Published: March 2008 Iceland
Power Struggle
The people of Iceland awaken to a stark choice: exploit a wealth of clean energy or keep their landscape pristine.
By Marguerite Del Giudice

One of the main things to understand about Iceland is how tiny the population is and what it can be like to live here because of that. There’s the feeling that everybody on this isolated subarctic island knows just about everybody else, or at least can be associated (through family, friends, neighborhood, profession, political party, or school) by no more than one degree of separation. Imagine a country of 310,000 people, with most of them jammed in and around Reykjavík—a hip European capital known for its dimly lit coffeehouses, live music, and hard-drinking nightlife. That’s where all the good jobs are, and the chances of running into somebody you know are so high that it’s hard, as one commentator mused, to have a love affair without getting caught.

“We are,” said one bespectacled sixtysomething newspaper editor wearing a blazing white shirt, “very close-knit.” Then he clasped his hands together, as if in an embrace. Or a vise.

The consequence of living in what amounts to a small town on an island in the middle of nowhere, with its vertiginous links going back dozens of generations to the origins of Viking myth (a gene pool so pure that molecular biologists drool), is that it functions somewhat like a big extended family. “As soon as you open your mouth,” one observer said, “they’re all over you.” It’s like living on a mobile—disturbing any part of it could generate a ripple throughout. So while Iceland in many ways remains an open and transparent society, there’s an underlying guardedness among the people when it comes to talking politics and public policy—concerning such things as how the country should go about striking a balance between protecting its environment and growing its economy, which is more or less what this story is about.

“The drowning”

In the fall of 2006, secluded, faraway Iceland found itself at a turning point. A remote highland wilderness was being flooded—this to create a reservoir measuring 22 square miles as a power source for a new aluminum smelter. The dam that went with the reservoir was the tallest of its kind in Europe (the continent Iceland is conventionally associated with), and the land was going to be irreversibly changed: highland vegetation submerged, waterfalls and part of a dramatic canyon dried up, pink-footed geese and reindeer herds displaced. Environmentalists around the world were condemning the flooding as an attack on one of Europe’s last intact wilderness areas—they called it “the drowning”—and the Icelanders themselves didn’t know if they were headed for an economic boom, an economic bust, and/or the greatest environmental disaster in European history.

But that’s getting ahead of things. This modern Icelandic saga actually begins millions of years ago, for it is rooted in the land itself—the island’s unique geology and the geologic destiny that issues from it. First of all, the country is largely uninhabitable—a rocky, windswept, treeless terrain, unsuitable for much of anything beyond raising sheep. “Forbidding” comes to mind. Breathtaking. Strange. Giant chunks of blue ice floating in glacial lakes edged with boiling mud. Craggy mountains with formations that resemble human heads. Volcanoes, geysers, glaciers, belching gas vents, and vast stretches of gnarly lava fields where American astronauts came in the 1960s to see what they would be up against on the moon.

Here’s where geologic destiny comes in. Iceland happens to be situated right on top of the intersection of two of Earth’s tectonic plates, straddling a volcanic boundary called the Mid-Atlantic Ridge. Consequently, a third of all the lava that has erupted from the Earth in the past 500 years has flowed out right here, and there are so many natural hot springs that almost all the homes and buildings are heated geothermally. On the surface, meanwhile, sit giant glaciers and the abundant rivers that flow from them. This hot-and-cold combination, of churning activity beneath the surface and powerful rivers above it, makes Iceland one of the most concentrated sources of geothermal and hydroelectric energy on Earth—clean, renewable, green energies that the world increasingly hungers for.

