Iceland will show off its volcanic power in a bid to increase trade with the fastest growing major economy as Chinese Premier Wen Jiabao visits the island.
Wen, whose two-day visit starts today, will tour Hellisheidi, Iceland’s largest geothermal power plant, and meet with President Olafur R Grimsson and Prime Minister Johanna Sigurdardottir. It’s the first visit by a Chinese premier since diplomatic relations were established 41 years ago, according to the Foreign Ministry in Beijing.
For Iceland, the visit will be a chance to deepen ties with China and speed up efforts to emerge from its 2008 economic collapse when its three-largest banks defaulted. After its failed foray into high-finance, the north Atlantic island is seeking to revive its $13 billion economy by returning to the industries it once relied on for growth such as tourism, fishing and energy.
“Iceland and the city of Reykjavik, especially, have a story to tell of the country’s energy conversion from fossil fuels,” Bjarni Bjarnason, chief executive officer of Reykjavik Energy, Iceland’s largest utility, said in an e-mailed reply to questions. “In a cold country we don’t have to rely on oil, coal or gas to keep us warm.”
The volcanic island gets about 25 percent of its power from geothermal sources and the rest from hydropower. Iceland last year started a feasibility study into building a 1,170-kilometer (727-mile) power cable to Scotland to send some of its untapped potential of geothermal and hydropower power toEurope.
Great Geysir
After visiting the Great Geysir, whose eruptions can hurl boiling water as far as 230 feet into the air, Wen will get to peer inside one of Iceland’s inactive volcanoes from its crater, according to his schedule.
China is already applying some of Iceland’s geothermal knowhow at home, according to Ingvar B Fridleifsson, director of the United Nations University Geothermal Program in Reykjavik.
“Until recently a lot of heating was generated with coals, but now the Chinese are building heating utilities similar to the ones that have been built up in Iceland over the past decades,” Fridleifsson said. “There’s a huge growth in the utilization of hot water for heating and even cooling over the warmest months.”
The university, a post graduate training program hosted by Iceland’s National Energy Authority, has had 78 Chinese graduates, according to Fridleifsson.
‘Great potential’
Iceland has geothermal advisers at work in the US, China, Southeast Asia, Africa and Latin America, according to its National Energy Agency. Grimsson has helped secure energy deals with China, India and Russia after touring the world to promote the island’s geothermal potential.
“The two sides enjoy great potential of cooperation in business, geothermal and Arctic and hold a high level of consensus on further deepening cooperation,” Chinese Vice Foreign Minister Song Tao said in an April 16 statement on Wen’s visit. The countries will share views on trade, geothermal cooperation and Chinese business investment in Iceland, according to the ministry.
Iceland’s government last year blocked Chinese billionaire Huang Nubo from buying land to build a golf resort. Nine municipalities in northeast Iceland have since expressed an interest in getting Huang to help finance their purchase of the same land, which they then plan to lease back to him, according to Bergur Elias Agustsson, the mayor of Nordurthing.
Iceland’s economy will expand 2.4 percent this year and 2.6 percent next year as it emerges from its financial crisis, the International Monetary Fund said in a report released this month.
“Imbalances are unwinding, but all sectors of the economy remain highly leveraged,” the IMF said in an Article IV staff report and post-program monitoring dated March 23. Iceland completed a 33-month IMF program in August after its 2008 meltdown.
