Feb 15 2011

The Þjórsá Farce Continues – Are the Dams Planned for Aluminium Production?

A decision by Svandís Svavarsdóttir, Minister of Environment, to reject the construction of a dam in Urriðafoss waterfall in Þjórsá river, has been ruled illegal by Iceland’s supreme court. Whilst Svavardóttir and her comrades in government accept the ruling, and say the Minstry of Environment now has to look into the case and examine the legal environment, the right wing opposition in parliament, along with heavy industry lobbyists, demand the ministers’ resignation, claiming that she has delayed all construction in the area for two years. People living by Þjórsá have announced that these statements are wrong and ask for examples, while a MP accuses Landsvirkjun (the national energy company) of bribery.

In early 2010 Svavarsdóttir rejected land-use plans, made by the parishes of Flóahreppur and Skeiða- and Gnúpverjahreppur (rural districts along Þjórsá) at the request of Landsvirkjun, which had also paid for the preparations to the changes in the plans. A contract about Landsvirkjun’s financial involvement in the land-use plan was signed in July 2007, and included e.g. that the company would pay for the making of the plan. In addition, Landsvirkjun was to pay for road and water supply construction in the area, as well as improved mobile phone connections – all constructions that the state is already legally bound to take care of.

Landowners by Þjórsá relegated the contract to the Ministry of Transport, which ruled it illegal since only the municipality could pay for the making of the plan. In September 2009, the National Broadcaster, RÚV, reported that the municipality would most likely repay the 6.5 million Icelandic krónur that Landsvirkjun had already paid the council.

Legal uncertainty about Landsvirkjun’s financial involvement
The Minister’s decision to reject a part of the plan was made on the grounds that according to Icelandic law, such plan changes are to be paid for by the communities themselves, and any third-party involvement in the costs is illegal. The rejection was sued by the council of Flóahreppur and ruled illegal by the District Court. The Minister appealed to the Supreme Court, which on last Thursday, February 10th, confirmed the District Court’s decision, stating that Landvirkjun’s involvement was not illegal.

At the time the contract was made, nothing in the Icelandic law said that an outside party could not become financially involved in such a project. Nevertheless the law said that land-use plans should be paid by municipalities or particular planning funds. In the beginning of 2011 a law amendment went through parliament, making it clear who is allowed to pay for plan making and who not.

Financial Minister Steingrímur J. Sigfússon, who is also the chairman of the Left Green party, said in parliament yesterday (February 14th) that the Court’s ruling is not a condemnation of the administration of the Ministry of Environment. Those who read the judgement see that an uncertainty had arisen about the legality of an outside party paying for a part of the plan making; two ministries came to the conclusion that it is not legal but the court came to another decision, said Sigfússon.

Rejection of the dam only
According to a recent announcement from the Ministry of Environment, the rejection had only to do with a particular part of the land-use plan, i.e. the Urriðafoss dam. The Ministry also claims that it was ready to validate all other parts of the plan when ready without the dam. But instead the council decided to start a whole new process and make a new land-use plan from the scratch – work that is still not finished.

Director of the local council lied about construction delay
Shortly after Supreme Court’s decision, Margrét Sigurðardóttir, the director of Flóahreppur council, lied when interviewed by the state-owned radio RUV, stating that Svavarsdóttir’s decisions had stopped all detailed land-use plan from taking place. People living in the region have proven this wrong and pointed out that all kinds of construction has taken place during the last year, some of it on behalf of the local council, e.g. school buildings, residential houses and stables.

Leftist news website Smugan spoke to local people who said Svavarsdóttir’s decision did even not delay the construction of the dams themselves, since landowners by Þjórsá have still not signed any contracts about the use of their lands. Therefore no dams can be built, regardless of the minister’s decisions. In 2008, Friðrik Sophusson, director of Landsvirkjun at that time, said that if meetings with local farmers would not go as expected – meetings that the farmers just announced would never take place – expropriations might be used.

According to Smugan, members from both of today’s government parties have promised farmers by Þjórsá that no expropriations will take place, which fits well to Þórunn Sveinbjardóttir’s (then Minister of Environment) reaction to Sophusson’s statement in 2008. Today, Landsvirkjun though still claims that the company will continue its preparations for three dams in lower Þjórsá but wait for the results of a framework programme – currently in the making, about the use and protection of natural resources – before final decisions are made. Prime Minister Jóhanna Sigurðardóttir recently said that the current government opposes the planned damming of Þjórsá.

