Iceland Has Power to Burn

Even with gas at $8 a gallon in local currency, an expensive hydrogen-powered Prius isn't competitive with a gas-guzzling Jeep Cherokee. In Iceland, the public sector has funded the hydrogen experiments and continues to play a significant role in the development of alternative energy. The efforts to move beyond polluting fossil fuels carry their own environmental costs. To build the hydroelectric plant that serves Alcoa required flooding pristine areas, for example. By and large, however, there's a consensus in Iceland that having the government take such action is good economics and environmental policy. "From a global perspective it is more responsible to produce aluminum in Iceland from clean energy sources rather than producing them elsewhere from fossil fuels," says Prime Minister Haarde.

Companies are coming around to a similar view. Sipping a cappuccino and looking out over Reykjavik's harbor, Ossur Skarphedinsson, minister of Industry, Energy and Tourism, lists the blue-chip companies that have inquired about tapping into Iceland's cheap green energy. An American firm and Icelandic investors are spending $300 million to build a data center that will be rented out to foreign tenants—another new industry, and another way to export a natural resource.

At the Blue Lagoon spa, where plans have been drafted for 150-room hotel, Anna Sverrisdottir, talks up her company's latest efforts to turn green energy into green. For about a decade, the spa has been selling pricey skin-care products at its gift shop and at the airport. This month, she says, Blue Lagoon's masks and muds will begin to appear in stores in America. "Do you know Saks Fifth Avenue?"

© 2008