What is Iceland’s target for biofuels as a share of motor fuels by 2030?

iceland green energy

A key aspect of Iceland’s energy transition is exploring the uses of renewable energy in transportation.

As can be seen from the graph below, electricity currently leads the way as the preferred renewable energy. Recent advances in the viability of private electric vehicles and Iceland’s plentiful geothermal and hydroelectric energy facilities have meant that, for Iceland, the future is mostly looking electric.

There are, however, efforts being made to investigate the viability of biofuel production in Iceland from industrial and household waste. Under a new recycling regulation, methane fuel will be also be produced from household waste.

Currently, road transport accounts for some 20% of GHG emissions in Iceland. Of this 20%, about 15% of GHG emissions come from freight vehicles. The National Energy Authority announced funding in May 2021 for heavy transportation projects. This funding will be used to purchase freight vehicles that use sustainable fuels or for infrastructure development that supports the use of renewable fuels for such vehicles. The National Energy Authority also announced project funding in May 2022 for heavy transportation, called “Electricity and Fuel Cells and Methane,” which includes both infrastructure and production. An Icelandic demonstration project for heavy transportation has also received funding from the Nordic Council of Ministers for Energy, which includes hydrogen refueling stations for freight vehicles.

Despite the overwhelming preference for electric energy, there is nevertheless significant growth in domestic production of renewable energy sources, including methanol production by CRI, and biodiesel production in waste management. Sorpa and Norðurorka produce biogas methane from landfill gas generated in the Reykjavik area and in Akureyri, which is used to fuel cars, buses, and waste disposal trucks.

However, despite the fact that biofuels will play a role in Iceland’s energy transition, because of the unique conditions of Icelandic energy production, it is not a priority and there are currently no set goals specifically for biofuel.

Read about the legal framework for Iceland’s energy transition at the National Energy Authority.

The most recent statistics on national energy consumption.

What is Iceland’s Energy Mix?

green energy iceland

Of all stationary energy produced in Iceland, some 70% is hydroelectric and 30% is geothermal, with a negligible but growing percentage of wind power, at .03%. Fossil fuels accounted for .01% of all energy produced in Iceland in 2021.

Iceland has become well-known for its ability to produce green energy relatively cheaply and efficiently. However, this picture has grown somewhat more complicated in recent years with Iceland’s participation in the international carbon credit market.

Read more: Iceland to Buy Emission Allowances

In figures recently released by the National Energy Authority on 2021 energy usage in Iceland, it has come to light that 63% of energy used in Iceland was produced by fossil fuel, 24% by nuclear power, and only 13% by renewable energy sources. Although the actual electricity flowing into Icelandic homes and businesses is still green, the energy credit market allows foreign companies to “buy” Icelandic green energy. In this way, consumers in Europe might choose to buy green certificates of origin for their energy, even though the energy actually powering their house is sourced from a coal plant.

This market dynamic has led to a curious situation: although the electricity flowing into Icelandic homes and businesses is 100% renewable in origin, Icelandic consumers are now being made to pay extra for green energy certification. Some 90% of energy produced in Iceland is now sold on renewable energy credit markets.

For those interested in Iceland’s energy production, you may want to read more at the National Energy Authority of Iceland.

Energy Credit Market Means Only 13% of Icelandic Energy is Renewable in Origin

Carbfix Hellisheiðarvirkjun

In figures recently released by the National Energy Authority on 2021 energy usage in Iceland, it has come to light that Icelandic energy may not be as “green” as previously thought, due to the energy credit market.

According to the latest numbers, in 2021, 63% of energy used in Iceland was produced by fossil fuel, 24% by nuclear power, and only 13% by renewable energy sources.

This may come as a surprise to many, as Iceland is often lauded as a leader in the energy transition, with a power grid entirely dependent on hydroelectric and geothermal power. And to be sure, the actual electricity flowing into Icelandic homes and businesses is still green, as Minister of Environment, Energy, and Climate Guðlaugur Þór Þórðarsson stressed in recent comments: “It doesn’t change the fact that all our energy is green. This is simply an arrangement that is supposed to encourage investment in producing more green energy. That’s the thinking behind this.”

The energy credit market, however, allows foreign companies to “buy” Icelandic green energy. In this way, consumers in Europe might choose to buy green certificates of origin for their energy, even though the energy actually powering their house is sourced from a coal plant.

Of the energy actually produced in Iceland in 2021, some 70% was hydroelectric, 30% geothermal, with a negligible but growing percentage of wind power, at .03%. Fossil fuels accounted for .01% of all energy produced in Iceland in 2021.

In contrast to Iceland, a majority of energy produced in Europe is still nuclear or fossil fuel. In order for energy providers to be able to certify that they provide 100% renewable energy, it is required that they purchase at least as many renewable energy credits as they produce.

This market dynamic has led to a curious situation: although the electricity flowing into Icelandic homes and businesses is 100% renewable in origin, Icelandic consumers are now being made to pay extra for green energy certification. Some 90% of energy produced in Iceland is now sold on renewable energy credit markets, leaving Icelanders with the “sins” of fossil fuel and nuclear energy.

