Ræðismannaráðstefna: Þorkell Helgason

Ráðstefna fyrir kjörræðismenn Íslands erlendis
Reykjavík, 2.-5. September 2001

Ræður og erindi

Dr. Þorkell Helgason, orkumálastjóri
"Energy in Iceland"

3. september, 2001


Skýringamyndir

Chairman, permanent secretary, consuls and honorary consuls of Iceland, ladies and gentlemen,

It's very difficult to be the next speaker after Magnús Magnússon, talking only about figures and statistics, but I'll try to do my best.

I represent an instutute, the so-called National Energy Authority, which is a combination of a research institue, mainly in geothermal- and hydropower, and an advisory body to the government of energy affairs, and I'll first give you some basic figures about the energy figures in Iceland, things that those who have attended previous conferences of this kind probably have heard before, but I'll nevertheless repeat it. But my main task here is to talk about export opportunities in exporting Icelandic know-how in energy abroad.

First about the energy resources of Iceland and its utilisation. This graph shows an increase in primary energy consumption in Iceland. In most countries and most areas this is more or less proportional to the growth of the national output. And this is definitely also the case for Iceland, although the energy consumption has risen even faster than the GDP. The reason being…I'll talk about that later. But do note the share of geothermal.

Primary energy consumption is a concept that is defined internationally and it has to my opinion some tendency to overestimate heat sources of energy like geothermal at the expense of other sources like hydro, so this is maybe a little bit exaggerated, the share of geothermal with respect of the hydro but nevertheless this figure shows that two-thirds of the Icelandic energy consumption namely this part of the pole column is currently derived from renewable energy, and I believe this is a world record. I'm almost sure that it is, that no other nation in the world uses relatively as much of renewable energy as Iceland.

Nevertheless, oil plays a considerable part in our energy consumption. I'll come to that in a minute. This figure shows the same just relatively speaking in percentages. The increase in energy consumption has been particularly rapid. Our energy consumption can be divided into two parts, mainly the general consumption of the general households and general industry, and that's the blue part of this diagram. But the red part indicates the electricity consumption of the energy intensive industry which started in Iceland about 30 years ago, much later than in, say, Norway but nevertheless it started then.

This consists mainly of aluminium smelters and there has been a very steep, rapid increase in the aluminium industry in the latest years and we foresee the next 5-10 years a much faster increase than it is now. Nevertheless the situation now is such that over 60%, close to two-thirds actually, of the electricity consumption is used for power intensive industry. And this again is probably a world record.

We have eliminated the use of fossil fuels for space heating, for heating our houses. We did this during the oil crisis in the seventies and eighties. And as you see here some 86% of all houses in Iceland are heated with geothermal energy. Almost all of the remaining 15% are heated with electricity. It is more expensive to heat with electricity than geothermal so there is a subsidy program, sponsored by the government which sort of subsidises the electricity for house-heating purposes. This is to sort of even out the opportunities here in Iceland. That's probably the only subsidies that are still remaining in Iceland.

But note this, and this is one of the reasons we have a little problem with signing the protocol, that we cleaned up prior to the reference here 1990. If the reference here for the Kyoto protocol would have been, say, 1970 when we used oil to a great extent to heat our houses, we would have no problem at all in signing the Kyoto protocol, I believe.

The origin of the greenhouse gas emissions in Iceland can basically be divided into four parts, as you can see there. Firstly the transport; we use quite a lot of oil for our relatively big car fleet and for powering our fishing vessels. Transport is the blue part of the cake and fishing vessels is the red part. Then we have almost half of the emissions. Direct release from the industry, mainly the aluminium industry, is responsible for about one-third of the emissions. This release of CO2 from aluminium smelting is independent of the location, whether this is in Iceland, in S-Africa or where have you.

But, the main difference is that our aluminium smelters use electricity produced from renewables. Thus there is no release of CO2 in producing the electricity, whereas if an aluminium smelter would be located in some country where ultimately the power source would be fossil fuels, it would actually lead to a release of up to 10 times as much CO2 as we do when we produce aluminium from renewables. This again is very important when you take into account whether or how we should sign the Kyoto protocol.

Now, a few words about our potential. First look at the column to the right, the blue and red column. This shows the electricity energy potential that we have already harnessed. It is measured in terawatt hours per year which is not important to understand; the main thing to understand here is the relative figures.

To the left you see the potential, and the table shows the figures. Altogether, look at the 15% down in the south-east corner of the table, that indicates that we have already harnessed 15% of our energy potential so we have still quite a lot of energy to offer us and mankind.

Here are some figures that show that Iceland and Norway lead in the use of electricity per capita, of course, and, also measured per capita, we are number one in the world in hydro-power capability. Tachichistan is number two and Norway number three. But most of our potential is still unharnessed.

But what do these figures indicate? The figure before showed that our potential is some 50 terawatt hours per year of electricity production. The average use in the OECD states is 5 mW hours annually per capita. In Iceland it is currently 27 mW hours, so it is 3,5 times the OECD average.

Our potential could thus suffice to supply some 8 million US citizens with electricity. And that's more than the need of a state like Denmark. But our problem is we're an island so we cannot export the electricity directly.

To sum up on this figure here; currently some two-thirds of all our primary energy needs is renewable and that's definitely the highest ratio in the OECD and most likely the highest in the world.

Nevertheless we still have to import one-third of our energy needs to operate the fishing fleet and the car fleet. And, as I have already said, we have more or less cleaned up prior to the reference here so therefore we have a little bit of a problem with signing the Kyoto protocol.

