Like all countries, Iceland cannot simply insulate itself from the world and expect to prosper. Possessing only 1% arable land (Opp), Iceland relies heavily upon food imports to sustain its people. These imports are subject to the fluctuations of the global energy economy, and are often exorbitantly priced.

 

Perhaps most expensive of all is transportation within Iceland. In September of 2007, gasoline on the island reached $8/gallon (Mihelich), and surely must have continued to rise subsequently. Regardless, Iceland’s stout economy, with very low unemployment rates and a comprehensive welfare system, allows its citizens to drive gas-guzzling automobiles. As a matter of fact, Iceland is one of the greatest producers of greenhouse gases in the world, per-capita (Opp).

 

Yet Iceland has a plan, and a rather audacious plan, at that. They intend to be the first country to implement an emmissions-free hydrogen economy. This would mean using the clean, renewable energy from geothermal and hydroelectric power plants to separate the hydrogen component from the oxygen component of the water molecule, yielding pure hydrogen, pure oxygen, and chemical potential energy. The hydrogen would not be considered a source of power, but rather a means of storing it.

 

If Iceland managed to implement such a transition, they could realize incredible cost reduction in their fishing fleets, civilian transportation, and farming overhead. The only problem is that the transition would be very expensive, and would probably require foreign capital investment in order to initiate such drastic change.

 

Until then, Iceland has several strengths on which to build: (a) a relatively small population, at around 300,000 for the entire island,  (b) abundant renewable energy, and (c) the comparative advantage that comes with cheap energy resources.

 

As more countries feel the pinch of rising oil prices, Iceland will become a more attractive prospect for investment; as Iceland gains wealth and influence, she comes ever-closer to achieving the capital necessary to transition to an emissions-free economy. Meanwhile, the world watches, and waits. Perhaps this tiny country will prove to be the prototype for a new age of energy wealth and abundance.