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Iceland's Full Steam Ahead on Energy Saving

Iceland is clever about combating global warming.
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REYKJAVIC -- Iceland is proof positive that being green and curbing global warming doesn't necessarily require higher costs and lost personal comfort.

This frosty island nation that's just a five-hour flight from New York has been weaning itself from its fossil-fuel diet for more than 30 years.

The results: cheap electricity that's so abundant that the country doesn't know what to do with it all, streamlined heating that's almost entirely renewable, an expanding industrial sector and a high quality of life that centers on spas and outdoor pools.

When the oil crisis hit in the 1970s, several world leaders, including

Richard Nixon, vowed to make their countries energy self-sufficient and reduce their vulnerability to the whims of OPEC. But when oil prices softened again, unlike us, Icelanders didn't leave their resolve in the dust of their SUVs (though they like their SUVs as much as we do).

Today, 72% of the country's energy -- pretty much all its electricity and heat -- comes from drilled

geothermal wells or hydroelectric plants. Cars, buses, trucks and ships are the only things consuming fossil fuel, and the nation's

business and

academic leaders are doing their best to find a solution to that as well.

The Icelanders themselves use only a quarter of the electricity they produce and, according to Ingibjörg Sólrún Gísladóttir,

minister of foreign affairs and external trade, prices fell after the conversion from fossil fuel. Conserving energy isn't something people here trouble themselves with.

Since geothermal pressure and glacial waterpower are not easily exported, Icelanders have had to be creative to monetize the 75% of electricity that they don't need. One of the earliest solutions was to invite electricity-intensive industries to move their manufacturing facilities north.

Aluminum companies in particular have eagerly accepted the invitation.


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, among others, use more than half of the nation's green electricity for their smelters, sometimes from power plants built just for them.

Gísladóttir wasn't able to quantify how many new jobs these plants have created, but she said in an interview that in small towns like Reydarfjordur, in eastern Iceland, where Alcoa recently opened its

Fjardaál plant, populations that had been shrinking are growing again and new housing and businesses are going up.

No matter how renewable the electricity might be, of course, smelting and power plants are still hulking industrial facilities and don't enhance otherwise pristine and wide open landscape. Regular Icelanders -- especially those in Reykjavic who head out into the wide-open spaces to commune with nature rather than to earn a living -- aren't sure how many more of these businesses they want.

So the nation is now building data centers, hoping to attract technology companies that need inexpensive and temperate places to back up their work. Most of the power in such centers goes toward keeping servers from overheating. Cooling systems don't need to work as hard in a place where the temperature rarely reaches into the 60s. And if the power the centers do need comes from a source that's cheap and green then all the better, the Icelanders argue.

They've been courting the likes of


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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.

Eileen P. Gunn writes about the business of life and is the author of "Your Career Is An Extreme Sport." You can learn more about her at

her Web site.