Iceland’s Renewable Energy Success

Iceland is defined by its dramatic landscape of volcanoes, geysers, hot springs, and lava fields, making it uniquely suitable for geothermal energy. This resource has shaped Iceland’s energy infrastructure, providing a reliable and sustainable power source. With six geothermal power plants supplying 30% of the country’s electricity, geothermal energy is an essential part of Icelandic life.

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Ninety percent of homes rely on geothermal heating, a shift that began in the 1970s oil crisis to ensure energy security. This transition had numerous benefits for Iceland, significantly lowering household energy costs, and improving air quality, contributing to improved public health and environmental conditions. Unlike conventional heating systems, which rely on fuel combustion, geothermal heating in Iceland involves pumping naturally heated water directly into homes, eliminating emissions associated with burning fuels. Over time, this system has saved Icelandic households and businesses millions of dollars in energy costs. Between 1990 and 2014, Iceland saw a 25% population increase and an astonishing 1,700% rise in geothermal electricity production, solidifying its position as a leader in geothermal innovation.

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Greenhouse agriculture in Iceland relies heavily on geothermal heat to create a controlled growing environment, enabling the production of crops such as tomatoes, cucumbers, and bell peppers despite the country’s harsh climate. The plastic recycling industry also benefits from geothermal heat, which is used to melt and process plastic waste more efficiently, reducing the energy demand compared to conventional recycling methods. Similarly, the skincare industry utilizes geothermal minerals and silica-rich waters, particularly in popular products derived from the Blue Lagoon, a geothermal spa known for its purported skin-healing properties. These industries benefit from Iceland’s ability to harness high-temperature geothermal heat directly, lowering operational costs while reducing carbon footprints. By integrating geothermal energy into multiple sectors, Iceland has maximized the value of its natural resources.

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Iceland’s geothermal innovation parks have played a key role in advancing sustainable technology. These parks utilize abundant heat, water, and residual electricity to support the development of carbon capture and storage (CCS). A landmark achievement in this field came in 2021, when Carbfix partnered with Climeworksto launch Orca, the world’s first large-scale carbon-negative direct air capture and storage plant. By combining direct air capture and CCS technologies, Iceland has created a model for removing CO2 from the atmosphere.

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This commitment to innovation is a key part of Iceland’s broader climate strategy. The country generates 100% of its electricity from renewable sources—70% from hydropower and 30% from geothermal energy—and 85% of its total primary energy supply comes from domestically produced renewables, the highest share in any national energy budget. Iceland aims to cut greenhouse gas emissions by 40% by 2030 and achieve carbon neutrality before 2040. To reach these ambitious targets, the Icelandic Climate Action Plan outlines 150 specific actions aimed at reducing emissions and increasing carbon sequestration. Iceland also benefits from its unique geography, with potential for carbon uptake through afforestation, revegetation, and wetland restoration.

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As well as this, Icelandic companies have exported their expertise in geothermal energy worldwide, leading projects in Ethiopia, Kenya, Turkey, Hungary, Germany, El Salvador, Indonesia, and China. Although it is a small nation, Iceland has made a global impact by collaborating on sustainable energy initiatives across borders.

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In July 2024, Iceland released its Sustainable Development until 2030 strategy, led by the cross-government organization Sustainable Iceland. This strategy highlights the nation’s ambition to be an international leader in geothermal energy, renewable energy, and CCS, while also addressing social and economic aspects of the green transition. Key initiatives include measuring progress against the United Nations Sustainable Development Goals and 40 wellbeing indicators, ensuring equitable distribution of green transition benefits, and promoting responsible consumption and production. The plan also emphasizes Iceland’s role in supporting other countries’ climate goals through overseas development assistance and technological cooperation.

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Iceland’s approach to sustainable energy and innovation provides a valuable model for nations worldwide. Its effective use of geothermal resources has transformed living standards, while its climate policies demonstrate how ambitious targets can be met with strategic planning and technological advancement. By using its geothermal resources effectively, improving energy security, and contributing to international climate efforts, Iceland proves that a carbon-neutral future is within reach.