The thing is, very little of that energy has been tapped, because it’s stranded in the middle of the nowhere between continental Europe and Greenland. So, since the 1960s, the government has been wooing heavy industry to Iceland with the promise of cheap electricity, no red tape, and minimal environmental impact. But—except for two small smelters and a ferrosilicon plant—getting companies to come here has been a hard sell. The labor force is very small, highly paid, and probably overeducated. Add to that the remoteness of the place, the long, dark winters, and the inhospitable weather. Only an industry requiring the most intensive use of energy, and which could get a heckuva good rate for it over a long period, would find it economical to set up shop all the way in Iceland. The most obvious fit was the aluminum industry. And so it was—to the alarm of environmentalists who want to save that rare land and the thrill of industrialists who want to use some of it to finally produce something—that the paths of aluminum smelting and unspoiled Iceland were fated to cross.

According to Sigurður Arnalds, the spokesman for Landsvirkjun, the national power company—an avuncular engineer everyone calls “Siggi,” whose hooded eyes and white-fringed balding head give him the same soft appeal as Mr. Magoo—the grand idea was to “export electrical power on ships in the form of aluminum.”

“We have to live”

Now elsewhere in the world, Iceland may be spoken of, somewhat breathlessly, as western Europe’s last pristine wilderness. But the environmental awareness that is sweeping the world had bypassed the majority of Icelanders. Certainly they were connected to their land, the way one is complicatedly connected to, or encumbered by, family one can’t do anything about. But the truth is, once you’re off the beaten paths of the low-lying coastal areas where everyone lives, the roads are few, and they’re all bad, so Iceland’s natural wonders have been out of reach and unknown even to its own inhabitants. For them the land has always just been there, something that had to be dealt with and, if possible, exploited—the mind-set being one of land as commodity rather than land as, well, priceless art on the scale of the “Mona Lisa.”

When the opportunity arose in 2003 for the national power company to enter into a 40-year contract with the American aluminum company Alcoa to supply hydroelectric power for a new smelter, those who had been dreaming of something like this for decades jumped at it and never looked back. Iceland may at the moment be one of the world’s richest countries, with a 99 percent literacy rate and long life expectancy. But the project’s advocates, some of them getting on in years, were more emotionally attuned to the country’s century upon century of want, hardship, and colonial servitude to Denmark, which officially had ended only in 1944 and whose psychological imprint remained relatively fresh. For the longest time, life here had meant little more than a sod hut, dark all winter, cold, no hope, children dying left and right, earthquakes, plagues, starvation, volcanoes erupting and destroying all vegetation and livestock, all spirit—a world revolving almost entirely around the welfare of one’s sheep and, later, on how good the cod catch was. In the outlying regions, it still largely does.

Ostensibly, the Alcoa project was intended to save one of these dying regions—the remote and sparsely populated east—where the way of life had steadily declined to a point of desperation and gloom. After fishing quotas were imposed in the early 1980s to protect fish stocks, many individual boat owners sold their allotments or gave them away, fishing rights ended up mostly in the hands of a few companies, and small fishermen were virtually wiped out. Technological advances drained away even more jobs previously done by human hands, and the people were seeing everything they had worked for all their lives turn up worthless and their children move away. With the old way of life doomed, aluminum projects like this one had come to be perceived, wisely or not, as a last chance. “Smelter or death.”

The contract with Alcoa would infuse the region with foreign capital, an estimated 400 jobs, and spin-off service industries. It also was a way for Iceland to develop expertise that potentially could be sold to the rest of the world; diversify an economy historically dependent on fish; and, in an appealing display of Icelandic can-do verve, perhaps even protect all of Iceland, once and for all, from the unpredictability of life itself.

“We have to live,” Halldór Ásgrímsson said in his sad, sonorous voice. Halldór, a former prime minister and longtime member of parliament from the region, was a driving force behind the project. “We have a right to live.”

The little country that could

At first, most of the country appeared to be behind the dam and smelter that would save the east—it would be good for Iceland, progressive, modern. As far as Icelanders are concerned, Iceland is the greatest country on Earth and everything Icelandic is the best. “We are like Tarzan, a proud island nation,” remarked a man who directs a whale museum. They pride themselves on the sagas, the absorbing, rambling, medieval narratives of early Norse and Icelandic society that are generally considered among the Middle Ages’ finest literature; a Nobel laureate for literature (Halldór Laxness in 1955); three Miss Worlds; four climbers of Everest; the oldest parliament extant; and the world’s first democratically elected female president, Vigdís Finnbogadóttir, who served for 16 years before she’d had enough.