Berglind Rán Ólafsdóttir, director of ON (Orka Náttúrunnar) stated to Vísir: “As it stands now, we can expect increases from five to fifteen per cent coming months and years. The development will depend on how the energy credit market in Europe further develops.”

Pollution Report Brings Strætó Energy Transition into Question

straetp bus reykjavik

Jóhannes Svavar Rúnarsson, managing director of Strætó, has recently spoken out in response to statements by the Minister of Environment, saying that his critique of Strætó may represent a misunderstanding.

See also: Capital Area Limit on Pollution Exceeded

In light of a recent report on emissions in the capital area, Minister of Environment Guðlaugur Þór Þórðarson has called for municipalities to cut down on emissions by reducing the number of diesel vehicles. In the minister’s statement, he specifically singled out Strætó, saying that the energy transition must be expedited in the case of public transportation.

In a statement to RÚV, the minister said: “Strætó is currently increasing the number of vehicles […] Right now, very few of the 160 vehicles in service are electric. In the coming months, some 25 new buses will be added to the fleet.”

However, in identifying the older diesel engines in many of the system’s buses as key culprits, Jóhannes Rúnarsson believes that public transportation’s overall share in emissions is exaggerated.

In an interview with RÚV, Jóhannes stated: A significant majority of the buses meet the highest environmental standards governing vehicle import, the Euro 6 emission standards. Claims that Strætó significantly contributes to emissions are based on a misunderstanding. However, we would have liked to have progressed further in the energy transition by this date.”

Due to COVID-19 and recent budgetary setbacks, Strætó has not made progress towards its climate goals that it has set out for itself. Currently, some 140 of Strætó’s 160 vehicles are diesel powered. Strætó’s current goal is to go all-electric by 2030.

Sustainability Conference Centres Around Iceland’s Climate Goals

katrín jakobsdóttir prime minister iceland

Prime Minister Katrín Jakobsdóttir and Mayor of Reykjavík Dagur B. Eggertsson met today with other ministers and officials for the founding of the Council for Sustainability.

The meeting was held at 14:00 today in the House of Collections.

Read more: Iceland Lagging Behind on Climate

Pursuant to Iceland’s being a signatory of the Paris Agreement, Iceland is obligated to cut greenhouse emissions by 40% by 2030. Additionally, Icelandic policy aims to achieve carbon neutrality by 2040. Mechanisms exist to incentivize the fulfilment of these goals, and if Iceland fails in this, then the consequences may prove costly.

Although heating and electricity are covered by renewable energy, much of Iceland’s energy goes towards energy-intensive industries, such as aluminium smelting. Iceland is still also very dependent on cars, especially in rural parts of the country.

Prime Minister Katrín Jakobsdóttir gave a speech at the meeting, calling for a more ambitious approach to Iceland’s climate goals.

The Council of Sustainability will be chaired by the Prime Minister, and will work in cooperation with local municipalities, parliament, NGOs, and private companies.

According to Katrín Jakobsdóttir, the energy transition must be a top priority, but it must also act as a “guiding light in all areas of society.”

Read more of our coverage of Icelandic conservation efforts here

More Energy Needed to Ensure Green Transition, Government Report Indicates

Krafla Mývatnssveit power plant electricity

Iceland will have to increase energy production by 125% in order to achieve a full transition to green energy, a new government report indicates. Iceland’s Environment Minister says the report can be used as a basis for decision making, but it is up to authorities how they apply the information provided. The CEO of the Icelandic Environment Association has stated that building additional power plants entails sacrificing Icelandic nature and is not a necessary step toward achieving the country’s environmental goals.

“It’s clear that this is necessary if we are to achieve the energy transition, Iceland’s Minister of the Environment, Energy, and Climate, Guðlaugur Þór Guðluagsson, stated. “However, there are many ways to achieve that goal. And this is not a policy. It is, however, a status report and highlights how things stand. Now it is up to the Parliament and the government to work it out, how to best handle this issue.”

Innovation depends on energy availability

The report proposes six scenarios for the future of energy production in Iceland, five of which entail increasing energy production. Only four scenarios assume that the country will achieve a full energy transition by 2040: that is, completely stop the use of fossil fuels within the next 18 years. If this goal is taken into account, and a rise in energy-intensive industry is assumed, then Iceland will need to produce 125% more energy than it does today. Ensuring those energy needs are met would not only require additional power plants, but increased efficiency at existing plants, energy-saving measures, and more efficient energy usage.

Read More: Iceland’s Plan to Become Carbon Neutral by 2040

Energy production is also a key factor in innovation and job creation across Iceland, according to Sigríður Mogensen, a department head at the Federation of Icelandic Industries, and one of the authors of the government report. “Many projects have been in the works and in development, whether it is food production projects, biotechnology projects, algae cultivation, and I could go on, which have unfortunately not been possible due to a lack of electricity or the weak state of the electricity transmission system.”

