Nov 19 2007

Climate Change-Iceland: Emissions Quota Debate Heats Up

By Lowana Veal, Inter Press Service, 19 November 2007

“I am of the opinion that Iceland should not ask for a repeat of the Iceland Provision in the upcoming climate change negotiations,” says Iceland’s environment minister Thorunn Sveinbjarnardottir.
The Iceland Provision was the exemption given to Iceland when the Kyoto Protocol went into effect in 2005. Because Iceland derives 72 percent of its energy needs from renewable energy and had little heavy industry at the time the Protocol was agreed, the country was allowed to increase its greenhouse gas emissions by 10 percent from their 1990 level, rather than decrease emissions by at least 5 percent like most of the other signatories are required to do.
During the first commitment period, 2008-2112, the Iceland Provision allows for emissions averaging 1.6 million tonnes annually of carbon dioxide from energy-intensive industries that had not existed prior to 1990.

Iceland now lags behind other European countries when it comes to reducing greenhouse gases, Left-green politician Kolbrun Halldorsdottir pointed out at a recent Althingi — parliament — discussion.

Iceland churns out 12 tonnes of greenhouse gases per capita, she said, while the European average is 11 tonnes.

In Iceland’s case, the figure will rise to 17 tonnes per head when the Fjardaal smelter in East Iceland becomes fully operational in early 2008.

“We need to shoulder our environmental responsibilities, and the same is true for all other nations,” Sveinbjarnardottir says.

Sveinbjarnardottir’s view is not shared by the Prime Minister of Iceland, Geir Haarde, who in reply to a parliamentary question, said he felt that Iceland should attempt to ask for the Iceland Provision at the end of the next negotiation round, which is expected to take place in Copenhagen in 2009.

Haarde says that the ruling coalition have not yet made a firm decision on the matter, but four ministers are working on it.

Sveinbjarnardottir and Haarde are from the Broad Left Alliance and the right-wing Independence Party respectively. The two parties make up the ruling coalition in Iceland.

Sveinbjarnardottir and her colleagues, who had previously been part of the Opposition, have always been against the Iceland Provision, while Independence Party members have generally been in favour of it.

At the time the Kyoto Protocol and the Iceland Provision were agreed, Iceland’s ruling coalition consisted of the Independent Party and the right-wing Progressive Party, who also support the existence and extension of the Iceland Provision.

In total, Iceland has been allocated 10.5 million tonnes of greenhouse gas emissions for the period of 2008-2012. These gases include: nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride and carbon dioxide.

The bulk of these emissions, 8.6 million tonnes, has recently been assigned to five plants: the Alcan aluminium plant in Hafnarfjordur, just outside of Reykjavik; the Century aluminium plant in Grundartanga, West Iceland, and its neighbour, Iceland Alloys; the Alcoa aluminium plant in Reydarfjordur, East Iceland; and the Iceland Cement factory in Akranes, West Iceland.

Four companies requested permits but were denied them.

The denied proposals include: the proposed Alcoa aluminium smelter at Bakki, North Iceland; the Century aluminium plant at Helguvik, south-west Iceland; a possible Alcan aluminium smelter at Thorlakshofn in South Iceland; and the Tomahawk Development silicon refinery at Helguvik where solar cells would be manufactured.

These companies will have to buy allocation permits from the market if the projects are approved to go forward.

“But,” says Arni Finnsson from the Iceland Nature Conservation Association, “it’s important to realise that Iceland will exceed its Kyoto commitments if the aluminium plants at Helguvik and Bakki are built, although the 8 million tonne limit of carbon dioxide will probably not be exceeded before 2012.”

The projected Alcan plant at Thorlakshofn has encountered further problems.

Landsvirkjun, Iceland’s national power company, has just decided to provide energy to customers other than aluminium smelters when — and if — its proposed series of hydroelectric plants in the Lower Thjorsa river in South Iceland come on line.

Up till now, these had been intended to provide energy for the now-rejected expansion of the Hafnarfjordur smelter or other possible aluminium plants in South Iceland.

Landsvirkjun now favours the development of a silicon refinery and a server farm on the abandoned U.S. military base at Keflavik.

Thorsteinn Hilmarsson, information officer for Landsvirkjun, says that higher electricity prices can be achieved from silicon refineries and server farms than from the proposed aluminium projects in the south of Iceland.

“Over the last few months Landsvirkjun has had talks with about fifteen different prospective buyers,” Hilmarsson says.

Ossur Skarphedinsson, Minister of Industry, commented recently that the Icelandic government has no control over the development or expansion of aluminium smelters in Iceland.

In an interview with the Morgunbladid newspaper, he said that Landsvirkjun’s announcement marks a change in direction that could be seen as a step toward achieving the government’s climate change policy.

“From an environmental point of view, very little pollution comes out of server farms and silicon refineries — particularly server farms,” he said in the interview.

Iceland aims to reduce its greenhouse gas emissions by 50-75 percent from those of 1990, by 2050, although Anna Kristin Olafsdottir, political advisor to the environment minister, says that no final decisions have been made on ways of accomplishing this.

“Right now, a scientific committee is working very hard on preparing such a plan and is expected to deliver its conclusions next spring,” says Olafsdottir.