In any event, the national power company was spending 1.5 billion dollars on the hydroelectric part of the dam-and-smelter project, most of it borrowed from international banks—the biggest construction investment little Iceland had ever undertaken and probably ever would. The energy expected to be generated annually (4,600 gigawatt-hours) was about half what the entire nation was then using, and the scale of it was intoxicating: a huge tangle of dams, tunnels, power stations, and high-tension lines, including one rock-and-gravel dam 650 feet high.

All this to service the single aluminum smelter being built on the other side of the country from Reykjavík, in the eastern fjord town of Reyðarfjörður, which is pronounced something like “radar-f ’your-dur.” There’s an unremarkable mountain out there named Kárahnjúkar, and that’s where they got the name for what they were doing: the Kárahnjúkar Hydroelectric Project. You say it “KAR-en-yoo-kar.”

As the project progressed, it gradually became clear that Kárahnjúkar was bigger than anyone had imagined. Even Jóhann Kröyer, project manager for the dams and tunnels, remarked over dinner at a work-site canteen: “I think maybe people didn’t realize how huge this project is.”

But as the months passed, a growing and significant minority did realize it, and a kind of national family feud erupted—ostensibly framed around the irreversible impact on the land of the gigantic dam, the blocking of two glacial rivers, and the resultant flooding of the highland wilderness for the reservoir. Iceland had obtained an exemption from the Kyoto Protocol pollution limits, which would expire in 2012, adding an element of urgency, and future smelters and expansions were on the drawing board. Was the government going to take one of the world’s cleanest countries and offer it up as a dumping ground for heavy industry?

Did the people really want this—did they even understand what it meant?

Planetary differences

Kárahnjúkar touched off what one player characterized as Iceland’s cold war. A leading conservationist said to me, for instance, that when he walks by a river, he sees an act of God, and that when dambuilders walk by, “they start counting kilowatt-hours.” Told of the remark, a smelter manager sniffed, “They don’t understand business, and they don’t want to.”

One side may as well have been from Venus and the other from Mars. The main guy here from Alcoa, Tómas Már Sigurðsson, a native Icelander with a degree in environmental engineering who considers himself an environmentalist, was upbeat and idealistic. Alcoa’s mission, he said, was to be a good neighbor in the community—while creating the most efficient, safe, and eco-friendly smelter on the planet, by recycling materials and using state-of-the-art technologies to minimize waste and control the sulfur dioxide fumes that are a by-product of smelting aluminum from alumina, a white powder refined from bauxite ore.

He seemed particularly psyched about something Alcoa calls the Sustainability Initiative—under which representatives of diverse interest groups (business, government, the power company, community, church, the environment) devise mutually agreed-on standards for holding Alcoa accountable over time: Did Alcoa raise the region’s standard of living, provide the kinds of jobs it said it would, treat the environment as promised? The Sustainability Initiative had been put into effect at the new smelter in Reyðarfjörður. “A first in the world,” Tómas said—and an industry template for how to approach new communities with the controversial idea of building smelters.

“We’re not just building a factory that will produce metal,” said Tómas, baby-faced, balding, and fit, with high color, a smear of lips, and an open, earnest manner. “It’s a far different level.”

Young and idealistic eco-warriors, meanwhile, rolled their eyes in droll disbelief. They dismissed things like the Sustainability Initiative as little more than a capitalist lie designed to manipulate and co-opt an unsuspecting public—a “greenwash,” as they put it, which is why, in one highly publicized protest action, a band of them dumped buckets of green-dyed yogurty stuff, called skyr (pronounced skeer), on a gathering of aluminum industrialists (including Alcoa’s Tómas), who, not realizing at the time that the skyr was just skyr, were understandably alarmed. “They were trying to say aluminum smelters were eco-friendly!” said Arna Ösp Magnúsardóttir, a local protest organizer who got arrested that day, as she sat at a sidewalk café in Reykjavík, wearing a pink satin pajama top over black tights.

