Iceland’s Free Emissions Allowances Extended Until 2026

Ursula von der Leyen

At a press conference yesterday, PM Katrín Jakobsdóttir and President of the European Commission Ursula von der Leyen announced that the European Union and the Icelandic government had reached a preliminary agreement on Iceland’s emissions; Iceland will continue to receive free emissions allowances up to and including the year 2026, Vísir reports.

New and tougher emissions regulation

The Icelandic authorities have sought exemptions from new and tougher European regulations (the so-called “Fit for 55” package, in reference to the bloc’s new climate target of a 55% emissions reduction by 2030.) intended to reduce the emission of greenhouse gases from air transport. An agreement was reached on this legislation within the EU last December and is due to enter into force at the end of next year. It will then subsequently be included in the EEA Agreement.

As noted by Vísir, the rules include, among other things, changes to the European Emissions Trading System (EU ETS), which would now require airlines to pay for emission allowances in a progressive measure (airlines have, until now, received them mostly for free). “The EU’s intention is that free emission allowances for airlines will decrease by a quarter by 2024 and by half by 2025. They will be completely eliminated after 2026,” Vísir notes.

The Icelandic government has been open about its belief that the rules harm the competitive position of Icelandic airlines and fail to take into account Iceland’s geographical location, which makes its citizens more dependent on air transport than other residents of the mainland.

Subject to approval

Prior to the Council of Europe summit yesterday, Icelandic Prime Minister Katrín Jakobsdóttir met bilaterally with President of the European Commission Ursula von der Leyen. At a press conference after their meeting, both leaders stated that a special solution to Iceland’s emissions allowances had been reached, which was compatible with the EU’s goals for the aviation sector.

Von der Leyen stated that the Icelandic government would be invited to receive free emissions allowances that they can distribute to airlines in both 2025 and 2026, noting that it was important that the country could give the allowances to all airlines in order to ensure fairness.

“I am pleased that we have found a solution that fits your circumstances and is consistent with our integrity in relation to the single market. First and foremost, this agreement also respects our long-term climate protection goals,” Von der Leyen remarked.

“The EU and Ursula have shown a great understanding for our views and our geographical situation. So our common view is that a solution to this should take into account Iceland’s specific geographical situation but also address the fact that green solutions in aviation have not emerged. But I would like to make it completely clear that Iceland wants to contribute to the common goal of reducing emissions.”

As noted by Vísir, the agreement is subject to the approval of the member states of the European Union, the Icelandic government, and Parliament.

Minister of Foreign Affairs Þórdís Kolbrún Reykfjörð Gylfadóttir told in March that the proposed EU legislation on aviation allowances was Iceland’s biggest interest since the EEA Agreement’s incorporation. “The Ministry of Foreign Affairs has embarked on an unprecedented effort to try to influence EU legislation,” the outlet reported.

Median Age in Iceland Lower Than Anywhere in European Union

Iceland flag national team

According to new data published by Eurostat last week, the median age of the European Union population was 44.4 years old as of January 1, 2022. The median age in Iceland, 36.7, is far lower—lower in fact, than in any country in the EU.

Iceland is not a member of the EU, but it is part of the European Free Trade Association (EFTA), along with Lichtenstein, Norway, and Switzerland. Eurostat measures the median age in EFTA countries alongside that of countries in the EU.

In 2022, the median age in EU countries ranged from 38.8 in Ireland and 39.7 in Luxembourg to 46.8 in Portugal, 46.1 in Greece, and 48.0 in Italy.

The median age in the EU has increased by 2.5 years since 2012, when it was 41.9 years. This is an average of .25 years annually. Iceland’s median age has also increased since 2012, but less than it has in the EU: it’s only gone up 1.4 years in the last ten years. The only EU countries that did not see an increase in their median age last year were Malta and Sweden. There was no change at all in Malta, where the median age remains 40.4 years. Sweden’s median age went down, if only incrementally, from 40.8 years in 2012 to 40.7 years in 2022.

