No Decision on Strikes in Latest Air Traffic Controllers’ Talks

Keflavík Airport

Negotiations between air traffic controllers and Isavia failed to produce an agreement earlier today, RÚV reports. The parties will reconvene at the State Mediator’s office on Friday, with no further strike actions currently planned by air traffic controllers.

Negotiations progressed slowly

A negotiation meeting that took place earlier today between air traffic controllers and the Confederation of Icelandic Enterprise, representing Isavia (the company that operates all public airports in Iceland), did not yield results.

The disputing parties have decided to meet again at the office of the State Mediator on Friday. Arnar Hjálmsson, Chairman of the Air Traffic Controllers Association, told RÚV today that no decisions had been made among air traffic controllers regarding further strike action. 

As previously reported on IR, air traffic controllers previously ceased work for four hours in strike actions over three days before Christmas but postponed the fourth due to the volcanic eruption on the Reykjanes Peninsula. The collective agreement of air traffic controllers expired on October 1 and negotiations have progressed very slowly.

M4.5 Quake Rocks Southwest Iceland

svartsengi power plant reykjanes

An M4.5 earthquake registered near Trölladyngja on the Reykjanes peninsula shook Southwest Iceland around 10:50 this morning.

A smaller, secondary M3.9 earthquake was registered soon after, at 10:54 local time. Smaller aftershocks were also registered.

reykjanes earthquake
Met Office Iceland

According to the Meteorological Office of Iceland, the earthquakes originated at a depth of 5 km [3 mi]. The Meteorological Office further stated that they are likely “trigger” quakes, which accompany magma movement.

The quakes were felt throughout much of South and West Iceland. The epicentre was located at around 20 km [12 mi] north-northeast of the Svartsengi power plant, where recent land rise due to magma intrusion has been detected.

Stay up to date with the latest on the Reykjanes peninsula here.


Gallup: Support for Independence Party Hits Historic Low

bjarni benediktsson finance minister

The Independence Party has hit a historic low in the Gallup National Pulse survey, polling at only 18%, Vísir reports. Despite minor fluctuations in support between polls, overall backing for the government has decreased slightly from 33% to 32%.

Social Democratic Alliance enjoying increased support

The Independence Party is currently polling at 18% support in the latest National Pulse (Þjóðarpúls) survey by Gallup. This marks the lowest level of support the party has ever recorded in the over three-decade history of the National Pulse, Vísir reports

The Social Democratic Alliance remains the largest party with 28% support, followed by the Independence Party with 18.1% support. The Centre Party is now the third largest party in Iceland, polling at 9.7%, slightly ahead of the Progressive Party at 9.4%. As noted by Vísir, there has been little change in respondents’ answers between polls, although support for the government continues to decline, dropping from 33% in November to 32% in December.

Support for individual parties (with 2021 election results in brackets) is as follows:

  • Social Democratic Alliance: 28.4% (9.9%)
  • Independence Party: 18.1% (24.4%)
  • Centre Party: 9.7% (5.5%)
  • Progressive Party: 9.4% (17.3%)
  • Pirate Party: 9.1% (8.6%)
  • Reform Party: 8.8% (8.3%)
  • People’s Party: 6.8% (8.9%)
  • Left-Green Movement: 6.0% (12.6%)
  • Socialist Party: 3.6% (4.1%)

Reduced Incentives for Electric Vehicle Ownership

driving in reykjavík

The government has revoked the VAT exemption for electric vehicles and introduced a new per-kilometre charge, affecting electric, plug-in hybrid, and hydrogen vehicles. Despite these changes, driving an electric vehicle will remain cheaper than operating petrol or diesel cars, according to government calculations.

Reduced incentives

As reported by RÚV yesterday, half of the cars sold in Iceland last year were electric vehicles – and that proportion exceeded 90% if cars sold to rental companies are excluded from statistics. Among the appeal of electric and hybrid vehicles to consumers are financial incentives. 

At the start of this new year, however, the costs associated with electric vehicles underwent significant changes. The government decided, for instance, to end the value-added tax exemption previously granted to electric vehicles. (This exemption amounted to a maximum of ISK 1.32 million [$9,600/€8,800].)

As noted in an article in Viðskiptablaðið from last year, incentives for purchasing electric vehicles were introduced in 2012 in the form of value-added tax exemptions: “… They carried no excise duties, unlike internal combustion engine vehicles, which were subject to excise duties ranging from 30 to 45% at registration, on top of which the value-added tax was then applied.”

Buyers may now, however, apply for a tax-free grant of ISK 400,000 to 900,000 [$2,900-6,500/€2,700-6,000] from the Energy Fund for the purchase of an electric vehicle. As noted by RÚV, the amount of the grant varies, based, among other things, on the age of the car. No grant will be given for passenger cars costing more than ISK 10 million [$72,600/€66,400].

