the cheapest, most hard working and healthiest labour force in the world, the cleanest air and purest water – as well as the cheapest energy and “a minimum of environmental red tape” to some of the world’s most well known polluting industries and corporations (such as Rio Tinto and Alcoa). This campaigning has led to the development of an ‘Energy Master Plan’ aimed at damming almost all of the major glacial rivers in Iceland, and exploiting all of the geothermal energy, for the power intensive aluminium industry. The loans taken by the Icelandic state to build large scale energy projects, and the minimal payback they have received from the industry, has been a considerable contributing factor to the economic crisis, while at the same time creating a European ecological crisis that is little heard of.

The Largest Wilderness in Europe
I first visited Iceland in 2006 and spent a week with activists from the environmental campaign Saving Iceland, a network of individuals from around Europe and Iceland who decry the fragmentation of Europe’s largest wilderness in favour of heavy industry. From these informed and passionate folk I learned of the 690 MW Kárahnjúkar dam complex being built in the untouched Eastern Central Highlands to power one Alcoa aluminium smelter in a small fishing village called Reydarfjörður. The dams formed the largest hydro-power complex in Europe, and were set to drown 57 km² of beautiful and virtually unstudied wilderness, the most fertile area in the surrounding highlands. Ultimately it would affect 3% of Iceland’s landmass with soil erosion and river silt deprivation. They also explained how materials in the glacial silt transported to the oceans bonds with atmospheric CO₂, sinking carbon. The damming of Iceland’s glacial rivers not only decreases food supply for fish stocks in the North Atlantic, but also negatively impacts oceanic carbon absorption, a significant climatic effect. After taking part in demonstrations at the construction site of the Alcoa smelter (being built by famous Iraq war profiteers Bechtel), I went to see the area for myself.

Travelling alone on foot in this vast and threatening landscape was one of the most incredible and spiritual experiences of my life. I walked along the deep canyon of the crashing glacial river set to be dammed, as ravens soared above me and a sound like falling rocks echoed from distant mountains. I slept in grassy valleys and bathed in a warm waterfall which ran from a nearby hot spring as reindeer galloped in the distance. The midnight sun showed me the way to Snæfell mountain, from the top of which I could see from the Vatnajokull ice cap all the way to the dam construction site; across wetlands, black sand deserts and shadowy mountains. By the next year the dam’s reservoir would stretch across this whole area. I felt small and vulnerable and had a sense of the immense power of nature, and the even greater power of mankind to choose whether to preserve or to irreversibly destroy it.

Since then critiques of the completed Kárahnjúkar project have made it increasingly unpopular with the Icelandic public, who have become sceptical about the secretive nature of energy deals and the damage to nature. As a result, Landsvírkjun and the heavy industry lobby are now focussing on geothermal power which has a more benign reputation. Ultimately, it is proposed that all of the economically feasible hot spring areas in Iceland will be exploited for industrial use, including a number of sites located in Iceland’s central highlands, the beautiful heart of Iceland’s undisturbed wilderness. Landsvirkjun, without any irony, has termed Iceland ‘the Kuwait of the North’.

The following section challenges some of the myths about ‘green’ geothermal energy.

Renewable
Geothermal energy is created when boreholes are drilled into hot subsurface rock areas or aquifers, and turbines are powered by the emitted steam. They only have a sustainable production level if the surface discharge of heat is balanced by heat and fluid recharge within the reservoir (as occurs at undisturbed hot springs), but this is generally not sufficient for exploiting economically. The Geyser hot springs at Calistoga, USA experienced a 150% decrease in production over ten years, due to rapid exploitation to meet economic requirements, and there have been many similar cases. Geothermal boreholes in Iceland are usually modelled for only 30 years of productionⁱ.

Carbon-neutral
The concentration of carbon dioxide present in geothermal steam is a reflection of the chemical make up of the underground reservoir and is distinct to each area. The 400 MW of boreholes planned for another Alcoa smelter in the north of Iceland will release 1300 tonnes CO₂ per MWⁱⁱ. An average gas powered plant would produce only slightly more, 1595 tonne per MWⁱⁱⁱ. The total of 520,000 tonnes CO₂ for these fields alone is almost as much as what is produced by all of road transport in Iceland^iv.