Europe facing a ‘marked transition towards a much older population structure’

The recent Eurostat findings also measured what it calls the “old-age dependency ratio,” that is, “the number of elderly people (aged 65 and over) compared to the number of people of working age (15-64).” In 2022, more than one fifth of the EU population (21.1%) was aged 65 and over. Demographic aging is “likely to be of major significance in the coming decades,” reads the report. “Consistently low birth rates and higher life expectancy are transforming the shape of the EU’s age pyramid; probably the most important change will be the marked transition towards a much older population structure.”

As of 2022, the old-age dependency ratio in the EU increased to 33%, up 5.9 percentage points (pp) from 27.1%  in 2012. “This indicator varied among EU members,” explains the report, “but remained above 20% in all of them.” This is true in Iceland as well, where the old-age dependency ratio in 2022 was 22.5%, up from 18.9% in 2012.

Across the EU, there was an average increase of 3.1 pp in the share of the population aged 65 or over between 2012 and 2022. Considered alone, Iceland had less of an increase in this indicator, only going up 2.4 pp over ten years, but the country still experienced more of an increase in this indicator that a number of countries surveyed, including Latvia (2.3 pp), Switzerland (1.8 pp), Austria (1.6 pp), Sweden (1.5 pp), Germany (1.4 pp), and Luxembourg (.8 pp).

These findings are significant and are expected to dramatically impact daily life and economies throughout Europe in the future. As the Eurostat report explains, “As a result of demographic change, the proportion of people of working age in the EU is shrinking while the relative number of those retired is expanding. The share of older people in the total population is expected to increase significantly in the coming decades. This may, in turn, lead to an increased burden on those of working age to provide for the social expenditure required by the ageing population for a range of related services.”

See Eurostat’s full summary of its findings, in English, here.

Parliamentary Resolution Reignites EU Membership Debate

Alþingi Icelandic parliament

A parliamentary resolution that proposes a referendum be held to determine whether Iceland should continue membership negotiations with the European Union has the full support of every MP in the Social Democratic Alliance, Reform Party, and Pirate Party, but has been met with staunch opposition from members of the People’s Party, RÚV reports.

See Also: Foreign Minister: Iceland’s EU Membership Off the Table (March 2015)

On July 16, 2009, Alþingi passed a parliamentary resolution instructing the government to submit an application for Iceland’s membership in the EU, after which it was supposed to hold a referendum on the resulting membership agreement. In March 2015, however, then-Foreign Minister Gunnar Bragi Sveinsson sent a letter to the European Union stating that Iceland was no longer interested in membership.

See Also: Icelandic Government’s Letter to EU Gets a Reply (April 2015)

Proponents of the current resolution say the 2009 resolution still stands and should be honoured. They submitted their resolution, proposing a referendum on continued EU membership negotiations, to Alþingi on Thursday. The undersigning MPs want a vote to be held on the issue before the end of 2023.

In the event of such a referendum, Icelandic voters would be asked to vote yes or no on the following question: “Do you want Iceland to pick up negotiations with the European Union with the goal of developing a membership agreement that would be submitted to the nation for approval or rejection?”

Says number of Icelanders opposed to EU membership has only grown since Brexit

People’s Party chair Guðmundur Ingi Kristinsson pushed back against the resolution immediately, saying that the majority of the nation does not want Iceland to join the EU. He said that Iceland’s anti-EU contingent has only grown in the wake of Brexit.

Within days of the new resolution’s submission, the People’s Party had submitted a resolution of their own, namely that Iceland should withdraw its application for membership to the EU entirely. The proponents of the counter-resolution are all People’s Party MPs. They have submitted the same resolution for the last three legislative sessions.

Iceland Likely to Procure Monkeypox Vaccine, Deems General Inoculation Unnecessary

Iceland will likely participate in the European Union’s joint scheme to purchase and procure doses of Imvanex to use in cases of monkeypox infection, RÚV reports. At time of writing, no cases of monkeypox have been diagnosed in Iceland. After exploring its procurement options, the Ministry of Health says it monkeypox vaccinations would be administered to people who have been exposed to the virus and perhaps other select groups, but says that general vaccination against the virus is unnecessary.

