ICELAND EXCLUSIVE: Test driving the world's energy future

Posted: 15 March 2008

Author: Don Hinrichsen

As Iceland prepares the for the inaugural run, next month, of the world's first hydrogen-equipped commercial sea-going vessel, the country's 'hydrogen economy' is poised to take off - with stunning repercussions for the rest of the world, says People & the Planet Contributing Editor, Don Hinchichsen, just back from a first-hand investigation.

Iceland, situated off the southeast coast of Greenland in the middle of the stormy North Atlantic, has a tiny population (300,000), few natural resources, no hydrocarbon deposits and an economy largely dependent on one source of foreign exchange; fisheries. Yet, this isolated island, which sits atop one of the world's most active volcanic ridges, is leading the way towards a future economy based on hydrogen, one of the two most common elements in the universe.

In a little more than a decade, Iceland is expected to have put in place the foundation for getting the country off dependence on fossil fuels (oil in this case) and onto a sustainable energy form that is economical, non-polluting, and most important of all, produced and used locally.

If successful, this would propel Iceland into the forefront of efforts to wean the world off dependence on imported oil and gas, helping to mitigate climate change, reduce polluting emissions and save the vast majority of the world's countries billions of dollars in imported energy costs.

Hydrogen powered bus, made by Daimler-Chrysler, being unloaded on the main dock in Reykjavik.
Hydrogen powered bus, made by Daimler-Chrysler, being unloaded on the main dock in Reykjavik.
Hydrogen powered bus, made by Daimler-Chrysler, being unloaded on the main dock in Reykjavik. Photo © Iceland New Energy
Why is tiny Iceland developing hydrogen? Though the country's barren, volcanic landscape looks more lunar than earth-like, it is blessed with abundant hydropower and, thanks to the fact that the island sits atop a 'lake' of magma it has impressive geothermal resources. Together, these two sources provide over 80 per cent of the country's energy needs. Most of its oil imports are used to power its fishing fleet, and its increasing number of private vehicles.

Furthermore, only about 20 per cent of the country's renewable energy resources have actually been developed - there is huge potential for extracting steam heat from deeper wells, down to 5 kilometres, where temperatures reach 1000 degrees F. Though problematic from both an environmental and political point of view, more hydropower stations could also come on-line.

Geothermal reserves

The big drawback to producing hydrogen for fuel is that it is a very energy intensive process. Normally, it requires large quantities of fossil fuels (oil, gas or coal) to produce the electricity needed to drive the electrolysis process which splits water into its basic components - two parts hydrogen and one part oxygen - with the latter vented into the atmosphere. Iceland, with its vast domestic geothermal and hydropower reserves, does not have to produce hydrogen with expensive, imported hydrocarbons.

Moreover, the country's long term energy policy is to eliminate the need for fossil fuels altogether. "Our goal is to have a hydrogen economy by 2050, and by doing so drastically reduce dependence on fossil fuels," proclaims Jón Björn Skúlason, General Manager of Icelandic New Energy, a joint venture between industry, academia and the government. Given the country's continued development of renewable energy sources, "it's a goal we believe is eminently achievable," he adds. "The country's leaders are fully behind this initiative and so is the public."

Indeed, all of the country's heat and electricity come from hydropower and geothermal energy. Reykjavik, Iceland's charming capital, is perhaps the world's cleanest, unpolluted capital city, since all of its heat comes from geothermal sources, while its electricity is supplied by both hydropower and geothermal energy. And there is virtually no significant pollution from industries. The energy needs of one of the largest aluminium plant in the world, situated outside the capital, for instance, are supplied by both sources - no polluting fossil fuels are used.

It seemed a logical step to use renewable energy to make the world's ultimate renewable energy - hydrogen. But Iceland's hydrogen experiment has been a long time on the drawing board. When Dr. Bragi Árnason, a chemistry professor at the University of Iceland, wrote the first paper on the possibility of Iceland developing the world's first hydrogen economy more than two decades ago, he was ridiculed by the scientific community. "No one believed this could be done in Iceland," Árnason recalls.

Hydrogen buses

Árnason did not give up. After all, he explained, the country had gone through two major energy revolutions in the 20th Century. The first one began to tap Iceland's vast hydropower capacity, while the second one, beginning in the 1940s, harnessed its geothermal water supplies, providing district heating and electricity to Reykjavik.

