Water to Burn

A cool September dusk had settled over Reykjavík as tourists strolled down the gravel path leading into Villi Knudsen’s backyard. Knudsen was waiting in a dirty red parka and ragged jeans at the entrance to his makeshift theatre, which has room for maybe seventy people; $17 gets you into the cramped rows of fold-down seats. With the coming of fall, the days were getting shorter and the tourists were mostly gone. When he decided no one else was coming, Knudsen shut the door, mounted the wooden stage, and introduced his film, The Volcano Show, by telling stories about tilting lakes, lurching mountains, and other signs of impending doom. He had an enormous rusty pipe beside him, which he lifted before dropping it to the floor with a crash. The pipe, he explained to his startled guests, formed part of a line that brought hot water from a kilometre below ground until 1977, when a volcanic eruption flooded it with lava and ripped it apart. Hefting the pipe to his shoulder again, Knudsen turned it toward the audience so they could see the jagged blowhole.

Knudsen had been filming The Volcano Show on the day of the eruption, and soon the assembled group was watching images of a razor-sharp crack in the ground, a kilometre long and the colour of blood. A small section of the Mid-Atlantic Ridge had split open, revealing the guts of a tectonic fissure running through the middle of the country. This is where North America and Europe are pulling away from each other, tearing Iceland in half as they separate.

As unsettling as Knudsen’s film may be, there are real advantages to sitting on top of a molten cauldron. Knudsen’s pipe once belonged to the same vast underground network that now heats 87 percent of all homes and buildings in Iceland—turn on any hot water tap and you’ll catch a sulphurous whiff from the local borehole. Geothermal heat captured far below the surface is used for everything from drying seaweed and producing electricity to de-icing the streets of Reykjavík. In terms of raw, primary energy, it provides half of what Iceland’s 300,000 people and the country’s businesses consume each year. Along with hydroelectric dams, the geothermal network has displaced oil as Iceland’s major source of energy—entirely, in fact, except for the fourteen million barrels needed annually by industry and for the nation’s vehicles and fishing fleet.

Being all alone in the middle of the Atlantic Ocean with few resources has pushed the cost of living in Iceland to the point that Reykjavík has become the world’s fourth most expensive city to live in, with gasoline selling for $2.20 a litre. To ensure its future prosperity and provide work for its young and growing population, Iceland has embarked on a massive experiment to use its supplies of cheap energy to produce hydrogen power and to be nothing less than oil-free by 2050. “We want to become the first hydrogen society in the world,” says Hjálmar Árnason, caucus chairman of the ruling Progressive Party. “There is no other government that has given such a clear statement.”

Politicians in foreign capitals, with their own citizens growing restless over the spectre of $100-a-barrel oil and crushing home-heating costs, are now starting to take notice of Iceland’s attempt to do away with oil. But hardly anyone was paying attention back in 1996, when Árnason met in Reykjavík with officials from Volkswagen to discuss supplying the company with metal. At the meeting, a prominent lawyer, representing a number of European automakers, approached Árnason about an altogether different matter. “This lawyer was not interested in light metals at all,” recalls Árnason. Instead, he suggested looking at hydrogen and fuel cells, saying that the car industry would move in that direction and that Iceland would be the ideal testing ground for the new technology.

So began Iceland’s energy odyssey—an experiment that Canadians who live in smog-filled cities and face escalating gasoline prices might want Ottawa to join, or at least consider. It conceives of a future in which oil and its attendant environmental damage have been vanquished and replaced by clean energy alternatives. But so far, despite the fact that the fuel cells powering Iceland’s revolution are manufactured by Ballard Power Systems in Vancouver, Ottawa’s energy planners seem content to look backward to so-called big-energy solutions. After years of neglect, Canada’s alternative-energy sector produces just 4.5 percent of Canada’s total production. As if declaring its preference, Ottawa gives the oil industry $1.6 billion in subsidies each year, and companies such as Suncor and Canadian Natural Resources will spend nearly $100 billion to develop the Alberta oil sands over the next two decades. In so doing, vast amounts of new carbon emissions will be created in almost open defiance of the Kyoto Protocol. The situation won’t change, says Victoria Liberal MP and former environment minister David Anderson, until Ottawa, like Iceland, is seized by a cleaner vision of the future. “We are light years behind,” he says. “Oil has a built-in subsidy advantage, and we haven’t compensated the other side by giving subsidies to other energy sources.”

The debate doesn’t end with oil. The thirst for more energy recently led Ontario to consider, after years of failing to develop its alternative-energy resources, constructing another round of multi-billion-dollar nuclear power plants—a technology so mismanaged in the past that it contributed to the breakup of Ontario Hydro, one of the country’s largest companies, leaving the province with a $20-billion debt. (The French energy giant Total has also proposed building a nuclear plant in Alberta to power the extraction of oil from the tar sands.)

Prime Minister Paul Martin recently announced that he wanted Canada to take the lead in renewable-energy technology. But with so much policy emphasis on big energy, many people involved in the renewable-energy sector have their doubts. “It’s great to have a vision like that,” says Rob McMonagle, executive director of the Canadian Solar Industries Association, “but my comment is, ‘Well, Germany has been working on solar for fifteen years while Canada did nothing.’”

Asked how Canada might finally buy into an oil-free vision of the future, María Maack, a senior official in Iceland’s hydrogen program, rolled her eyes in disgust, declaring: “You have solar! You have wind! You have hydro! Many countries have geothermal power too, but they are just waiting for the world to run out of oil before they do anything about it.”

Iceland is seen by many energy strategists as the ideal place to break the back of oil dependency. “Because we are a small island [with a] small but real-scale infrastructure,” explains Árnason, “we have experienced changing from one source of energy to another—we went from coal and petroleum to hydropower and geothermal. It’s easier to change the buses in Reykjavík, where we have eighty, rather than, let’s say, the thousands of buses you have in London.”