Iceland's Full Steam Ahead on Energy Saving

They've been courting the likes of Cisco(CSCO Quote), Microsoft (MSFT Quote)and Google(GOOG Quote) among others, but no deals have been announced yet.

For their own use, Icelanders have spent the past 30 years exploring ways to make the most of their geothermal reservoirs. To tap them, energy companies bore into the ground just as you would for oil and collect water that's heated by the earth's core into powerful steam.

To exploit that effort they've gotten clever about finding multiple ways to use the same water. Very hot steam churns electrical turbines and keeps hothouses warm. The steam is cooled into water that heats homes and businesses and flows out of kitchen and bathroom taps. They even channel the pipes under city sidewalks to keep them clear of snow without anyone having to lift a shovel.

Most appealing is the fact that 4% of this geothermal energy goes toward heating water for recreational use.

A top tourist attraction is the Blue Lagoon, an outdoor spa created by flooding a lava-rock plain with runoff from a nearby powerplant. Steam rises off of electric blue, silica rich water and floats across porous black rocks to give one the sense of having landed on a Martian beach. At $30 a head, tourists can't get enough of it.

Only 25% of the lagoon's visitors are Icelanders. It seems that locals prefer their ubiquitous swimming pools. After the geothermal water has cooled a degree or two below what's needed for heat and hot water, it's channeled into outdoor pools and hot tubs, so residents can swim in the fresh air on even the frostiest January day. These pools are where retirees gossip, business people socialize and families pass their weekends.

Iceland has a lot going for it that other countries don't -- a small population (300,000 or so), a government that prides itself on its lack of red tape and a landscape that's chock full of glacial rivers and sits atop an accessible, energy-filled ridge where two continental plates meet.

But other countries, including the U.S., have more geothermal potential than you might imagine -- along with other natural resources we've barely tapped into, like wind and water.

Iceland at the very least is a laboratory for the rest of the world.

The country has demonstrated that it's possible to exploit these alternative resources both extensively and responsibly and to live better for the effort. But business and government leaders have to be resourceful and willing to explore possibilities instead of throwing up their hands and assuming that oil dependence is the inescapable price of a consumer society addicted to convenience. Too many here still do the latter.

Next week, I'll take a look at how Americans are already using geothermal energy and how Icelanders are exporting their expertise to help us do it better.