The profitability of Landsvirkjun, Iceland’s national energy company, is way too low. And worst off is the Kárahnjúkar hydro power plant, Europe’s largest dam, the company’s biggest and most expensive construction. Landsvirkjun’s director Hörður Arnarson revealed this during the company’s recent autumn meeting, and blamed the low price of energy sold to large-scale energy consumers, such as Alcoa’s aluminium smelter in Reyðarfjörður, as one of the biggest factors reducing profit.
These news echo the many warnings made by the opponents of the cluster of five dams at Kárahnjúkar and nearby Eyjabakkar, who repeatedly stated that the project’s alleged profitability was nothing but an illusion, but were systematically silenced by Iceland’s authorities.
Now, as these facts finally become established in the media—this time straight from the horse’s mouth—similarly bad news has arrived regarding another big Icelandic energy company. Reykjavík Energy has failed to make a profit from their 2007 and 2008 investments, effectively making them lose money.
At the same time, new research shows that the environmental impacts of the Kárahnjúkar dams are exactly as vast and serious as environmentalists and scientists feared.
And yet, more dams, geothermal power-plants and aluminium smelters are on the drawing table—presented as the only viable way out of the current economic crisis. Read More
The smallest aluminium smelter in Iceland uses 50% more electricity than all of Iceland’s households and businesses combined, while contributing very little to the country’s GDP. Heavy industry has often been touted by Icelandic conservatives as a cash cow: foreign companies can provide the country with jobs, while utilising Iceland’s green energy to produce aluminium in a cleaner fashion.
While the myth of the “green smelter” has been definitively put to rest, aluminium is still billed by some as being good for the economy. However, Vilhjálmur Þorsteinsson – the chair of a study group assembled by the Ministry of Industry that studies Iceland’s energy use – has come to some damning conclusions about smelters in Iceland.
Iceland’s three aluminium smelters – Alcoa in Reyðarfjörður, Norðurál in Grundartangi, and Rio Tinto Alcan in Straumsvík – consume approximately 13 terawatt hours of electricity. The entire capacity of Iceland’s electrical output is 17 terawatt hours. Furthermore, Straumsvík – the smallest smelter in the country – uses 3.6 terawatt hours. The combined total energy consumption of every home and business in Iceland (apart from the smelters) equals only 2.3 terawatt hours.
At the same time, even the best estimates of what smelters contribute to the economy only put them in the neighbourhood of contributing to 5% of the GDP. Tourism accounts for about the same percentage of the GDP while using far less of the power grid. Meanwhile, Iceland’s service sector accounts for 69.9% of its GDP, and fishing accounts for 12%.
After a six years process Alcoa in Iceland has withdrawn its plans to build a 250 thousand ton aluminium smelter in Bakki, near Húsavík in the North of Iceland. It is now clear, according to the company, that the energy needed to run the proposed smelter will not be provided and, even if it could be provided, the company finds the price too high. Tómas Már Sigurðsson, the director of Alcoa in Iceland, announced this yesterday on a meeting in Húsavík, marking a milestone in the struggle against the aluminium industry’s further development in Iceland.
As from 2005 Alcoa, along with national energy company Landsvirkjun, Húsavík’s authorities and – to begin with – the Icelandic authorities, has been working on the project, which would have required at least 400 MW of energy, produced by harnessing geothermal areas and glacial rivers in the North. In 2008 a Memorandum of Understanding (MOU) between Landsvirkjun and Alcoa expired, and a year later the same happened concerning a MOU between the aluminium producer and the Icelandic government, the latter not willing to renew it.
Since then Landsvirkjun has signed a few other MOUs, regarding geothermal energy commerce, with possible buyers such as data centres and silicon factories, in some ways meeting with a popular demand for less destructive and more “green” use of the geothermal energy. Regardless of what one finds about the alleged “greenness” of such enterprises this development has inevitably raised the question if Landsvirkjun would be able to feed both Alcoa’s planned smelter and at the same time these smaller, less energy intensive factories. Read More
Overrun by Viking ambition, Reykjavík Energy built headquarters fit for Darth Vader, expanded ambitiously, dabbled in tiger prawn farming and flax seed production, went into the fibre optics business, invested in a new geothermal plant, speculated in places like Djibouti, and finally managed to run itself so completely into the ground that foreign investors will no longer offer the company loans.
In hopes of rescuing its multi-utility service company from the depths of abyss, the city of Reykjavík stepped in this March with a 12 billion ISK (105 million USD) loan, which is nearly its entire reserve fund set aside for the company, but still only a fraction of the company’s massive foreign debt of 200 billion ISK (1.7 billion USD).