Hydrogen power bus
Hydrogen power bus
Hydrogen power bus, one of three circulating aorund Reykjavik, is refuelled. Photo © Iceland New Energy
For these reasons, surmised Árnason, Iceland is the ideal place to test drive the hydrogen economy. In the 1990s his ideas took root in the scientific community and in 1999 Icelandic New Energy, Ltd. was formed to develop hydrogen-powered vehicles and test out the possibility of developing a full-fledged hydrogen fuel-based economy.

The first three hydrogen-powered buses began running regular routes on Reykjavik's streets in the spring of 2003. The world's first hydrogen filling station was established in April 2003, operated by Shell, which is part of the consortium of companies involved in the experiment. Other international members include Daimler-Chrysler and Norway's leading hydroelectric company, Norsk Hydro.

"People still say that this is a pipedream," shrugs Árnason. Now known as 'Professor Hydrogen', he is adamant that the scheme can work. The plan is to test out the vehicles and establish a nascent infrastructure for hydrogen, which can be scaled up later on.

Ship engine

Iceland's plans are nothing short of ambitious. The country fully intends to convert every one of its 180,000 public and private vehicles to run on hydrogen. But the biggest fossil fuel consumers are the country's 1,300 vessel fishing fleet. With oil hitting over $100 a barrel, eliminating the need to import expensive diesel fuel to run its fishing fleet would save the country considerable foreign exchange.

The first steps have already been taken in this direction. At the end of April 2008, the world's first hydrogen equipped commercial vessel, the Elding - Icelandic for "Lightning" - will have its inaugural run. The ship's auxiliary engine, which controls the lighting system, will be powered by a fuel cell engine which runs on hydrogen. In the next phase, the diesel engine which powers the boat will be converted to run on hydrogen.

The whale watching boat, Elding
The whale watching boat, Elding
The whale watching boat, Elding, will have an auxiliary engine that runs on hydrogen. Photo © Iceland New Energy
The Elding, a 155 passenger whale watching boat, takes tourists out for the modest price of 43 Euros per trip (about $63). But the diesel engine, which currently powers the ship, has to be turned off so tourists can both see and hear the mammals as they surface. Speaking to Reuters News Agency, the ship's owner, Vignir Segursveinsson, commented: "Once we have a hydrogen powered engine on board the boat will become completely silent, which will make the experience of seeing whales in their natural habitat even more magical."

Remaining hurdles

With the first obstacle overcome - Iceland can make hydrogen cheaply using its renewable energy sources - Iceland New Energy is now grappling with the remaining challenge of storage. Liquefying and compressing hydrogen, in addition to requiring 20-40 per cent of the energy it produces, needs to be stored in very heavy tanks, weighing much more than their contents. So storing hydrogen on ocean going vessels that remain at sea for weeks is not practical at the current stage of development. Ways will have to be found to store hydrogen on ships without the need of cumbersome and heavy tanks.

The other challenge, of course, is scaling up hydrogen use so that the costs per vehicle are economic enough for mass use. This will require continued investment in R&D and government subsidies to make it feasible. To reach the real take-off stage, hydrogen production will have to increase at least 30-fold in order to meet projected demand.

These obstacles can be overcome, insists Skúlason. It takes foresight, investment and most of all political commitment. But proponents are optimistic that the necessary preconditions exist to turn Iceland into the first hydrogen economy on the planet.

Forging Ahead

Plans call for all of Reykjavik's fleet of 80 public buses converted to hydrogen or another type of alternative fuel by 2015. By then, if the trial period goes according to plan, the company aims to have the Elding outfitted with a hydrogen powered engine as well.

Meanwhile, it's full speed ahead on developing engines for cars that run on hydrogen. This is part of Iceland New Energy's SMART-H² initiative. In the autumn of 2007, the first of 30 hydrogen-powered vehicles developed by both Daimler-Chrysler and Toyota began their testing period in Reykjavik. As of the middle of March 2008, 12 vehicles powered by hydrogen with electric motors were circulating on Reykjavik's streets. And three specially converted Toyota Prius cars are available for tourists to rent from the Herz rental agency. The Toyota hybrids have been retrofitted with an internal combustion engine that runs on hydrogen.