According to the European Centre for Disease Prevention and Control, “there is a multi-country outbreak of monkeypox affecting the UK, EU/EEA states, and North America. This is the first time that chains of transmission are reported in Europe without known epidemiological links to West or Central Africa.” As perhaps obvious from the name, monkeypox was first found in monkeys and is spread through close contact, although it is not typically spread easily amongst humans.

The current outbreak (roughly 200 cases globally) extends to 20 countries in which monkeypox is not endemic, and is causing concern because the virus rarely spreads outside of West and Central Africa. Its symptoms include fever, headache, chills, exhaustion, asthenia, lymph node swelling, back pain and muscle aches.

Luckily, existing smallpox vaccinations are effective against monkeypox. Danish biotech company Bavarian Nordic is one of the few in the world to have approval for its smallpox vaccine, known as Imvanex in Europe and Jynneos in the United States. Iceland would receive a proportional allocation of the vaccine that the EU purchases for countries participating in the scheme, just like it did with the COVID-19 vaccine.

Special Article Triggered to Assist Ukrainian Refugees

Jón Gunnarsson Minister of Justice

The Minister of Justice has decided to trigger article 44 of the Foreign Nationals Act in response to the Russian invasion of Ukraine, RÚV reports. The article, activated for the first time in history, concerns the collective protection of foreign nationals in the event of mass exodus.

Solidarity among European ministers

Yesterday, the national ministers of EU member states agreed to provide special protection for Ukrainians in mass flight following the Russian invasion. Icelandic Minister of the Interior Jón Gunnarsson attended the meeting in Brussels and subsequently spoke to a reporter from RÚV.

“EU member states decided to trigger the (temporary protection directive), involving the collective protection of individuals that are party to a mass exodus. There was great solidarity among the European ministers,” Jón Gunnarsson stated.

“I have, therefore, decided to trigger article 44 of the Foreign Nationals Act, which concerns collective protection in a mass flight situation. This will expedite our reception of refugees.”

Circumventing the overburdened asylum system

Although Ukraine is not part of the passport-free Schengen Area, Ukrainian nationals are “entitled to visa-free travel for up to 90 days.” The triggering of the directive aims to offer a long-term solution in the event that the 90-day limit is exhausted.

As noted on the website of the European Commission, temporary protection is an “exceptional measure to provide immediate and temporary protection to displaced persons from non-EU countries and those unable to return to their country of origin.” The measure applies when the standard asylum system is at risk of not being able to cope with the demand stemming from a mass exodus.

An “historic moment”

When asked if this meant that this would remove all uncertainty for Ukrainians fleeing the invasion – as they would receive immediate protection without the delays that often accompany the standard processing of applications – minister Jón Gunnarsson replied in the affirmative:

“Yes, on the basis of this legislation, they’ll receive protection without going through the system. This is the first time that this article is triggered in Iceland. It’s a kind of historic moment. We have opened our borders to these people, and there are a few who have already arrived. This will simplify our work and make the process more efficient.”

The minister’s decision will be introduced before Parliament today.


(The first two paragraphs of article 44 on the Foreign Nationals Act:

“In a case of mass flight the Minister may decide to apply the provisions of this article. The Minister also decides when authorisation to provide collective protection under paras. 2 and 3 shall cease.

A foreign national who is a member of a group which flees a specified region and arrives in Iceland, or is in Iceland when the provisions of the article are applied, may upon application for international protection be granted protection on the basis of a group assessment (collective protection). This entails that the foreign national will be granted a residence permit under art. 74. The permit cannot serve as basis for the issue of a
permanent residence permit.”)

Icelandair Implements Regular Drug Testing of All Staff

Keflavík airport Icelandair

New EU regulations that take effect in February require all airlines flying within the European Union to conduct regular drug tests of flight and security staff. Icelandair will apply this regulation to all staff, including those in administrative positions, starting this month. Ásdís Ýr Pétursdóttir, Icelandair’s Public Relations Officer, told Fréttablaðið the company will emphasise education, prevention, and support alongside the new testing procedures.