Minimal environmental impact
Geothermal power accounts for 79% of Iceland’s H₂S and SO₂ emissions^v. In 2008, sulphur pollution from the Hellisheiði power station, 30 km away, was reported to be turning lamposts and jewelry in Reykjavík black, as a record number of objections was filed to two more large geothermal plants in the same area, which would have produced more sulphur and carbon emissions than the planned smelter they were supposed to power, and plans were put on hold.
Geothermal areas such as Hellisheiði are globally rare, very beautiful and scientifically interesting. Icelandic geothermal areas are characterised by colourful striking landscapes, hot springs, lavas and glaciers, and are biologically and geologically endemic to the country. Irreversible disturbance to these wild areas for power plants includes roads, powerlines, heavy lorries and loud drilling equipment.

Wishful green thinking?
In the desperate search for plausible alternatives to our fossil fuel economy, a number of well known British greens have been advocating a ‘European Grid’ energy future, in which Icelandic large scale hydro and geothermal power, and Saharan solar, are transferred by underwater cable to Britain and Europe^vi. It is quite understandable that such schemes look appealing, but it is also essential to have a realistic analysis of the impacts caused by these so-called sustainable technologies before we accept them as a panacea to our fossil fuel sickness.

The technological or pragmatic environmentalism in favour of super grids comes down to a proposal to sacrifice unique ecological areas for the greater good of living a resource-intensive life style ‘sustainably’. In contrast, for anyone who identifies with a natural area, it is easy to understand why it has a value of its own. This value can be seen as far greater than that of any of our possessions; it is in a sense, invaluable.

What can perhaps be concluded from this Icelandic green energy case study is that application of a technology that has been thought of as renewable, climate-friendly and low-impact, on the large scale that is associated with fossil fuels, makes it a lot like the technology it was supposed to replace. It has certainly been argued that technological systems tend to reproduce themselves independent of the specific technologies^{vii viii}. Simply applying a different technology to address issues that are not entirely technological, is not addressing the problem of our consumptive lifestyles. But it can irrevocably end the existence of a place that is not like any other.

References:

i E.g. VGK (2005), Environmental Impact Assesment for Helisheidarvirkjun [online]. URL http://www.vgk.is/hs/Skjol/UES/SH_matsskyrsla.pdf [Accessed August 15, 2007].
ii Sigurðardóttir, R. Unpublished. Energy good and green. In: Bæ bæ Ísland (bye bye Iceland), to be published by the University of Akureyri and Akureyri Art Museum.
The data in this study is arrived at by calculation of the figures in site surveys for the Krafla, Bjarnarflag and Þeistareykir geothermal plants.
Sigurðardóttir has experienced threats and harassment by Landsvirkjun, the national power company, since 2000. In that year, she concluded the formal environmental impact assessment for a proposed large dam, Þjórsárver, a Ramsar treaty area, by stating there were significant, irreversible environmental impacts. The national power company did not pay her and refused to publish the report. Since then Sigurðardóttir has been refused all Icelandic government commissions. Since then, practically all EIAs for geothermal and hydro plants and smelters have been commissioned to the companies HRV and VGK, construction engineers rather than ecological consultancies and “the leading project management and consulting engineering companies within the primary aluminum production sector” (HRV. 2008. Primary aluminium production [online]. URL http://www.hrv.is/hrv/Info/PrimaryAluminumProduction/ [Accessed 13-12-2008]).
iii US Govt. Energy Information Administration. 2008. Voluntary reporting of greenhouse gases program. [online]. URL http://www.eia.doe.gov/oiaf/1605/coefficients.html [Accessed 13-12-2008].
iv Ministry of the Environment, Iceland (2006). Iceland’s Fourth National Communication on Climate Change. http://unfccc.int/resource/docs/natc/islnc4.pdf [Accessed August 15, 2007].
v Statistics Iceland. 2007. Emission of sulphur dioxides (SO2) by source 1990-2006 [online]. URL http://www.statice.is/Statistics/Geography-and-environment/Gas-emission [Accessed 12/12/2008]
vi E.g. Monbiot, G. (2008). Build a Europe-wide ‘super grid’ [online]. URL http://e-day.org.uk/solutions/charities/14536/george-monbiot–build-a-europewide-super-grid.thtml [Accessed 13-12-2008].
vii E.g. Mander, J. 1992. In the absence of the sacred. Sierra Club, San Francisco, CA.
viii Krater, J. 2007. Duurzame technologie, een contradictie? Buiten de Orde, zomer 2007.

Þorsteinn Hilmarssson, Landsvirkjun’s spokesperson, states that Alcoa is minimizing its costs in various place around the world and did not think the company could bring money in to the test drilling. The Icelandic participants, Landsvirkjun and Þeistareykir, also face uncertainty about financement and what price it would be.