With thousands of captive lifetime subscribers and a means of producing energy at very little cost, the company had all the makings of a cash cow. So what happened to Reykjavík Energy, an entity that less than a decade ago was a perfectly viable, municipally owned company providing the city with basic utilities: cold water, hot water and electricity? Read More
In the video above, Indian author Arundhati Roy talks about her recently published book, Broken Republic: Three Essays, and how the Indian government is, along with international mining corporations, violating the indigenous of India, destroying their lands and displacing them, leading to a constantly increasing gap between the rich and the poor. One of the book’s essays, titled “Mr Chidambaram’s War”, focuses on the Dongria Kondh tribe in Odisha, who have fought against Vedanta’s and ALCAN’s bauxite mining for aluminium production over the last decades.
The following text explains Broken Republic’s content briefly:
War has spread from the borders of India to the forests in the very heart of the country. Combining brilliant analysis and reportage by one of India’s iconic writers, Broken Republic examines the nature of progress and development in the emerging global superpower, and asks fundamental questions about modern civilization itself.
Landsvirkjun, Iceland’s national energy company, plans to build fourteen power plants in the next 15 years; ten hydro dams and four geothermal plants, costing between 4,5 and 5 billion US dollars. If the plans go ahead Landsvirkjun will increase its electricity production by eleven terawatt hours (TWh), resulting in annual production of 40 TWh. “A new Kárahnjúkar dam is on the cards,” said Katrín Júlíusdóttir, minster of industry, when discussing energy plans in parliament recently.
Landsvirkjun’s new plan was presented at the company’s annual general meeting, which took place on April 15th. According to the company’s director, Hörður Árnason, the planned power plants are to be built in several rivers, including Þjórsá, Tungnaá and Hólmsá, as well as geothermal areas in the north of Iceland. The construction of Búðarháls Dam in Tungnaá has already started and Landsvirkjun plans to start energy production there in 2013, whereas all the other options are still being looked at in the making of a framework programme concerning the use and protection of Iceland natural resources. Read More
After many years of preparations the Greenlandic government say the final decision on Alcoa’s proposed smelter will be taken at the spring 2012 of the parliament. It is more likely, as the global history of the industry and the evidence in Greenland tells us, that the decision has in fact already been made undemocratically behind closed doors, despite the decreasing support of the Greenlandic people. In fact Alcoa and the Greenland government are so keen on passing the project that they have just hired an eighth employee at their national company Greenland Development- formed to enable the industry to go ahead. Juaaka Lyberth’s explicit remit is to influence public opinion on the smelter through the media. Greenland Development paints a rosy picture of an aluminium future for Greenland, but will their promises of prosperity come true? A comparison to Alcoa’s Fjardaal project in East Iceland suggests that many will not. Read More
Recently it was revealed that ten billionaires from Canada and the US are seeking Icelandic citizenship to ease their access to invest in geothermal and hydro energy in Iceland. These two news articles were published on the Reykjavík Grapevine website (1 and 2).
Wealthy Individuals Seeking To Buy Icelandic Citizenship
Ten people promising to invest millions in Iceland’s renewable energy field have applied for citizenship directly with parliament. The reaction from within parliament has been one of both bewilderment and suspicion.
The ten individuals are apparently from outside the Schengen area. By Icelandic law, this would normally mean they would need to live here, work, not leave the country for more than six months at a time and remain a resident of Iceland for seven years before they could even qualify for citizenship. However, Iceland has made exceptions in the past for those applying directly to parliament – most notably with certain athletes and chess player Bobby Fischer. Read More
The Los Angeles Times Henry Chu, Reporting from Grundartangi, Iceland
Some say aluminum is vital to Iceland’s budding economic recovery. Others say the industry was at the root of the nation’s 2008 economic collapse.
Part of the cure — or cause — of Iceland’s spectacular economic meltdown sits here on a rugged fiord backed by frigid blue waters and snowcapped mountains. Read More
While history—meaning: ‘the past’—does not change, history—meaning: ‘the narration of past events’—does in fact change. This is because we view history through the lens of the present. As events unfold, the meaning and significance of the past changes. And because our view of the past changes we constantly need to change our history textbooks.
So, it is pretty hard to predict how any event, let alone a whole decade, will be remembered. Because we do not know what the future holds, or what academic fads will reign among future historians, it is exceedingly difficult to say with any certainty how future historians will judge this first decade of the 21st century. Still, even if we lack the necessary hindsight of history, we can make some pretty good educated guesses. Read More
The profitability of Landsvirkjun, Iceland’s national energy company, is way too low. And worst off is the Kárahnjúkar hydro power plant, Europe’s largest dam, the company’s biggest and most expensive construction. Landsvirkjun’s director Hörður Arnarson revealed this during the company’s recent autumn meeting, and blamed the low price of energy sold to large-scale energy consumers, such as Alcoa’s aluminium smelter in Reyðarfjörður, as one of the biggest factors reducing profit.
At the same time, new research shows that the environmental impacts of the Kárahnjúkar dams are exactly as vast and serious as environmentalists and scientists feared.