Sól á Suðurlandi, a local organization fighting against the Þjórsá Dams, has now officially demanded detailed answers from the district council, about what exact plans, others than Urriðafoss dam, have been delayed because of the Minister’s rejection. The organization also says that the delay of the planned dams can be explained by many other different factors, e.g. the fact that Landsvirkjun  generally lacks access to money, manifested in the fact that the company still has not found enough money to fund Búðarháls Dam in Tungná river (north-east of Þjórsá). Nevertheless the company has received all necessary permissions for that projects, which is obviously completely different then the situation with Þjórsá.

Accusations back and fourth
Since the Supreme Court ruling, accusations have been thrown back and fro between the two opposing parties; environmentalists on the one hand and heavy industry proponents on the other. MP’s from the opposition have demanded that Svavarsdóttir resigns from her position and the Confederation of Icelandic Employers (SA) – one of the most dedicated pro-heavy industry lobbyist organizations in Iceland – said the Minister’s aim was only to “please narrow political interest in the Left Green party.”

Members of the Left Greens have responded to this critique in defence of Svavarsdóttir, saying that a Minister of Environment should always allow nature the benefit of doubt and people should be happy to finally have an Environment Minister of that actually does so. Svavarsdóttir herself has said that she has no reason to resign from her position, a statement supported by Prime Minister Sigurðardóttir.

In a weekly discussion show on state TV station RÚV, Mörður Árnason, MP from Samfylkingin (the social-democratic People’s Alliance) accused Landsvirkjun of bribery and referred to the above-mentioned promises Landsvirkjun gave the municipality before the contracts were made in 2007. Árnason’s statement has been highly criticized by the heavy industry lobby and particularly by Landvirkjun, which in a press release refused the accusations and said that the company had only worked closely with the municipality like it always does. However, the press release does not mention the different parts of Landsvirkjun’s financial involvement, apart from the payment for the plan making itself.

What is all this energy for?
During the whole media frenzy following the Supreme Court’s decision, neither Landvirkjun nor Flóahreppur council nor the parliament opposition have been asked the simple question: Why are three dams to be built in lower Þjórsá; Urriðafoss (130 MW), Hvammur (82 MW) and Holt (53 MW)?

In November 2007, Landsvirkjun announced that the company would not sell any more energy to companies planning to build aluminium smelters in the south-west part of Iceland, but rather to data centres, silicon factories and other such production, which is low-impact compared to aluminium production. But due to older contractual obligations the power company is bound to provide energy to Rio Tinto-Alcan’s planned expansion of its aluminium smelter in Straumsvík, Hafnarfjörður. Also there is an existing contract about energy for Verne Holding’s planned data centre in Reykjanes. Landsvirkjun obviously needs more power plants.

However, the data centre needs only 25 MW, which is about 10% of the planned energy production in Þjórsá, and Rio Tinto-Alcan needs about 75 MW, which leaves Landvirkjun with 165 MW from the Þjórsá Dams, not to mention the energy that is supposed to be produced with Búðarháls Dam in Tungnaá River (80 MW), making the total sum 245 MW. So what is all this energy for?

Like repeatedly mentioned by Saving Iceland and other environmentalists, both Norðurál (Century Aluminum) and Alcoa are faced with a lack of energy: Norðurál for its smelter in Helguvík, currently in the making, and Alcoa for its planned smelter in Bakki. Environmentalists have pointed out that at least eight power-plants are needed for the Helguvík smelter and while the majority of them will be geothermal plants, environmentalists have made a guess that Urriðafoss Dam will be the last of the eight needed. Similarly, Alcoa states that the Bakki smelter will be run only on geothermal energy, whereas environmentalists – especially Saving Iceland – have made it clear that hydro dams will have to be built if the smelter is supposed to run at all.

This leads inevitably to a simple question: Are the Þjórsá Dams planned for more aluminium smelters?

2 Responses to “The Þjórsá Farce Continues – Are the Dams Planned for Aluminium Production?”

  1. Jonathan D. says:

    Since this has to do with the Supreme Court… here is an interesting article about that same Supreme Court:


  2. […] Hér má lesa (á ensku) nýjustu greiningu Saving Iceland á áformum Landsvirkjunar um virkjanir í neðri Þjórsá. […]