Per-kilometre charge introduced

In addition to the revocation of the VAT exemption, a new per-kilometre charge for electric, plug-in hybrid, and hydrogen vehicles was formally adopted at the beginning of this year. This fee amounts to 6 króna per kilometre for electric and hydrogen vehicles and 2 króna per kilometre for plug-in hybrids.

As noted on Vegir okkar allra – a government website outlining the new per-kilometre fee system – based on an annual average driving distance of 14,000 kilometres (the national average for private vehicles), electric car owners can expect to pay ISK 7,000 per month [$51/€46] in kilometre charges, amounting to ISK 84,000 [$610/€557] annually. 

Furthermore, at least once a year, starting at the beginning of 2024, owners of electric, plug-in hybrid, and hydrogen vehicles must track and record their vehicle’s mileage on the website or app Í The kilometre charge will be paid monthly, “similarly to how payments are made for electricity and other utility services,” the website notes. Owners must register a reading of their odometres by January 20, 2024, or incur an ISK 20,000 [$145/€133] late fee. 

A new system needed

As noted on Vegir okkar allra, the road system in Iceland is primarily funded by excise duties on oil and petrol. However, revenue from these fees is declining as more drivers switch to electric or hybrid vehicles, which contribute less to road financing, and as traditional vehicles become more fuel-efficient. 

The website notes that with the shift towards alternative energy sources, it has become evident that the current funding model has become unsustainable, especially as road maintenance costs rise. Therefore, a new system is being adopted to ensure fair road financing, independent of the vehicle’s energy source.

Next year, the government plans to introduce a kilometre charge for petrol and diesel vehicles, as well. This way, fees will be collected uniformly instead of being levied as fuel taxes on the latter group.

Still cheaper to drive electric

Although vehicle owners are expected to pay a similar amount for the road system regardless of their energy source, driving an electric vehicle will still be cheaper than petrol and diesel vehicles, according to government calculations.

“All things considered, it will be about ISK 160,000 [$1,162/€1,062] more expensive per year to drive an average petrol car compared to an electric car,” the website Vegir okkar allra notes. This includes costs like a carbon tax of about ISK 12,000 [$87/€80] per year and a significantly higher value-added tax, around ISK 46,000 [$334/€305] annually.

Additionally, it is estimated that the annual vehicle taxes for petrol and diesel cars are, on average, about ISK 3,000 [$87/€80] higher than for electric vehicles. The charges paid at petrol pumps are also expected to be slightly higher than the kilometre charge, averaging an additional ISK 3,000 [$87/€80] annually.

Grindavík Begins Barrier Construction Amid Eruption Fears

Reykjanes peninsula

The construction of a protective barrier north of the town of Grindavík began yesterday. Once finished, the barrier will stretch an estimated two kilometres. Contractors will work around the clock and coordinate with the Department of Civil Protection and Emergency Management to ensure safety.

Permits in, work begins

On December 29, the authorities announced plans to construct a protective barrier north of Grindavík, located on the southern coast of the Reykjanes Peninsula, as a precaution against potential volcanic eruptions. As reported by RÚV, as soon as the Ministry of Justice had received all necessary permits by noon yesterday, construction of the barrier began.

Drawing on lessons from a previous barrier project around the Svartsengi Geothermal Plant, which has yet to be completed, contractors are utilising large excavators that have proven highly effective in digging up material to be used for the project. Materials will also be sourced from a nearby quarry.

The entire protective barrier is expected to be two kilometres in length, and the first section of the barrier is estimated to take about three weeks to complete. The project will cost an estimated ISK 6 billion [$44 million / €40 million].

Working around the clock

Víðir Reynisson, Head of the Department of Civil Protection and Emergency Management, told RÚV yesterday that numerous contractors would be involved in the project and that they would work around the clock.

He explained that while contractors would use their personal vehicles to access the site, they’ll maintain direct communication with the DCPEM’s control centre to ensure that they can be promptly directed to evacuate if necessary. “People are prepared for an eruption at any moment,” Víðir stated. 

As noted by RÚV, the land uplift near the Svartsengi Geothermal Power Plant has slowed down, which could be a sign that another volcanic eruption is imminent (which also was the case before the last eruption in December).

Víðir also noted that the authorities had advised the people of Grindavik not to stay overnight in town, although they were within their rights to do so; acknowledging that some residents had no other place to stay, Víðir asked these individuals to remain alert to the possibility of an eruption in or near Grindavík. To ensure residents are alerted promptly, especially at night, a text-message system and two police cars are on standby to notify people if another eruption occurs.

60 earthquakes since midnight

As reported by RÚV this morning, there have been no changes in the activity on the Reykjanes Peninsula since yesterday. According to the Icelandic Meteorological Office, about 60 earthquakes have been detected since midnight, with no observed changes in land uplift.