Entails sacrificing Icelandic nature

“It’s a question of what decisions we make. If this becomes a reality, then we’re making the decision to sacrifice Icelandic nature,” Auður Önnu Magnúsdóttir, CEO of the Icelandic Environment Association, stated in response to the report. She does not agree that a 125% hike in energy production is necessary in order to achieve a full energy transition.

Auður has argued for “real energy-saving measures, such as diversifying tourism, coastal shipping, such as building passive buildings, using heat pumps, and taking real energy efficiency measures, such as using waste heat from power plants. Today, 80% of the energy that is produced, it goes directly to big industry. That is not sensible prioritising.”

New Fast Charge Station Can Power a Car for 100 Km in Under Five Minutes

driving in reykjavík

The most powerful electric vehicle fast-charge station went into use in Iceland on Friday, RÚV reports. It only takes five minutes for the station to charge a vehicle for 100 kilometres [62 mi].

The charging station has been installed in the parking lot of the Bílabúð Benna car dealership at Krók­háls 9 in Grafarholt og Úlfarsárdalur in the eastern suburbs of Reykjavík. It can deliver up to 350 kW of electricity. According to dealership owner Benedikt Eyjólfsson, this is even more powerful than the EV charging stations that Tesla is installing, which provide up to 250 kW. The stations installed by Icelandic power company ON Power reach a max of 150 kW.

“It can take under five minutes for 100 kilometres,” said Benedikt, “and if the car can take such a powerful charge, you could get up to 250 kilometres in 10 minutes.” The station will be open to anyone who has a vehicle with the so-called ‘Euro connector’ (Type 2) for fast charge stations. The first person to charge their electric car at the station was Minister of Industry and Innovation Þórdís Kolbrún Reykfjörð Gylfadóttir, who commented that the country’s transition away from from fossil fuels in transportation is well underway. In fact, she says, Iceland has made more progress in transitioning away from fossil fuels than almost any country in the world.

See Also: Renewable Energy 11.4% of Fuel in Road Transport in 2020

“The energy transition in transportation is going well, we’re now number two in the world, after the Norwegians, and we’ve been encouraging and supporting infrastructure development.” Þórdís Kolbrún says that this infrastructure, i.e. additional charging stations, has been “sorely needed” so that “there won’t be this range anxiety and people can travel between places and out in the countryside.”

“We also know that there are often bottlenecks,” Þórdís Kolbrún continued, “and we have to be careful that at places where there are many [EV charging stations], that people can charge both quickly and well. We’re trying to achieve this combination by pushing things forward with grants, but of course it’s just the general market that’s really doing it,” she concluded.

Renewable Energy 11.4% of Fuel in Road Transport in 2020

driving in reykjavík

The Ministry of Industry and Innovation announced yesterday that the government had attained an important milestone in the transition from fossil fuels to clean energy. Renewable energy accounted for 11.4% of the fuel used for road transport in 2020, according to a report from the National Energy Authority.

The first milestone

Ten years ago, the government confirmed a parliamentary resolution entrusting the Minister of Industry (now the Minister of Industry and Innovation) to decrease the share of fossil fuels in the transportation sector. The aim was to “replace fossil fuels with local, renewable energy.”

The legislation established a timeline for the creation of policy, goal-setting, and a comprehensive plan of action regarding energy transition in the transportation sector until 2020. Its primary purpose was for Iceland to become a leader in sustainable transportation. “The percentage of renewable energy within the transportation sector is currently lower in Iceland when compared to other countries, or less than 1%. The goal of EU member states is 10% by 2020,” the resolution stated.

Renewable energy 11.4% of total fuel in road transport

In a statement released yesterday, the Ministry of Industry and Innovation stated that renewable energy had accounted for 11.4% of the fuel in the transportation sector in 2020, marking a significant milestone on the way to sustainability. The figure – which refers solely to road transport – reflects “all of the renewable energy that is used to power vehicles in Iceland, including electricity, biodiesel, methane, and hydrogen.” The statement enumerated some of the benefits of the transition:

“Energy Transition, where fossil fuels are replaced by sustainable sources of energy, are necessary to combat the threat of climate change, which is one of the greatest challenges facing mankind. The transition to cleaner energy will lead to energy savings, increased energy security, currency savings, and lower CO2 emissions.”

The communique also included a link to an article published by the World Economic Forum in February. In collaboration with Statista, the World Economic Forum gathered global data on new passenger car sales in 2020. According to the results, plug-in electric vehicles – including plug-in hybrids and light vehicles but excluding commercial vehicles – accounted for 45% of new car sales in Iceland, second only to Norway (nearly 75% of new cars sales in Norway are plug-in electric vehicles).

New goals set

The Ministry also announced new goals had been established for 2030, wherein the government aims to increase the percentage of renewable energy within the road transportation sector to 40%. The Ministry hopes to make Iceland completely carbon neutral by 2050 (100% renewable energy for road transport).