What will change in Iceland in 2024?

New Year's Eve Fireworks in Reykjavík, 2017.

A new year and a new beginning, so they say. 2024 comes with many changes to public price structures all over Iceland, a historic milestone in the population size and also some restructuring in leadership within the country. Here’s all you need to know about the upcoming changes in 2024 in Iceland.

Iceland’s population will reach 400,000 & election of new president

It is predicted that within the first six months of 2024, Iceland’s population will surpass 400,000 people. Currently, the population is only 1,000 people away from that mark. According to Statistics Iceland, the growth has been more rapid than expected as reaching a population of 400,000 was initially predicted in the year 2050.

Iceland’s president Guðni Th. Jóhannesson has announced that he will not run for president again, stepping down after two terms (8 years) in office. A new president will be elected in June. Currently, no one has announced their candidacy in the upcoming election.

The mayor of Reykjavík Dagur B. Eggertsson has also announced that he will step down from his position on January 16. He was Reykjavík’s mayor for the last ten years. Progressive Party Leader Einar Þorsteinsson will take over as mayor until the next election in 2026.

President Guðni Th. Jóhannesson

Pool prices and garbage disposal fees hike

Municipalities in Iceland have announced higher prices for trash collection, as a new system for sorting refuse is being implemented in the capital area. The biggest increase is in Reykjavík, where the price for two bins goes from ISK 52,600 [$389, €350] to ISK 73,500 [$544, €489]. The highest fee remains in the more affluent neighbouring municipality of Seltjarnarnes and amounts to ISK 75,000 [$555, €499]. From January 10, it also won’t be possible to collect disposable paper bags for the biodegradable trash free of charge from the supermarkets anymore. They can be picked up at the recycling centre Sorpa or the second-hand furniture store Góði hirðirinn instead and are still free of charge there.

In Reykjavík, the prices for trips to the swimming pool, museum tickets and petting zoo admissions in Laugardalur have also gone up. A single adult ticket to a public pool increased by 6 per cent and will now cost ISK 1,330 [$10, €9]. Yearly tickets go up by 5.5 per cent, while prices for towel and swimming trunk rentals also rise. 

A hike in bus fare prices for the public transport company Strætó has also been announced. Stræto operates the city buses in the Reykjavík capital region. They will rise by an average of 11 per cent with a single ticket now costing ISK 630  [$4.60, €4.20] from ISK 570 [$4.20, €3.80]. The increase has been justified by citing higher fuel prices. The buses outside the capital area are not affected by those changes.

Úlfarsárdalur swimming pool Dagur B. Eggertsson mayor

Tax rates on substances & electric vehicles increase

Municipalities have also upped the fees for some of the services they offer, while the 2024 budget, recently approved by Alþingi, heralds new taxes and adjustments to the existing ones. Tax rates on alcohol and tobacco go up by 3.5 per cent, Morgunblaðið reports. As does the licensing fee for public broadcasting and the gasoline tax. 

The litre will cost an extra ISK 4.20 [$0.03, €0.03], while the litre of diesel goes up by ISK 3.70 [$0.03, €0.02]. The vehicle tax on lighter automobiles rises by 30 per cent as well, while owners of electric cars will need to pay a new fee per kilometre, which for the average driver will amount to ISK 90,000 [$666, €599] per year. 

Owners of hybrid, electric and hydrogen vehicles will now need to keep track of the mileage of their vehicles and register them on island.is in the beginning of 2024. This procedure must be repeated once a year. The Icelandic government decided to implement this change due to a stark decrease in the state’s revenue from vehicles since 2018 and the ongoing need for the development of road infrastructure. The kilometre fee will be paid monthly. People concerned by this change can visit the government-run website Vegir okkar allra to find out more about this change.

Keflavík Airport
Keflavík Airport

EU travel fee not coming into effect until 2025

The by the EU announced ETIAS waiver program that was initially announced to come into effect in 2024 has been postponed to 2025. So travellers from outside of the EU are not facing registration fees of $7.70 / €7.00 just yet. ETIAS travel authorisation is an entry requirement for visa-exempt travellers who are visiting one of the thirty participating European countries. The entry requirement is valid for up to 90 days in any 180 days. Travellers intending to visit Iceland will also need an ETIAS travel authorisation to enter Iceland from 2025 on. This system will not replace visa requirements for citizens who currently require a visa to visit any EU country, like travellers from China, India and South Africa. 

