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Can Iceland Become a Green Land?

By Salvör Jónsdóttir

Following the financial collapse in 2008, Icelandic society has undertaken a nationwide self-analysis. New types of debates and discussions, pertaining to both economic policy of the past and the future have been held in the media and the Parliament. However, one thing has not changed; Icelanders still like to present themselves, their country and their energy as clean and green (see example). To continue this image, a proposal is pending in Parliament to further strengthen Iceland's green economy.

Compared with many other countries, Iceland possesses many advantages with regard to environmental conditions and social justice. It has a Nordic-style social welfare system and a natural environment with plentiful supplies of clean water, geothermal heat and strong winds. However, in order to demonstrate that Iceland is taking good care of its ecosystem, as well as its social and economic responsibility, certain policies must be enacted to ensure a sustainable future. This is particularly true as per capita greenhouse gas emissions in Iceland are one of the highest in the world because of a large aluminium industry and ground, air and sea transportation, which rely on imported oil.

Socioeconomic changes in Iceland over the past few years have been significant. Historically, the unemployment rate in Iceland has been low with a rate between 2–3% during the first few years of the new millennium. Following the breakdown of the banking system, several companies went bankrupt and the unemployment rate increased to 7, 6% in 2010. The aftermath of the bank failures left many people without a job, frustrated, pessimistic about the future, and with less confidence in the governing bodies of Iceland.

These were the conditions when a group of 19 Members of the Parliament from every party represented in the Parliament, contributed to a parliamentary resolution on March 30, 2010 that addressed the preparation for expansion of the green economy in Iceland with a primary goal of sustainable development. The enhancement of the green economy would have two desirable effects, including promoting the welfare of future generations through sustainable use of the environment and the creation of new jobs and opportunities during the current recession. The resolution also emphasized the importance of a diverse economy, which is something that Iceland needs to achieve (see Fig.1).

Figure 1. Iceland's main exports and imports, 2009. Click to view a larger image.

The parliamentary resolution was adopted in June 2010. Soon after, in the fall of 2010, Parliament elected a nine-member committee that represented all parties to prepare a proposal for strengthening Iceland's green economy.

A green proposal

The committee completed its proposal in the fall of 2011 after having consulted different stakeholders, including government institutions, private companies and Non-governmental organizations. The committee developed a challenging vision, stating 'That Iceland may become one of the leading nations in the world regarding green economy, focusing on clean natural environment, sustainable use of energy and education towards sustainability'. Based on this vision, the policy for the development of a green economy is outlined in eight strategic points:

  • The national government and its institutions will serve as role models and create the conditions for a green economy.
  • Economic incentives will be used to promote the green economy.
  • The 'polluter pays' principle will be the basis for determining fees and tariffs.
  • The Precautionary Principle should be an integral part of the national fiscal and employment policy.
  • The number of green jobs should be increased.
  • Emphasis should be placed on promoting environmentally friendly investment.
  • Education for sustainable development and environmental issues will be increased.
  • The green economy in Iceland should be an underlying theme in official promotions to investors and tourists.

Finally, the committee proposed 48 initiatives that are in accordance with the proposal's goals and are scheduled to be implemented in the coming years. The initiatives are grouped into eight categories:

  1. Responsibilities, coordination and implementation
  2. The public sector as role model
  3. Support structure for the economy
  4. The educational system
  5. Economic stimuli
  6. Green business
  7. Environmentally friendly transportation
  8. Certification and image work

The focus of the proposal was on Iceland as a whole and also made the very important suggestion that the Prime Minister of Iceland should be in charge of the green economy, not the Minister for Finance, Minister for Industry, or the Minister for the Environment. The proposal demonstrates that the green economy should be filtered through the entire society and not be linked to special sectors or issues such as regional development.

One difficult issue the committee considered was how to define green jobs. In the end, a definition based on one developed by the US Bureau of Labor Statistics was used. According to that definition, green jobs can be divided into two main categories. One category includes jobs that produce goods or services that benefit the environment or conserve natural resources. The other category consists of jobs that make current production processes more environmentally friendly or use fewer natural resources. Any job can be included in the green economy if either category is met.

One suggestion that would provide both economic stimuli to businesses as well as increase green jobs is to adopt legislation that would reimburse ship owners for up to 20% of the cost of changing a vessel from fossil fuel combustion to eco-friendly fuel, or increasing the ship's fuel efficiency. Obviously, this change would also decrease Iceland´s greenhouse gas emissions.

Although the committee´s mandate did not include a focus on regional development, some of its suggestions will definitely impact the rural regions of Iceland, such as organic farming. The committee provided some examples of changes in current policies that would encourage a greener economy. One proposal is to set up a stronger support system for farmers wanting to convert from traditional agriculture to organic farming. This measure would strengthen the economy of rural areas, which have suffered from constant depopulation since the early 1900s and, at the same time, would respond to international demand for more responsible food production.

Organic vegetables at an Icelandic farm.

Furthermore, the substantial contribution of tourism to the Icelandic economy (see Fig.1) needs attention because most tourists come to Iceland to experience the country´s relatively pristine nature. One of the group's suggestions is to market Iceland as a green-economy country, to further strengthen the tourism industry, and to provide opportunities in rural areas because green tourism relies on local resources.

Moreover, the group suggests that the current act related to the Icelandic Regional Development Institute should be amended to require adherence to the goals of sustainable development and to incorporate the themes of the green economy into its operations, lending, and other forms of cooperation with respect to development centres.

The way to a greener future

The group worked together in a productive and dynamic manner, however, it should be noted that two members expressed reservations on some of the initiatives. The most significant reservation related to the Precautionary Principle, suggesting that the principle should be used along with social, economic and regional impacts being weighed against it for each time.

The committee´s entire proposal was submitted to the Parliament in October 2011 in the form of parliamentary resolution by the chairman of the group, who is also one of the MPs that contributed to the initial resolution. The Parliament passed the proposal on to the Committee on Employment, which then distributed it for comments to several stakeholders. Many comments were returned to the Committee expressing their satisfaction, yet others suggested significant amendments. Some of the most interesting comments were from several stakeholders concerned that making the Precautionary Principle one of the strategic points for the policy towards a green economy in Iceland may not be a wise move. Those stakeholders included representatives from the Confederation of Employers, the Federation of Fishing Vessel Owners, the energy industry and the Agricultural University of Iceland. This shows that the some of the fundamental principles that the international community is already using need to be further discussed in Iceland.

One of the more unexpected comments came from the Agricultural University of Iceland, which challenged the proposal's support for an increase in organic farming. The University does not agree with the idea that organic farming may be 'greener' than other forms of farming and also states that all farming in Iceland is, by its very nature, a green activity. All comments on the proposal can be reviewed (in Icelandic) on the Parliament´s website.

As of now (February 1st 2012), the proposal has not been returned to the Parliament from the Committee on Employment where it is undergoing the amendment process to accommodate some of the suggested changes. The final outcome has yet to be determined despite the proposal receiving positive press coverage since the time of its release. The fact that the proposal was submitted by members from all parties represented in the Parliament gives hope that not only should we expect a greener future in Iceland, but that governing bodies can work together to build a better future.

Back to Nordregio News Issue 1, 2012