Alcoa Fjarðaál has not commented anything on the issue but after a meeting with Landsvirkjun earlier this week. Tómas Már Sigurðsson, Alcoa’s director, stated that the energy in the North would for sure be used and that despite the world economic crisis ,,people would just continue with their plans. Alcoa really wants to buy the energy” said Sigurðsson.

Even though heavy industry and dams are one of the driving forces behind the current economic crisis in Iceland, the government has been talking about further heavy industry projects as some kind of a solution.  The government has already applied for a big loan from The International Monetary Fund to pay the three major banks’ debts. If IMF accepts to grant the loan, privatisation of the energy sector and the destruction of Iceland’s natural resources is likely to be on of the fund’s main demands.

But like the big Kárahnjúkar and Fjarðaál project in the East, further large power plant and heavy industry construction with borrowed money will only be a short term boost for the economy, while at the same time worsening the crisis in the long run.

Local residents demanding mains electricity and regular running water supplies blocked the railway at Mambia, between RUSAL’s Kindia mine and the port of Conakry, the coastal capital of the West African state.

Armed police moved in on Thursday to clear the demonstrators and at least one person was killed and several were wounded, police and witnesses said. “All of the barricades have been removed … but for security reasons, since there was one person killed yesterday, the train shuttle has not restarted yet,” an employee of RUSAL’s Compagnie des Bauxites de Kindia (CBK) told Reuters.

Asking not to be named, he said authorities were worried about possible sabotage against the railway by angry locals.

RUSAL did not immediately respond to emailed requests for an update on the situation.

The company had said on Wednesday the blockage of the trains “does not affect the company’s overall performance targets”.

Guinean government officials flew to the area to talk with local people about their grievances.

Although Guinea is the world’s top exporter of bauxite, the ore used to make aluminium, most Guineans live in extreme poverty despite the country’s mineral riches. While resource firms are keen to launch operations there, analysts say political instability is a concern for investors.

As well as RUSAL, U.S. aluminium company Alcoa and London-listed Rio Tinto dig bauxite in Guinea. Rio is also majority owner of Simandou, which it says is the richest unexploited iron ore deposit in the world.

This morning, big banners were hanged on a building in Copenhagen saying: ,,Aluminium Industry is destroying all major Icelandic rivers!” A big advertisment from Icelandair Airline Company, showing Icelandic rivers, was hanging on this same wall last week.

The construction of the planned new Century aluminium smelter in Helguvík and Alcoa’s smelter in Húsavík, will lead to damming of more glacial rivers and geothermal areas. Today it looks like dams will be built in Þjórsá River, Tungnaá, Skjálfandafljót and Jökulsá á Fjöllum; only for further heavy industry projects.

To supply energy for Alcoa’s 346 thousand tons smelter in Húsavík, a reservoir bigger than the infamous Hálslón in Kárahnjúkar will be needed; 72 km2 (1).

There is no reason for feeding companies like Alcoa with more cheap energy. Alcoa is a arms producer, directly working with the American army, the weapon producer Lockheed Martin and other mean companies (2).

Alcoa is also well known for it’s human right crimes in the company’s factories in Honduras and Guatemala. In Honduras workers often have to urinate and defecate in their clothes because they are not allowed to go to the toilet more than two times a day; women have to take down their pants to prove they are having period; and workers who plan to form unions get fired. These are just few examples (3).

Icelandic nature and society are in danger!

No more Dams! No more Smelters!

Resources:

(1) Jaap Krater, Morgunblaðið, Bakki Impact Assessment Should Include Dams, 22. Ágúst 2008.

(2) Snorri Páll Jónsson Úlfhildarson, Morgunblaðið, Lygar og Útúrsnúningar, 24. Júní 2008.

(3) National Labor Committee with Community Comunication Honduras (2007). The Walmart-ization of Alcoa. http://www.nlcnet.org/article.php?id=447.

“I do not see any laws against experimental drilling -which people say are bound to be postponed- taking their usual course despite an overall environmental impact assessment,” says Skarphédinsson in Frettabladid.

“An overall assessment will take place as well, but part of that is researching the area and estimating the possibilities at hand,” Skarphédinsson said.”An overall assessment will take place as well, but part of that is researching the area and estimating the possibilities at hand,” Skarphédinsson said.

Skarphédinsson restated his opinion that it is logical for experimental drilling for geothermal energy to begin before the environmental impact assessment is completed in fall 2009 because such drilling will reveal how much geothermal energy is available in northeast Iceland.