A central database which will track non-EU residents when entering any EU country called the Entry/Exit system, will presumably come into force in the second half of 2024.

 

Tesla Best-Selling Private Car in Iceland Last Year

Tesla electric cars were the best-selling passenger vehicle for individual consumers in 2022, RÚV reports. This is part of a larger pattern: more than half of new cars sold to individuals in 2022 were electric cars. Tesla did not, however, sell the most cars overall in Iceland. That distinction belongs to Toyota, although cars sold to rental companies accounted for 73% of its sales last year.

Changing patterns and incentives related to energy consumption have significantly shifted the automobile market in Iceland. According to María Jóna Magnúsdóttir, executive director of the Automotive Industry Association, last year was the seventh highest year for automobile sales in the country since 1972.

“It’s gone pretty well, in spite of great disasters around the world; car sales here have been good,” she remarked. “We’re naturally seeing a huge spike in the sale of electric cars, especially to individuals. They’re choosing electric cars just over 50% of the time.”

Toyota sold the most cars overall, Tesla the most cars for personal use

Just under 16,700 cars were newly registered in Iceland last year. Of these, 7,600 were rental cars.

Toyota is the foremost seller of cars that will be used on the rental market in Iceland. A total of 2,754 Toyota passenger cars were sold last year, the majority of which—or 1,440 cars—were intended as rentals. The remaining 739 Toyotas were sold to individuals.

The manufacturer that sold the second highest number of new cars in Iceland last year was Kia, with 1,800 cars sold. Hyundai was next, with just over 1,400 cars sold. Tesla came in fourth overall, with 1,300 cars sold.

However, if only car sales to individuals are considered, then the rankings shift in Tesla’s favor. Tesla sold 872 cars to individuals last year, followed by Toyota with 739, Kia with 717, and Hyundai with 502 cars sold for personal use. Tesla only sells electric cars, but it is not the only manufacturer that does. Toyota, however, has fewer electric options than its fellow brands.

Overall, nearly 5,600 electric cars were sold in Iceland last year. More diesel cars were sold in 2022 than in 2021 and 2020.

At-home charging only ISK 3 / km

Electric cars are commonly considered to be much cheaper to run and maintain in Iceland, not least because electricity is so much less expensive than petrol.

It’s been estimated that a five-person electric car costs roughly ISK 3/km [$0.021; €0.020/km] if it is charged at home. The price of domestic electricity in Iceland, including distribution charges, is estimated to cost roughly ISK 17 [$0.12; €0.11] per kilowatt-hour. It is more expensive to pay for electricity at fast charging stations and at so-called supercharger stations, though the charging process is, of course, much faster.

Car Taxes and Fees to Rise in Iceland

driving in reykjavík

The cost of owning a car in Iceland will rise significantly next year, if the 2023 budget bill is passed in its current form. The bill proposes hikes in gasoline and emissions taxes as well as the general vehicle tax. A new tax will be imposed on electric cars and new road tolls will also be implemented. The green energy transition will require the Icelandic government to restructure how it taxes vehicles and fuel, the main source of funding for road and transport infrastructure.

“Goes way too far”

The hikes in fees and taxes represent a 36% increase in revenue from vehicles for the state, according to Rúnólfur Ólafsson, chairman of the Icelandic Automobile Association (FÍB). “And then this comes with new taxes on both petrol and diesel,” Rúnólfur told RÚV. “This is happening at the same time as the Minister of Infrastructure is talking about greatly increased new taxation of public use of vehicles with so-called road tolls in tunnels, over bridges, and so on.”

Public transport infrastructure is limited in Iceland, meaning that the majority of the population relies on private vehicles to access employment and services. Rúnólfur says the additional costs will hurt the most vulnerable sectors of the population. “These are hugely increased charges that are being announced in one fell swoop, and we believe that this goes way too far as it is being proposed now.”

