Water to Burn

Árnason, a slim, soft-spoken man who says he doesn’t believe in coincidence, was chairing a parliamentary committee on industry and energy before his serendipitous meeting with Volkswagen. “So I raised this as a resolution,” he says, “a very simple resolution stating that the government should select a task force to look upon this.” The resolution passed, though not without ridicule. “My colleagues here were saying, ‘Ah, you like hydrogen my friend. The idea is nice, but that’s just a science-fiction novel.’ ” Initially little was accomplished, but that changed when Daimler-Benz sent a delegation to Iceland’s parliament in 1997, offering to join the country in a sweeping plan to convert it to hydrogen by 2050. “People woke up and said this might be something serious,” says Árnason. “Everything went crazy.”

Icelandic New Energy was created in 1999 to supervise the $7-billion project. Forty-nine percent of the company is divided between Netherlands-based Shell Hydrogen, the now-merged DaimlerChrysler of Germany, and Norwegian oil and aluminum giant Norsk Hydro. Shell will supply the country with hydrogen filling stations, Daimler with hydrogen vehicles, and Norsk Hydro with the electrolyzing equipment needed to create fuel by extracting hydrogen from water.

While hydrogen may be the fuel of tomorrow, it’s not the only candidate—alternatives vary from biofuels to battery-powered cars. But in Iceland hydrogen clearly offers the best substitute for petroleum. Biofuels, which require an enormous agricultural land base, aren’t an option for a country where only 0.1 percent of the land grows anything more than moss and grass. Battery-powered vehicles were ruled out, according to Maack, because “the best batteries are still polluting and take an entire night to recharge.”

Critics of the hydrogen option point out, with reason, that most of the hydrogen made today—some 50 million metric tons a year worldwide, enough to power 200 million fuel-cell vehicles, according to General Motors—is derived from natural gas and produces a considerable amount of carbon dioxide. Others argue that electricity and cleaner-burning fuels like natural gas should be conserved rather than used to make hydrogen, and that research money would be better spent developing mass transit, energy-efficient homes and alternatives such as solar power.

Iceland, though, has enough untapped geothermal and hydroelectric power to produce hydrogen exclusively from electrolysis—that is, by running an electric current through water to split the molecules. The Icelandic National Energy Authority estimates that the country could easily produce six times more electricity than it currently does. Ten percent of that would be enough to electrolyze the 100,000 metric tons of hydrogen needed to replace almost all of the country’s future oil imports. “Instead of importing fossil fuels,” explains Árnason, “we could export hydrogen and import money.”

Sprawled over a small patch of the Reykjanes Peninsula in the southwest corner of Iceland, Reykjavík starts at the gasoline terminal in the west end of town. Tankers from the North Sea pull in every few weeks to refill the glistening white silos built along the shore. Each one holds eight million litres of fuel, and collectively they store the country’s gasoline reserve. From here trucks fan out to stock Iceland’s 175 gas stations.

By comparison, the emerging hydrogen infrastructure is all but invisible. The tourist office doesn’t advertise the hydrogen-powered buses whizzing through the capital, and the bureau’s polite receptionist looked at me with a blank expression when I asked where I could find the hydrogen filling station. For all Reykjavík’s futuristic elements—the glass dome of the Pearl Restaurant overlooking the city, wireless Internet in the grocery stores—anyone expecting to see the Jetsons humming around in hydrogen-powered cars is bound for disappointment.

But hydrogen-fuelled buses do run here, and the filling station, the first commercial hydrogen facility in the world when it opened in April 2003, does exist. It’s on the opposite end of town from the gas terminal, trying hard to get noticed with a towering aqua-blue sign, visible from the nation’s sole freeway, that reads The Ultimate Fuel. Hydrogen is produced on site, electrolyzed inside a mass of pipes, coiled-metal tubes, and compression tanks. The apparatus is on display behind a Plexiglas wall, although the only evidence of any activity is a low, vibrating hum when the hydrogen is being made and compressed.

With only three buses—and not a single car—filling up here, this solitary station exemplifies the chicken-or-egg challenge of building an infrastructure whose parts rely on one another. Because only one facility is available, few people would want to order hydrogen-powered cars, and yet, without such vehicles, who will build another filling station? But that problem is about to be remedied. Virtually every major automaker, according to Ballard, is on the brink of mass-producing hydrogen vehicles. GM hopes to market its first fuel-cell cars in 2010; DaimlerChrysler could follow by 2012 and plans to sell 100,000 annually. Toyota is planning a high-end, $60,000 version. To encourage sales, the government has exempted hydrogen-fuelled cars from import taxes. And Icelandic energy officials estimate that six filling stations would be enough to make owning the cars feasible in the capital.

Looking further ahead, Icelandic New Energy is crunching numbers on everything from producing hydrogen for export to replacing the national fishing fleet with hydrogen-powered ships. Fishing trawlers currently account for 30 percent of the country’s oil consumption. But the long periods that crews remain at sea make this one of the most challenging steps, and the first of the new ships isn’t expected to leave port for another ten years. By then, however, all 110 buses in greater Reykjavík could be running on hydrogen. “I thought it would take twenty, maybe thirty years,” says Ásgeir Eiríksson, managing director of Greater Reykjavík Transport. “But after seeing how well these buses have operated, I would say closer to ten or fifteen.”