As you certainly know, there is a wave going through the world of deregulation in the energy industry, deragulating the energy industry, changing it into companies. They have usually been public utilities. This does not necessarily mean privatisation but in some states it follows with privatisation. This has not yet been done in Iceland but it's on its way.

What can we do with our vast energy resources? While we can increase our aluminium industry, and that's what we are currently doing. There are at least three big opportunities in expanding the aluminium industry that are in discussions just these days, which would lead to the tripling of our aluminium production at least.

Well, I have said it often that we find it unfair that we have this problem with Kyoto due to the aluminium industry because it's much less release of CO2 if you place your aluminium factory in Iceland than, say, on the European continent.

We can export electricity via submarine cable, i.e. it is technically possible and the losses over the ocean is relatively small. But it is hardly economically viable. Such a cable would be by far the longest in the world and cost quite a lot. Then we can use the electricity to produce artificial fuels, like hydrogen, but that's not economic yet. There are some technical advances needed still in order to make such a fuel competitive with imported gasoline.

Here are some figures showing the possibilities that have been studied regarding a cable to Europe. There has been interest in the UK and mainly in Germany and Netherlands to import green energy from Iceland through a sumbarine a cable. This has been put on ice for a while but I'm sure that sooner or later we'll get such a cable.

So what is the energy policy of the government? Well, I am an official not a politician, nevertheless I have listed here a few objectives which I think I can read from the statements of the ministers.

First of all we welcome foreign investments in power intensive industry. We keep watch on the developments in the hydrogen field and are ready to jump on the wagon as soon as economically feasible to do so. We do this all, as I'm sure the minister of environment told you this morning, with due respect for the environment.

We are, as I told before, now in the process of marketising, of reforming our electric industry. We have to do it because we are a member of the EES, and we had to implement the EU electricity directive.

Now comes maybe my main topic, the export of energy expertise. We first of all believe that we have quite a lot of knowledge and experience, mainly in the geothermal field. And this was recognised by the UN some 20-30 years ago when they entrusted us with operating a UN university geothermal training program here in Iceland. And this has been successfully operated now since it started in 1979. Its goals are to assist the developing countries in most aspects of the geothermal exploration and development. It offers half a year specialized courses for professional and geothermal work. These are not beginners. They are supposed to have completed university studies in geology, engineering and have some experience in geothermal. So this is a sort of postgraduate study they get here. It is hosted at my institution, the National Energy Authority. Its director is dr. Ingvar Friðleifsson and has been that all the time, and he is a world known specialist in geothermal energy.

Where do the students come from? Mostly from Africa, as a matter of fact the greatest share comes from China. I just came back from China yesterday, leading a geothermal delegation, and we met these Icelandic ambassadors or consuls in the geothermal field everywhere in China.

I dare to state that this is one of the most successful development aid of Iceland. This school is almost to 85-90% financed by the Icelandic government, the remainder is financed by the UN, and I think this is a very successful development aid.

Let's finish with the UN geothermal program, but as I said before we believe that we are experts in geothermal utilisation, and we have now for many decades exported this knowledge in the form of consultation, training etc. to many countries of the world, and here is a list of countries where we have had some engagements. Even in the USA, so it's not only developing countries.

What kind of activities are we able to undertake and have actually undertaken abroad? All kinds of exploration for geothermal heat, pre-feasibility studies. It's both geological and operational studies that we have been doing. Is it economical to operate a district heating for example, that's something we think we can also help with. I have no time to read all the technical terms there, you will get a hand-out which are actually a little bit more detailed than what I am telling you, but also with some typographic error, I'm sorry for that.

What do we see in the near future? We do see that we will be working in California. There was actually last month signed an agreement between the government of Iceland and the State of California on cooperation in the field of geothermal energy. As you know California has an energy crisis and is very much interested in harnessing whatever they have of energy potential, and they have a lot of geothermal which they have of course utilised, but they would like to cooperate with us.

You can read this. We have ongoing activities in many places. As I mentioned there was a little delegation that just yesterday came back from China and there are very many interesting opportunities there. There are currently two which are definite but maybe some more.

This is a list of companies that we have cooperated with. I would like to mention in particular Ormat, which is an Israeli-USA company which we operated very much with. They are specialists in harnessing low temperature-high temperature fields for energy production.

By the way, I have a specialist here in the room, dr. Einar Tjörvi Elíasson, who sits there and will help me with difficult questions. I am a mathematician, really, not a geologist.

So, here is sort of summing up. We believe that the international geothermal market needs this expertise, not only the scientific expertise that we have, but also participation in power projects, energy projects, geothermal projects in the country, and for this reason we have recently here in Iceland joined forces and created a new company. It had a predecessor but now we enlarged that predecessor and created a new company called Enex, which is not an Icelandic word but sort of created out of "energy" and "exportation". This was established last year by all the major energy companies in Iceland by the National Energy Authority, or actually the Ministry of Energy, not only to export know-how, expertise, but also in joint ventures. The Icelandic energy companies are gradually becoming relatively rich. This is a company we have big hopes about.

As I mentioned for example in China, they are interested in cooperating on commercial basis on joint ventures where we could step in and help and eventually finance some geothermal district heating systems in their country.

Summing up, Iceland has, relatively speaking of course, compared to the size of the country and population, vast renewable energy resources and these must be used to greater extent, not only to the benefit of us but we believe also to the benefit of mankind. We should try to use possible renewable energy resources, avoid fossil fuels as much as possible for the reason of greenhouse effect.

We do have experience and capabilities in geothermal and also hydropower energy, which I haven't really mentioned in this talk, and we wish to export this know-how to a much greater extent than we have already done, and we even want to participate financially in foreign energy investments, energy projects.

Thank you very much.