Cost of electric vehicles to rise

The government also proposes applying a 5% minimum excise duty on all cars, meaning that a full discount will no longer be applied to electric cars. While Finance Minister Bjarni Benediktsson stated there will continue to be strong incentives to buy environmentally friendly cars, FÍB calculates that the excise duty and value-added tax will raise the cost of electric cars by ISK 300,000 [$2,150; €2,150], though the rise could be as much as ISK 1 million for some cars [$7,160; €7,160].

Iceland funds the maintenance and development of roads and infrastructure through taxation on vehicles and fuel. A notice on the budget bill states the restructuring of this taxation will be one of the biggest challenges for the treasury in the coming years.

Government Approves Measures to Counteract Inflation, Overheating Economy

Minister of Finance Bjarni Benediktsson

In lieu of raising interest rates, the government will be implementing various measures intended to counteract inflation and an overheating economy as well as reducing the treasury deficit. Vísir reports that among the changes proposed by Minister of Finance Bjarni Benediktsson are a reduction to discounts on alcohol and tobacco products sold in airport Duty Free stores and the introduction of tariffs that will offset the current lack of revenue from vehicle and fuel taxation.

The scope of the proposed measures is roughly 0.7% of the GDP, or ISK 26 billion [$1.98 million; €1.88 million]. This amount should hopefully put the treasury in good stead to decrease the deficit without needing to increase interest rates. The proposals will be elaborated in full in the 2023 budget proposal.

Measures intended to increase the state’s revenue

One of the biggest changes is the introduction of tariffs that are meant to offset revenue that the government has lost from vehicle and fuel taxation. This drop in revenue is attributed in part to an increase in environmentally friendly cars. As more environmentally friendly cars become the norm, it is expected that the revenue streams that the government used to enjoy from gasoline and vehicle taxes will continue to decline. As such, a simpler and more efficient revenue collection system is being developed, which corresponds to the need for continued governmental expenditure on new construction, maintenance, and operation of Icelandic roadways.

Another major change will be a reduction in the tax discount on alcohol and tobacco products in Duty Free stores. Both are currently tax-free (in specific, limited quantities) when purchased, for instance, at the Keflavík airport upon entering or exiting the country. There will be a new diversion airport fee and the structure and scope of aquaculture-related VAT will be under review as well.

Measures intended to cut state costs

Current reductions of state-related travel expenses are to be made permanent. The leeway that exists for expenditures in the current budget will be suspended and leeway for general expenditures in policy-related areas will be almost cut in half. There will also be a reduction in contributions to political organizations.

Electric Car Share Launches in Reykjavík

Hopp car share Reykjavík

There’s a new way to get around Reykjavík for residents and visitors: shared electric cars. Transportation app Hopp, which introduced shared electric scooters to the city in 2019, has now added ten electric cars to its fleet of vehicles. Users can rent a car through the app, drive it from A to B, and park and leave it anywhere within the active zone.

“People are calling for a variety of forms of transportation and the environment is calling for us to change our travel habits,” a Facebook post from the company reads. “We believe that the time is now; city residents are calling for diversity in transport, and by offering shared cars, we are bridging a certain gap. People can take public transport to work and then take a shared car if they need to run an errand during working hours. Families can therefore do away with the “extra car” and use a shared car when needed.” The shared cars are also useful for those who do not own a private car but need to run errands that are more difficult to do on public transport or a bike, such as making a trip to big box stores in the suburbs, the company points out.

The Hopp cars cost a flat fee of ISK 300 [$2.33; €2.11] to rent, and ISK 45 [$0.35; €0.32] per minute to drive, meaning a trip between the University of Iceland and the Grandi harbour area would cost around ISK 660 [$5.12; €4.63]. It costs ISK 10 [$0.08; €0.07] per minute to “pause” a rental, for example, to run an errand while the car is parked. Reykjavík Mayor Dagur B. Eggertsson was the first to try one of the vehicles last week, as seen in the pictures below.

Electric Cars Over Half of New Vehicles in Iceland This Year

driving in reykjavík

The majority of newly-registered vehicles in Iceland this year are either electric or hybrid vehicles, mbl.is reports. It is the first time that conventional cars, powered by gasoline or diesel, have not been the majority of new cars purchased.