In reality a large amount of damage is done by test drilling, where a vast number of boreholes are created, for which the ground needs to be levelled and roads constructed. After the test drilling is already done, building a power plant and laying pipes in the area will not be of that much further impact as the damage is already done. This makes the test drilling highly controversial. Also unexpected results occur, such as  the large sulphur-arsenic lagoon at Þeistareykir.

Smelter size
Originally the Bakki smelter was said to be planned for 250,000 metric tons per year. However, Alcoa has said before it deems smelters under 360,000 tons ‘unsustainable’ (2). Now the American corporation has said it would like at least a 346,000 tons smelter (3) near Husavík. Alcoa has been steering towards a smelter of this size from the start. Their initial study for the area aimed at a smelter of this size (4), although the environmental impact assessment and energy generating plans under discussion now would be for a smaller smelter. For a smelter above 250,000 tons, the whole energy grid of the north would need to be rebuilt (5). In the end, expansion to 500,000 tons would be possible. “The bigger the better,” says Bernt Reitan, Alcoa’s Vice-President (6).

Energy requirements
A 250,000 ton smelter would require 400 MW of electricity. The energy would be coming from the geothermal fields in North Iceland. If the optimistic estimate of 370 MW for Krafla 2 (drilling into the Viti volcano), Þeistareykir and Bjarnarflag (7,8) would be realised, which is uncertain, there would still be a deficiency, so 30 MW would be taken from the yet unspoiled and unexplored Gjástykki area, at a huge environmental cost (9). For a medium sized smelter the deficiency would rise to at least 150 MW and for a large smelter it would be at least 400 MW.

Possible dams
Thus, if the Bakki project is pushed through, it is almost inevitable that this will lead to construction of more large dams. A company named Hrafnabjargavirkjun Hf is already set up to prepare construction of a new 90 MW plant with three dams in Skjalfandafljot. Fljotshnjuksvirkjun (two dams) in the same river would produce another 58 MW. The corporation is owned for 60% by Orkuveita Reykjavikur. Other shareholders include Norðurorka and Orkuveita Húsavíkur (10). The proposed Skatastaðavirkjun power plant dams on Jökulsá Eystri, Jökulsá-Vestri, Fossá , Giljá, Lambá and Hölkná and on Lake Orravatn and Reyðarvatn (north of Hofsjokull), may produce 184 MW. Villinganesvirkjun, which would dam both Jökulsá-Vestri and Jökulsá-Eystri in the Skagafjörður region, could produce another 33 MW.
A 72 km2 reservoir in Jökulsá á Fjöllum in the Eastern Highlands (Arnardalsvirkjun) could produce 570 MW.
So it would seem that new dams would need to be built in either Skjalfandafljot, Jökulsá Eystri and Jökulsá-Vestri, or in Jökulsá á Fjöllum, just to build a medium sized smelter at Bakki. Further options are more dams at Laxá í Aðaldal or Eyabakka (11).

Risks from geothermal plants
An added factor why an aluminium smelter in the north would need to rely on hydro rather than geothermal is the risks associated with power plants in highly active geological areas. Geological assessment has indicated definitite risks of geothermal boreholes being destroyed by geologic activity. In 1975, at Bjarnarflag, one of the areas that is supposed to power the Bakki smelter, four out of six boreholes were destroyed due to volcanic activity (12). For aluminium smelting, a prolonged electricity cut-off can destroy part of a smelter, which depends on continuous electric supply. A base level of supply from a second source is desirable. On top of that, geothermal energy production is more expensive than hydro.

For Alcoa, it would be neither desirable nor feasible to construct an aluminium smelter near Husavík that would be solely dependent on geothermal areas. A number of dams would need to be constructed. The environmental impact would be high.
At the same time, the damage from drilling into the Viti volcano and at Gjástykki will be considerable and at Þeistareykir a large pollution lagoon has already been formed by test drilling (13), for which no impact assessment was thought necessary.
It is thus not surprising that the pro-aluminium lobby is resisting a joint impact assessment. It would be much more convenient to have smaller half-hearted assessments when the smelter is already half built.
If the environmental impact of the Bakki smelter is to be considered seriously, then the impact of a medium to large smelter and potential new dams need to be taken into account as well as the damage from drilling around Lake Myvatn.

Jaap Krater is a spokesperson of Saving Iceland.

