The Foreign Service Journal, December 2003

labor interests, for instance, to safeguard such production. All these elements combined to help Iceland advance its reputation as the “Kuwait of the North.” Bold Plan and Major Players Iceland has designed an impressive plan to convert every personal vehicle in the country — of which there are currently over 180,000 — to hydrogen. The plan does not stop there, however. Every city bus is expected to run on hydrogen fuel within a decade. In the fall of 2003, the first three hydrogen buses began their scheduled routes on the streets of Reykjavík. They fill up at the world’s first commercial hydrogen station, which opened with great fanfare on April 24, 2003, on one of the city’s busiest thoroughfares. By the year 2006, the first demonstration project for a fuel cell-powered ocean vessel is expected to be completed, with current plans calling for a complete conversion to hydrogen of Iceland’s 2,500-ship fishing fleet, begin- ning in 2015. These are ambitious goals and corre- spondingly difficult to meet, but the opportunity for future benefits has attracted major players in the ener- gy industry to come to Iceland’s aid. In 1998, when Iceland’s hydrogen plans were still in the early stages of development, assistance came in the form of unlikely allies — business giants whose bottom line is often highly dependent on the production and con- sumption of non-renewable fossil fuels. Multi-national carmaker Daimler Chrysler, whose hydrogen-powered buses Iceland uses; petroleum powerhouse Royal Dutch Shell, which found- ed a new subsidiary, Shell Hydrogen, in 1999; and Norway’s leading hydroelectric company, Norsk Hydro, are now members of Icelandic New Energy, a joint ven- ture with a group of companies in Iceland. The European Union is also actively involved. Through its Ecological City Transport project, the E.U. has contributed about $3.1 million to the Icelandic hydrogen enterprise. With these powerful patrons supporting the Icelandic foray into alternative energy production, the chances for success have been exponential- ly increased. But why are these companies so excited about hydrogen power? The answer is sim- ple: Eventually, fossil fuel resources will run out, and those who have already invested in alternative energy research and development will be in a very favorable position to capture the emerging new energy market. For these companies, hydrogen may be a niche prod- uct at the moment, but they foresee an economic wind- fall in the future, especially if the Iceland project is a success. As Margrét Gumundsdóttir, a spokesperson for Shell Hydrogen Iceland, explains: “We’re working with the future as well. We cannot stay behind and just die.” Another aspect of hydrogen production that appeals to these companies is the environmentally friendly rep- utation that comes with it. The simplest way to explain Iceland’s projected hydrogen economy is to say that Iceland will use its hydroelectric and geothermal resources (both practically pollution-free) to “split” water into its two component parts — oxygen and hydrogen — through a process known as electrolysis. The only emission is pure water vapor. Through asso- ciation with this project, DaimlerChrysler, Shell, and Norsk Hydro can strengthen their status as environ- mentally conscious corporations. The Challenge of Hydrogen Iceland’s main interest is to replace the one third of its energy needs currently supplied by imported fossil fuels with domestically produced, clean and natural hydrogen. Iceland also faces an internal paradox that it hopes will be solved by the hydrogen economy. The country’s environmentally responsible practices are off- set by the immense CO 2 emissions from the country’s F O C U S D E C E M B E R 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 63 Fossil fuel resources will run out, and those who have invested in alternative energy research and development will be in a very favorable position. Ásgeir Sigfússon is assistant to the vice president of AFSA-USAID. An Icelander, Sigfússon received his bachelor’s degree in English and international relations from the University of Pennsylvania, and completed his master’s degree in German and European studies at Georgetown University’s School of Foreign Service.