Under the new EU regulation, certain airline staff working within the union’s member states will be required to undergo regular testing for “psychoactive substances,” defined as “alcohol, opioids, cannabinoids, sedatives and hypnotics, cocaine, other psychostimulants, hallucinogens, and volatile solvents, with the exception of caffeine and tobacco.” The regulations stipulate that in cases of “reasonable suspicion,” alcohol tests may be carried out “at any time.” Flight crew or cabin crew may be suspended from duty if they refuse to co-operate during tests.

Icelandair Extents Testing to All Employees

“As a company in aviation where safety is always a priority, we have decided that this policy will apply to [all staff], but procedures will differ between groups. Icelandair strives to create a safe and healthy workplace and this is one aspect of that, and there will be great emphasis on education, prevention, and support in this project,” Icelandair’s PRO told reporters.

Icelandair staff will attend a short workshop later this week where the new regulations will be presented to them. At the end of the month, they will be sent an amendment to their employment contracts concerning the new testing procedures.

Legal Framework for Drug Testing Unclear in Iceland

Iceland’s Parliament has not passed any legislation regarding drug testing of employees. A 2013 opinion from the Data Protection Authority stated there was no legal authorisation for the collection of samples for drug testing from employees of companies or institutions in Iceland. In addition, the Administration of Occupational Safety and Health (Vinnueftirlitið) did not have sufficient legal authority to respond to such cases.

Historical GDP Drop in Iceland Still Less than Predicted

Central Bank

Iceland’s Gross Domestic Product decreased by 9.3% in the second quarter of 2020 compared to the same period in 2019, according to estimates from Statistics Iceland. It is the largest fall in quarterly GDP since Statistics Iceland began measuring economic growth on a quarterly basis. The drop, however, was less drastic than predicted, and Iceland has experienced less of a downturn than most of mainland Europe. The winter ahead is expected to be difficult.

The COVID-19 pandemic and measures taken to counter its spread had a clear economic impact in Iceland in the second quarter of this year. Employment declined by 11.3% compared with the same quarter in 2019. Domestic demand dropped by 7.1% and household expenditure by 8.3%, while government expenditure rose by 3%. Travel restrictions had a significant effect on both imports and exports of services during the period. Exports decreased by 38.8% while imports decreased by 34.8% compared to the same period last year.

Better than Expected

Iceland’s GDP has decreased for two quarters in a row, generally indicative of a recession. Though the newly-released figures are hardly encouraging, Gylfi Zoega, Professor of Economics at the University of Iceland, says they are better than expected. “The Central Bank expected an 11% contraction in the second quarter, but it has now come to light that it is 9.3%. So what this new news is saying is that this is a slightly smaller contraction and that the situation is a little better, not much better, but a little better than expected,” Gylfi told RÚV. One factor that has softened COVID-19’s economic impact in Iceland is that locals have been spending more domestically. Government measures to stimulate the economy and the Central Bank’s lowering of interest rates have also had a positive impact, Gylfi stated.

Iceland’s 9.3% contract is also smaller than that of many countries in mainland Europe, as the numbers in Statistics Iceland’s report show. The European Union as a whole experienced a contraction of 11.7% in GDP, while the decrease was 20.4% in the United Kingdom, 18.5% in Spain, and 13.8% in France.

economic recession europe stats iceland
Statistics Iceland.

Challenging Winter Ahead

In a televised interview yesterday, Governor of Iceland’s Central Bank Ásgeir Jónsson outlined some of the reasons Iceland had come out of the second quarter relatively well. “First of all, we are an island and we actually managed to get control of the virus relatively early. Then there is a lot of so-called ‘monetary leeway’ in Iceland. Interest rates were so high when this shock started, so we were able to lower interest rates significantly and get relatively strong stimulus through monetary policy and stimulate private consumption and more.”

A recent poll found 38% of employers expected to resort to layoffs in the coming months, while only 6% planned to hire staff. Ásgeir stated that the coming winter could indeed prove difficult. “There will be problems ahead but I believe we can solve them,” he stated in a television interview yesterday. “We still have some cards up our sleeves and we will respond to this recession and try our best to ensure that it affects the nation as little as possible.”