She conceded that she hadn’t really thought skyr was going to stop Kárahnjúkar.

“For me, it’s to stop future projects and to hassle them enough that they know they won’t get away with this again so easily.”

Kárahnjúkar’s critics argued that surely something else could have been done to help the east without messing so much with the land. Building something on the scale of Kárahnjúkar to solve things, as one man put it, was like “taking a heartbroken kid and giving him a triple-bypass operation.”

At the same time, the people in the east said they had tried everything they could think of—business, industry, tourism. “Nothing worked,” said Smári Geirsson, a high school history teacher and onetime head of the 16-member association of eastern municipalities. What he said next beat at the heart of Iceland’s cold war: “I think the people who are against this are very worried about the land and the reindeer and the birds. But they never want to discuss the needs of the people. Many live in Reykjavík, and they are against it if we move a stone here,” he said, pinching his fingers together as if holding one. “But they live in concrete and asphalt. They want to come here in their Jeeps and have a look at the beautiful nature and the people too. And the people must be few and the more strange the better,” he said, shaking his bowed head.

This clash of ideals can be traced to the early 20th century, when Iceland was still poor as dirt and romantic poetry was being written about the harnessing of the waterfalls as the future of Iceland. During and after World War II, the occupation by thousands of British and then American soldiers led to a massive influx of foreign capital and an investment in some fishing trawlers, which boosted the economy for a while. Then over time the fish stocks declined, the herring disappeared, and Iceland became poor again.

By the mid-1960s, according to Styrmir Gunnarsson, the snowy-haired editor of Reykjavík’s leading daily, Morgunblaðið, the mood of the country was shifting back to the idea of becoming well-off “by using waterfalls to produce electricity and also by having aluminum factories.” So decade after decade, driven by a desire to build a leg other than fish for Iceland to stand on—and “inspired by the idealism of it” and by the poetry, Styrmir said—the society went about creating an infrastructure. Government agencies, ministries, academic departments, financial institutions, engineering firms—all in pursuit of what was thought of as a big and beautiful idea. Then, over the past two decades, the mood of the country again began to shift.

Little by little, Icelanders and eco-trekkers from around the world started venturing into the interior wilderness, he said, and a belated awareness of what was there—“glaciers, black sand, beautiful blue rivers”—began to take hold. “As the population has traveled to these parts, all get the same feeling: You shouldn’t change it. No power dams, no roads. It should be just as it is.”

In the midst of this environmental awakening, the opportunity with Alcoa stood as possibly the last chance for many Icelanders to realize a century-long industrial dream.

“They felt they were doing something good for the nation,” Styrmir said.

Now that they’re being depicted as environmental criminals, they’re bewildered.

“They don’t understand.”

The sky is falling

The months passed, and protests mounted. A protest camp and a protest concert were held, featuring Björk, the waif rock chanteuse who is currently Iceland’s most famous export; upwards of 10,000 people marched in downtown Reykjavík days before the flooding of the reservoir (the equivalent of ten million-plus people showing up someplace in the U.S.); and state television’s Ómar Ragnarsson, Iceland’s most famous reporter, a completely bald and preternaturally energetic 67-year-old (known for flying his Cessna to the sites of erupting volcanoes and sleeping in his black Jeep when he had to, surviving on Cheerios and Coca-Cola), launched a 20-foot white fiberglass boat he dubbed The Ark into the reservoir, to collect samples of lost vegetation and stone as it filled over the months and to film the land as it was transformed.

Critics, meanwhile, picked away at Kárahnjúkar’s business plan and characterized it, in a variety of ways, as crazy. The borrowed 1.5 billion dollars, for instance, was to be paid off with revenue from Alcoa over the four-decade contract. After that, Siggi, the power company spokesman, predicted, the dam would be “a gold mine”—a rosy forecast not shared by those who had started to think twice about there being no direct return for 40 years on such a huge investment.

