Sale of Green Energy Credits from Iceland Suspended

AIB, the European company responsible for an energy certification system for power companies in the region, has suspended the sale of green energy credits from Iceland. According to a press release from the company, there are indications that a “double claiming of energy attributes was taking place.” The certificates are bought by foreign companies and are a huge source of income for Icelandic energy producers. RÚV reported first.

Last January, Iceland Review reported on the local impact of the energy credit market, which is intended to encourage investment in the production of green energy. While over 99% of energy produced in Iceland comes from renewable sources like hydroelectric and geothermal power, a majority of energy produced in Europe is still nuclear or fossil fuel. Some 90% of energy produced in Iceland is now sold on renewable energy credit markets, meaning consumers of non-renewable energy can purchase green energy credits even if their operations are powered by, for example, coal.

Sale of energy certificates could reach ISK 20 billion per year

AIB suspended the sales due to a suspicion of double counting: that some companies were claiming they had purchased green energy credits from Iceland that had already been sold to another party. AIB pointed to a lack of oversight on the sale of the certificates from Iceland, and that it needs to be better clarified who is responsible for the oversight.

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AIB stated that they intend to help Landsnet (the public company responsible for Iceland’s power transmission system) resolve the issue, “thereby securing Icelandic national interests.” The sale of such certificates nearly reached ISK 1 billion [$7.4 million, €6.7 million] in 2019. The National Power Company of Iceland (Landsvirkjun) estimates that sales could reach ISK 20 billion [$147 million, €133 million] annually.

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.

Iceland’s Low-Cost Electricity in High Demand as Energy Prices Skyrocket in Europe

Low cost of electricity in Iceland compared with the rest of Europe

There is an increasing demand amongst foreign companies to base their operations in Iceland due to favourable energy prices, but the demand far exceeds what the country’s power plants can produce. RÚV reports that Landsvirkjun, the National Power Company of Iceland, says there’s a pressing need for increased electricity production.

‘New, potential customers are knocking on the door’

With Russia cutting off petrol pipelines to Europe, energy prices on the continent are skyrocketing. Meanwhile in Iceland, energy prices have remained almost unchanged. “It’s our renewable energy that makes this possible,” says Tinna Traustadóttir, Executive Vice President of Sales at Landsvirkjun. And as gas prices continue to rise, it’s not only consumers, but also companies, that are suffering. This has led to many enterprises—not least energy-guzzling aluminium smelters—going under as a result.

The state of Europe’s changing energy landscape is “reflected in high demand from existing customers,” explains Tinna, “and we also feel that there are new, potential customers knocking on the door.” At present, however, Iceland has no electricity to spare.

“As it stands now, you could say our electricity system is at full capacity, or as close to that as possible. And of course, it takes time to generate a new supply, but the situation is a pressing one,” says Tinna.

‘We will need to prioritize…but it’s clear we need to accelerate’

As a result, many foreign companies are clamouring to relocate their operations in Iceland, but the demand not only far exceeds the country’s current energy supply, it also exceeds Landsvirkjun’s plans for future  electricity production.

“We will need to prioritize,” says Tinna, listing off Landsvirkjun’s competing energy interests. “Domestic energy exchange, domestic food production, technological progress, supporting our current customers. But it’s clear we need to accelerate.”

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).

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, 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. 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.

Proposal for Expanded Highland Protections Protested

Energy companies and some local municipalities are hotly contesting a new proposal to expand environmental protections within the Icelandic highlands, RÚV reports. Per a proposal put forth by the Ministry for the Environment and Natural Resources, a new and expanded national park would include Vatnajökull National Park – already the largest national park in Western Europe – as well as 85% of the central highlands.

The boundaries for the new national park were suggested by a bipartisan committee appointed by the ministry in April 2018. The committee, which included MPs from all of the sitting parties in Alþingi as well as representatives from the Icelandic Association of Local Authorities, maintains that expanding the boundaries of the protected area would not negatively impact Vatnajökull National Park’s recent designation as a UNESCO World Heritage site. The proposal has since been opened for public comment, but will only remain so for the next two weeks, or until August 13.

Although the Association of Local Authorities has been part of the proposal process, however, many municipalities whose boundaries fall within the proposed national park feel that they were not appropriately consulted.

Ásta Stefánsdóttir, head of the district council of Bláskógabyggð in West Iceland says that it was the committee’s job to make proposals about the new national park, not to specifically evaluate the pros and cons of whether this should be done at all. Bláskógabyggð feels that this evaluation has yet to be done and that the current proposal represents an encroachment on the zoning power of local municipalities.

“There are large areas within the highlands that are within Bláskógabyggð and farmers and residents have put a lot of work into reclaiming the land, for instance, in marking riding trails and guiding traffic there, i.e. ensuring that people don’t enter sensitive areas and the like. People are only concerned because if there is some kind of centralised agency, some kind of government agency, which oversees this, that that will somewhat undercut all this volunteer work that people have done.”

Energy companies have also expressed opposition to the proposal. Samorka, the federation of energy and utility companies in Iceland, says that under the new protections, that all new energy generation and transmission would be prohibited in almost half of the country, making current laws about energy protection irrelevant.

For its part, Landsvirkjun, the National Power Company of Iceland, says that it is necessary that all of its power plants remain outside of protected areas and says that the utilisation of energy resources in the highlands have considerable economic significance for the country overall. The renewable energy produced in the highlands, it says, is the foundation of the nation’s economy and overall quality of life today.

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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