• 1 Iceland Review (2008). North Iceland Smelter Project up for Joint Assessment. http://www.icelandreview.com/icelandrevi… [Accessed August 4th, 2008]
• 2 Wilson, A. (2006). Alcoa clears the air. Interview with Bernt Reitan and Wade Hughes. Trinidad Guardian, Dec 7th 2006. http://www.guardian.co.tt/archives/2006-… [Accessed August 4th, 2008]
• 3 Alcoa (2008). Alcoa presents revised draft EIA proposal for an aluminum smelter at Bakki by Husavik. http://www.alcoa.com/iceland/en/news/wha… [Accessed August 4th, 2008]
• 4 HRV/Honnun (2005). Primary aluminium plant located near Husavik. Site study. http://www.hrv.is/media/files/Husavik_si… [Accessed August 4th, 2008]
• 5 Ibidem 4.
• 6 Saving Iceland (2008). Húsavík contract signed behind closed doors. http://www.savingiceland.org/?p=2500 [Accessed August 4th, 2008]
• 7 Ministry of Industry, Iceland (2002). Master Plan for Hydro and
• Geothermal Energy Resources in Iceland. http://www.landvernd.is/natturuafl/index… [Accessed August 4th, 2008]
• 8 Pallson, B. (2007). Geothermal Power in Iceland. Nordnet.
• 9 Iceland Review (2008). Power Company Accused of Prioritizing South Iceland. http://www.icelandreview.com/icelandrevi… [Accessed August 5th, 2008]
• 10 Alþingi (2008). 135. löggjafarþingi 2007–2008. Þskj. 688 — 432. mál. http://www.althingi.is/altext/135/s/0688… [Accessed August 4th, 2008]
• 11 Ibidem 7.
• 12 Sæmundsson, K. (2006). Assessing Volcanic risk in north Iceland. ISOR – Icelandic Geosurvey. http://www.hrv.is/media/files/Volcanic%2… [Accessed August 4th, 2008]
• 13 Saving Iceland (2008). Energy companies destroying Þeistareykir. http://www.savingiceland.org/?p=1317 [Accessed August 5th, 2008]

• Krafla gallery
• Þeistareykir gallery / report
• Hengill gallery

“At first sight it seems to me that [the decision] does not fall under middle course and equality regulations when a decision was recently made regarding another aluminum smelter, the smelter in Helguvík,” Thórhallsson said.

Ground has been broken fo a planned aluminum smelter in Helguvík on Reykjanes peninsula, southwest Iceland, and Minister Sveinbjarnardóttir decided that an overall environmental impact assessment for both the smelter and the related power plants would not be necessary in that case.

However, Sveinbjarnardóttir decided last week that such an assessment would be necessary in the case of Bakki and has consequently been subject to harsh criticism.

Landvernd – the non-governmental Icelandic Environment Association filed a complaint to the Ministry of the Environment because of the planning agency’s decision.

CEO of Landsvirkjun – the National Power Company Fridrik Sophusson and information officer of Alcoa Erna Indridadóttir both say that Sveinbjarnardóttir’s decision had taken them by surprise. Because of it, the execution of the Bakki project will be delayed.

Kristján Thór Júlíusson, first MP of the Independence Party for the Northeast Iceland Constituency, also said he was very surprised with the minister’s decision.

Júlíusson said that since the planned Nordurál – Century Aluminum smelter in Helguvík in southwest Iceland did not have to undergo an overall assessment, he assumed that the same would apply to Bakki.

“The world is supposed to be about harnessing natural resources to create capital goods,” Júlíusson said. “But the big issue is the attitude the Social Democrats [Sveinbjarnardóttir’s party] have towards harnessing the country’s natural resources. It is very peculiar how this project is being handled by the Ministries of Industry and Environment.”

Minister of Industry Össur Skarphédinsson, also of the Social Democrats, recently renewed a declaration of intent with Alcoa in regards to a smelter in Bakki.

Júlíusson stated that the Social Democrats did not know which way to turn regarding smelter issues. “There are clearly conflicts within the party. If they cannot solve this problem, it is very unfortunate in my opinion.”

Sveinbjarnardóttir said her decision regarding Bakki will delay the process of preparation for the aluminum smelter by two weeks at the most. In the end her decision would deliver a more thorough assessment and a better overall decision, she said.

The minister added that she had to make a different decision regarding Helguvík because preparations were further underway and therefore she had to take the middle course.

If any readers feel like encouraging the Minister of Environment in doing her job properly, contact Þórunn Sveinbjarnardóttir-  tsv at althingi.is, Ministry of the Environment, Alþingi, Kirkjustræti, Reykjavík 101, Iceland.