And what about the geologic risks associated with boring and blasting 45 miles of tunnels in a country that was one big volcano? Siggi insisted that the dam wasn’t located in an earthquake zone but nonetheless had been designed to withstand heavy shocks, and he likened all the safety measures taken to “putting many, many belts on the same pair of trousers.” But would the electromagnetic fields emanating from the project’s 31 miles of high-tension power lines make people sick? And how about pollution from the smelter? Alcoa’s plan was to blast potentially acid-rain-producing sulfur dioxide fumes way out into the atmosphere through a giant chimney. But what if the fumes became caught in the fjord’s notoriously calm atmosphere, trapped between mountains?

Inevitably, it started to dawn on more and more people: The entire public was paying for this grand project and would be responsible if something went wrong, but the benefits were accruing only to one depressed region numbering several thousand people. There began to be grumblings about Iceland’s “old boy” political party system and the perceived lack of forthrightness in engaging the electorate about the country’s industrial policy.

“On the surface, we have an open debate,” said Baldur Þórhallsson, a professor at the University of Iceland who specializes in the politics of small societies. “But underneath, there is this tendency by some politicians to control the debate and the agenda … phone calls, emails, and letters making little indirect threats.” With job opportunities few in such a small place—and ties among politics, business, government, and media so Byzantine that conflicts of interest are impossible to avoid and sleeping with the enemy is literally true—it’s understood that speaking one’s mind could be a really bad career move.

Most people I talked to seemed wary of appearing to demean their relatives to a stranger and sensitive about giving a bad impression of Iceland. But once they got going, it was talk, talk, talk into the night, spewing every story and conspiracy theory imaginable—most of them fluent in English and otherwise speaking an ancient Viking tongue that sounded like a tape recorder playing backward. There were even glimpses of an abiding belief in elves and the “hidden people,” who live in rocks that roads have been routed around so as not to disturb them. What kind of spiritual havoc might come from moving the Earth on the scale of Kárahnjúkar?

The problem of choice

Late one night, in a hut on a lake deep in the eastern highlands, Ómar, the reporter, while empathizing by candlelight with the people of the regions, lamented the larger course of events. “If only instead of looking for ways to use the land for heavy industry, Iceland had kept the land intact and for 20 years had worked on how to sell her intact, we’d have gotten much more for her.”

Why wasn’t Iceland positioning itself as a world leader in the development of hydrogen alternatives? Or marketing what is arguably the world’s oldest parliamentary democracy as a mecca for law students? Or more aggressively branding Icelandic products in the international market, which would surely pay for such remote purity? How about some high-end, eco-conscious tourism on a par with, say, the Galápagos Islands? Or capitalizing on the country’s rich heritage?

At the Culture House, for instance, you can view original medieval manuscripts, like Egil’s Saga, smudgy pages in careful script written on calfskin vellum. The Codex Regius of the Edda poems is also there, the oldest and most important collection of poems describing the gods, heroes, and mythology of antiquity, said to have inspired artists from Wagner to Tolkien.

“But we haven’t sold this,” said Andri Snær Magnason, author of Dreamland: Self-Help for a Frightened Nation, a surprise, runaway best-seller that exposed the spell he thought the Icelandic people had been under regarding the dam and smelter and galvanized the conservation movement. “We’re selling people cuddly stuffed puffins but not promoting real depth.”

Even more important, modern Icelandic society, Andri felt, had no template for how to conduct a national dialogue. As a result, the majority of people, instead of making conscious, informed decisions about issues like Kárahnjúkar, had—out of a combined sense of trust in the system, fear of the system, and intellectual laziness in the face of complicated and precarious issues—passively supported something they didn’t really understand.

