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

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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.

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.

Engineer Wages Advertising War Against Aluminium Factories

ISAL aluminium smelter

Electrical engineer Reynir Þór Eyvindsson has bought advertising time for a period of some years on national broadcaster RÚV during the holidays, with the intention of reminding the nation of some inconvenient truths about aluminium production in Iceland.

His advertisements come in response to what he identifies as a preponderance of aluminium industry PR in the media during the holidays, which could be seen as “greenwashing” an activity that has a worse environmental impact than many may think.

Aluminium production is a highly energy-intensive industry which has found a home in Iceland thanks to the supply of green electricity. Environmental critics, however, have pointed out that the use of geothermal and hydroelectric power do not simply neutralise the environmental impact of this industry.

iceland aluminium
Screensot – RÚV

The text of the advertisements reads in English: “Icelandic Aluminium Plants: Pay very little in taxes. Emit twice as much CO2 as the entire automobile fleet.  Around 1.5 million tonnes of toxic sludge are produced annually. This could fill the outdoor swimming pool at Laugardalur 1,500 times over. Happy New Year, Reynir Eyvindsson.”

In a statement to Morgunblaðið, Reynir said: “This is a highly political issue. Not everyone agrees that this highly polluting industry should be here.”

Reynir admits that advertising slots on RÚV during the holidays are rather expensive, but he says he doesn’t have much else to do with his money. He pays for the advertisements out of his own pocket, but recognises that they may not stand up to the production quality of the aluminium industry’s professional advertisements. Nevertheless, he counts the money as well spent.

Read more about protecting Iceland’s environment here.

Electric Motion

iceland green energy

Electric vehicles (EVs) are on the rise in Iceland. In 2021 alone, 58% of all cars sold were EVs; today, more than 13% of the country’s total number of passenger vehicles are at least partly electric. Around the globe, the benefits of electric vehicles are being embraced as both environmentally and financially preferable for consumers […]

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Electric Motion

iceland green energy

Electric vehicles (EVs) are on the rise in Iceland. In 2021 alone, 58% of all cars sold were EVs; today, more than 13% of the country’s total number of passenger vehicles are at least partly electric. Around the globe, the benefits of electric vehicles are being embraced as both environmentally and financially preferable for consumers […]

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Finding the Energy to Change

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The conversation about renewable energy is buzzing louder than ever before. Talk about methanol, in particular, is gaining traction across the automotive, marine, and electricity sectors, all of which have long relied on fossil fuels. A clean-burning, water-soluble and biodegradable electric fuel, methanol is the world’s simplest alcohol and is comprised of only hydrogen, oxygen, […]

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Iceland’s First Electric Aircraft Has Arrived

Iceland’s first electric aircraft arrived by ship in Sundahöfn Harbour yesterday, Vísir and Stöð 2 report. The aircraft, which is a small Pipistrel Velis Electro two-seater, will primarily be used for pilot training. The Velis Electro, which is produced in Slovenia, is the world’s first electric powered airplane to receive a Type Certificate from EASA.

The purchase of the aircraft was the initiative of Matthías Sveinbjörnsson and Friðrik Pálsson, who have launched an effort to electrify Iceland’s aircraft fleet. In an interview with Stöð 2 News last night, they stated that the arrival of the aircraft is an important first step in making aviation in the country eco-friendlier.

“We have been working on this for more than two years now,” Matthías says. “The next steps involve bringing together a group of people who are interested in the issue and are willing to help us out,” Friðrik adds.

They say that the aircraft will probably not take off until next spring. Preparations, such as registration and training, are estimated to take a couple of months.

Electrically powered passenger planes may become a reality in just a few years

Electrically powered aircrafts have existed since the 1970s but most of those who have been produced since then have either been unmanned or experimental prototypes. However, there has been a growing interest in the development of electric passenger aircrafts in recent years, primarily due to their reduced environmental impact.

But are electric aircrafts a realistic alternative to traditional petroleum-powered airplanes? Friðrik and Matthías are certain that in just a few years, electrically powered passenger airplanes will become a reality. They point out that a 19-seat electric aircraft, E-19 Heart Aerospace, is currently being developed in Sweden. If all goes according to plan, the aircraft will be operating within five years.

“The wait is shorter than people think,” Matthías says.