Iceland to Buy 550,000 COVID-19 Vaccinations

Iceland will purchase 550,000 doses of the COVID-19 vaccination when it becomes available at the end of this year or beginning of 2021, RÚV reports. According to Health Minister Svandís Svavarsdóttir, this will make it possible for around 75% of the nation to be inoculated against the virus and achieve so-called ‘herd immunity.’ Each person who is vaccinated will receive two doses of the vaccine.

On Thursday, the European Union signed an agreement with the Swedish-British pharmaceutical company AstraZeneca to buy the vaccine. The AstraZeneca vaccine has not yet been licensed for sale, but is in the final stages of testing and it’s hoped to be ready for general use within the coming months. The EU is also negotiating with other vaccine manufacturers. Although it was previously announced that the Swedish government would mediate sales of the vaccine to both Iceland and Norway, it’s now been decided that Iceland and other EEA countries will receive a proportionally equal amount of vaccines as EU countries.

Svandís asserted that international cooperation is vital to ensure that countries around the world have equal access to the vaccine, as well as the importance of all countries that are able contributing to vaccine development efforts. Through its collaboration with WHO, GAVI, and CEPI, Iceland has already donated half a billion krónur [$3.63 million; €3.05 million] to vaccine development and distribution to developing nations.

Iceland Reopens Borders to 14 Additional Countries


Iceland will lift travel restrictions on residents of 14 countries starting tomorrow, in accordance with the decision of EU member states to do the same. Residents of the European Union, EEA, EFTA, and Schengen Area countries are, as before, permitted entry into Iceland.

The 14 countries are:







-New Zealand



-South Korea





Read More: What do I need to know when travelling to Iceland in 2020 Post COVID-19?

The list will be reviewed regularly. Some travellers remain exempt from these restrictions, including students from non-Schengen countries coming to study in Iceland and specialists coming to work. The Directorate of Immigration provides more information on travel restrictions, exemptions, and documents required of travellers before departure and upon arrival.

EU Opposes Iceland’s Border Opening Proposal

Icelandair plane Keflavík

Iceland’s government would like to open borders to more countries in July, but the decision could be affected by its membership in the Schengen Agreement, RÚV reports. The Icelandic government is waiting for the European Union to publish a list of countries from which it will allow travellers into the Schengen Area. Minister of Justice Áslaug Arna Sigurbjörnsdóttir says Iceland’s proposal to take a more liberal stance toward border opening did not enjoy support within the EU, which hinted that if Iceland did not adhere to the Union’s decisions, it could be closed off from the Schengen Area.

Though Iceland is not a member of the European Union, it is a member of the European Economic Area and the Schengen Area. The Schengen Area’s outer borders have been closed since late March, but plans are in place to reopen the area to outside travellers from July 1.

Unlikely EU Will Open to US Travel in July

EU member states are presently working to define the criteria that countries must fulfil in order to be considered safe destinations for EU residents. The criteria will take into account the number of COVID-19 infections per capita, among other factors.

“It can be considered very likely that the United States will not be on [the list of safe countries] considering the situation today,” Áslaug Arna stated in a radio interview this morning. She expressed her disappointment that the US had not opened its borders to Icelanders, as she had been hoping it would be possible to open Iceland’s borders to US citizens from July 1.

Iceland in Unique Position

In talks with the EU, Áslaug Arna says Icelandic authorities have stressed the country’s unique position – it has relatively few entry points and arriving travellers have the option to take a COVID-19 test upon arrival. “We have reiterated that we’re screening everyone [for COVID-19 at the borders] at this time,” Áslaug stated. Iceland’s representatives have also proposed that Iceland can conduct border control for travellers proceeding to other Schengen Area countries and thus enforce its travel restrictions while still being exempt from them.

The European Union has, however stressed that it expects Schengen Area member states to adhere to its forthcoming list of safe countries in their own travel regulations. “It hasn’t been well received that we have been calling for […] more opening. It has been hinted that borders within this area could be closed to us.” Icelandic authorities have yet to decide whether they will comply with the impending EU list.