Here was Iceland (or at least Reykjavík), Andri said, “at a peak of economic growth and progress”—thanks to thriving pharmaceutical and tech industries, the privatization of the banks, and a general liberalization of the financial sector over the past 20 years. At such a juncture, he said, the problem should be “a problem of choice”—not of smelter or death. Not the old fear of privation but a sense that the future is limited only by Icelanders’ belief in themselves and their willingness to reawaken that primeval Viking spirit idling restlessly behind their seeming impassivity: the daring and inventiveness, the sense of artistry, and of tremendous resolve, from the old ways and the old days of old Iceland, when it was believed, as one former egg farmer told me, “that you could change the world with a poem.”

So here they all were, one big unhappy family. The environmentalists were trying to save Iceland. The industrialists were trying to save Iceland. Everyone was trying to save Iceland.

“A mental civil war,” somebody called it.

A war of dreams.

What price freedom?

Soon after the flooding, in what looked like a concession to the burgeoning green constituency, the government decided to designate a huge, long-awaited national park—a wilderness area in and around Vatnajökull glacier, adjacent to Kárahnjúkar, that may encompass some 5,000 square miles.

The park was a major victory, perhaps the first of many, it was hoped by conservation leaders such as Árni Finnsson, director of the Iceland Nature Conservation Association, a restless, sensitive man with a flop of strawberry blond hair and a voice low and raspy from his having lost one of his vocal cords in a car accident. He was ecstatic about the park and also the movement’s enhanced political clout. A new, green party emerged, chaired by Ómar, called Iceland’s Movement; and though it failed in last May’s elections to garner the minimum 5 percent of the vote required by law to earn any seats in the parliament (it got 3.3 percent), and its future was unclear, the political landscape appeared to be changing. The greens were squarely in the game now, environmental issues were higher on the public agenda, and all of Iceland’s parties were going to have to take them into account. Pro-Kárahnjúkar people were saying things like “we’re nearing the end of the road on aluminum,” and energy-intensive alternatives such as “server farms,” huge computer-processing centers, were on the horizon, as was a shift to geothermal energy, which can be less invasive than hydro.

Meanwhile, on the aluminum side, as of last fall: Smelting had begun at the Alcoa plant in Reyðarfjörður, with full production expected this year—344,000 metric tons annually; the company was planning another smelter, using geothermal energy, in the northeast town of Húsavík; and Century Aluminum was expected to start building a second smelter this year, near the airport outside Reykjavík. (Though the townspeople of Hafnarfjörður narrowly voted down Alcan’s bid to increase the size of its existing smelter there.)

So for now, Iceland is in a state that can only be described as schizophrenic.

“The question over the next few years,” said Styrmir, the newspaper editor, “is can we compromise between those who are still inspired by the idea of Iceland becoming rich by using our land for energy and the people who are fighting against any changes in the environment? Can we use geothermal energy in a better way than how it’s been done in the past, with ugly above-ground zigzagging pipes that carry the steam and lie across the landscape like a broken zipper?”

A new, deep-drilling technology that could generate more power with fewer boreholes and exposed pipes is being explored by the national power industry (partly supported by Alcoa). The experiments involve drilling five kilometers down instead of the usual two, said Landsvirkjun’s Siggi, to tap into “higher temperature and higher pressure and therefore up to ten times more power per borehole.” But the results are years away. “Such a hot liquid is not easy to handle, so there are many technical hurdles.” At the same time, the use of conventional geothermal technology, mostly to power aluminum plants in the southwest and northeast, is also being developed—and challenged by environmentalists. “Most of this is still in the exploration phase,” said Siggi, about which Ómar remarked: “They call it research, but for that research they’ve got bulldozers in there and made roads and destroyed the area.”

So the cold war slogs on, with geothermal energy emerging as the next environmental battleground.

For Iceland, and for any country groping for a balance between protecting its environment and growing its economy, the challenge is this: How do you change the infrastructure of a society—overcome the inertia and allow time for alternatives to develop—while people’s lives and livelihoods are at stake? How do you develop eco-friendly industries that are also lucrative, thereby making conservation profitable as well as virtuous?

“I think Kárahnjúkar is the beginning of a new era,” said a man filming a documentary about it. “An opportunity for transformation.”