"We want to test out a variety of hybrids and fuel cell cars capable of running on hydrogen," says Skúlason. "This is giving us a lot of data to compare the various advantages and disadvantages of each type of vehicle. But the common denominator is that they all have to be designed to run on hydrogen."

So far, testing has revealed no impediments to replacing petrol driven cars with hydrogen. Already, attention is being focused on the Daimler-Chrysler fuel cell cars. They are proving to be as fast as petrol powered ones and they have the tremendous advantage of being clean, green and safe. There are no harmful emissions, such as nitrogen oxides, carbon monoxide and unburned hydrocarbons - the only emission is steam (water vapour). These cars are easy to repair (there are few moving parts), twice as efficient as internal combustion engines, and running costs will be much lower once economies of scale kick in.

But first, they have to become more economical. And that will take considerable scaling up, which Iceland is fully prepared to do. Currently, the test cars can go about 100 kilometres on a kilo of hydrogen and filling them up runs just under £9 per kilo. Not an excessive expense, even at this early stage of the programme.

According to Skúlason, all of Reykjavik could be serviced with just 6-10 hydrogen filling stations, so gearing up would not be complicated or overly expensive. "Furthermore, hydrogen powered vehicles and those which run on methane and other alternative fuels, will have no tax added onto the purchase price," observes Skúlason. Since the current value added tax on cars doubles their purchase price, this will give them an added competitive advantage over petrol driven cars, not to mention lower running costs and lower pump prices, once a commercial market has been developed.

During the testing period, costs, of course, remain high. Right now, for instance, the cost of a hydrogen powered bus is nearly $1.1 million, three to four times greater than a diesel-powered bus. But, as more buses are produced that run on hydrogen the cost per unit will be lowered.

Reykjavik is not the only city experimenting with hydrogen powered buses. Experimental models are also operating in Amsterdam, Chicago, Hamburg, London, Madrid, and Beijing. Despite the initial costs, they have tremendous advantages over their conventional diesel powered counterparts. The most obvious advantage is that hydrogen powered vehicles are completely non-polluting: they emit nothing but water. Moreover, they do not produce greenhouse gases such as carbon dioxide, which will help to mitigate climate change. And they are quiet, virtually noiseless, which cuts down on urban noise pollution.

More urgency

Researchers are convinced there will be even more urgency to finding viable alternatives to the hydrocarbon economy once climate change drivers increase in intensity. Costs aside, the fact that the earth might be very close to a tipping point - in terms of the onset of virtually irreversible climatic changes causing untold damage to ecosystems and the organisms that depend on them (including humankind) - is reason enough to pursue an alternative global economy, one run on environmentally sound renewable sources. Hydrogen may be the silver bullet that can get the planet off its life threatening dependence on fossil fuels and onto a safer and more sustainable energy path. Hydrogen powered vehicles and ships may well prove to be the engines for this dramatic change.

Refuelling hydrogen car
Refuelling hydrogen car
Asdis Kristinsdottir, a project manager for Reykjavik Energy, one of the Icelandic companies involved in the consortium that is promoting a hydrogen economy for this island nation, refuelling the Daimler-Chrysler hydrogen powered Mercedes in Reykjavik at the only hydrogen filling station in Europe. Photo © Don Hinrichsen
With Iceland producing more carbon dioxide per capita than anywhere else on the planet, mainly a result of its growing fleet of private cars, many of which are gas guzzling SUVs, the country has another valid reason for wanting to get off the "oil wagon".

In 1874, Jules Verne, the renowned science fiction writer, and author of 20,000 Leagues under the Sea, envisioned a world in which water would replace coal as the fuel of the future. Hydrogen from water is one promising way to get off dependence on fossil fuels and contribute to an energy future that is sustainable and potentially conflict-free.

Iceland is poised to show the rest of the world that "it's possible to have an entire society based on a new kind of energy," proclaims Iceland's President, Olafur Ragnar Grimmson. "Energy that doesn't threaten the life on earth, doesn't threaten the climate and is friendly to the future of mankind."

Professor Hydrogen is even more enthusiastic. He is already seeing the first steps towards his vision of a new world. "My children will watch the transformation, and my grandchildren will live in this new energy economy," concluded Árnason.

Related links:

Four countries sign up to go carbon neutral

Developing a hydrogen economy in the South

Sweden plans world's first carbon neutral economy