In 2014, conventional vehicles accounted for 97% of new registrations. So far this year, they account for just 45%, and there is no sign the trend will reverse. Hybrid vehicles and plug-in hybrids are popular in Iceland, but fully electric vehicles have gained the most ground on the market recently.

Read More: How is the Icelandic government promoting electric vehicles?

Electric or hybrid cars currently account for 11% of the nation’s fleet. Mbl.is estimates that electric cars will account for the majority of passenger vehicles within a decade or so. There are around 16,000 electric vehicles in Iceland, of a total of 357,000 motor vehicles, of which around 220,000 are passenger vehicles.

How is the Icelandic government promoting electric vehicles?

electric car charging station

The Icelandic government has put forward a plan to replace fossil fuels with electricity in the next decades. Among the government’s goals is a total ban on new petrol and diesel vehicles by 2030. The government aims to have 30,000 electric cars in Iceland by 2026. To make this transition go smoothly, charging ports have […]

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Icelandic National Church to Neutralise Carbon Emissions

Bishop of Iceland Agnes M. Sigurðardóttir.

The Church Council of Iceland’s National Church has approved an extensive environmental action plan proposed at a synod (clergy conference) earlier this year, Vísir reports. The plan includes forestry and wetland restoration as well as installation of electric vehicle charging stations on church lands. Clergy also seconded the Icelandic Environmental Association’s call for the government to declare a climate emergency.

The Church Council will now organise an evaluation of which land in its ownership is suitable for large-scale forestry and wetland restoration. These carbon-binding projects are a step toward carbon-neutralising emission from transportation related to church work within the next three years. The Council also agreed to install charging stations for electric vehicles at four locations this year: two in Reykjavík; one in Skálholt, South Iceland; and one in Hólar, North Iceland. Parishes will be encouraged to install charging stations, and others will be installed at vicarages according to demand.

Clergy are also urging airline companies and tour operators that sell flights to and from Iceland to include an option for carbon offsetting trips in the ticket-buying procedure.

Reykjavík to Reduce Gas Stations by Half by 2025

Reykjavík is set to dramatically reduce the number of gas stations in the city by 2030, Vísir reports. Currently, there are 75 gas stations in the capital area, but Reykjavík City Council has approved plans to reduce these to around 37 in the next six years as part of its environmental initiatives.

Mayor Dagur B. Eggertson announced the plan on his Facebook page this week, saying that the gas stations will be replaced with apartment buildings, shops, and other services. Originally, the city had intended to meet this goal by 2030, but Dagur noted that the City Council liked the initiative so much that everyone agreed to comply with a tighter deadline.

Reykjavík’s climate plan foresees gas stations largely disappearing from the city by 2040 and that vehicular traffic and public transportation will also be greenhouse emission-free by the same time. Current projections are that private cars will account for 58% of transportation by 2030, while public transportation will account for 12% and cycling 30%.

PM’s Next Car Will Be Electric

The Icelandic government will be upgrading its fleet of ministerial vehicles to electric cars, RÚV reports. Electric cars will be integrated into the existing fleet according to the regular car replacement schedule.

Prime Minister Katrín Jakobsdóttir says that it is now important to gather information on electric car manufacturers and dealerships to determine what make and model should be selected by government ministers.

Electric cars have been very popular with Icelandic consumers in recent years and sales have been steadily increasing. For instance, only 227 electronic cars were sold in 2016, but 415 of them were sold in 2017 – an 86% increase. Alternative and clean transportation has been an important issue with city planners, whose proposals for new energy-efficient initiatives included city-wide lamppost charging stations. Supporting increased use of electric cars was also one of the goals laid out in the Reykjavík Climate Policy, which was approved in 2016.

A recent report on electric cars in Iceland revealed that the proportion of clean electric cars in Iceland is expected to increase even more in the coming years, although this will depend somewhat on government decisions and market conditions. One of the most significant factors for buyers to consider, however, is that from the time they are purchased new, cars in Iceland are, on average, in use for 12 to 13 years. As such, any car purchased today will impact the local environment for more than a decade.