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Archive for the ‘Icelandic energy issues’ Category

Difficult silicon market hinders sale of Helguvik smelter

Iceland’s Arion Bank, which has a number of holding companies including Stakksberg, the company entailed with the task of trying to sell the silicon metal smelter in Helguvik originally owned by United Silicon and closed down by the Environment Agency (EA) in September 2017, has sent out a statement saying that they have reduced the value ascribed to Stakksberg from 6.9 billion kronur (USD 52.9 million) at the end of March 2019 to 3.2 billion kronur (USD 25.6 million) nine months later.

Stakksberg has been rectifying some of the problems with the smelter identified by the EA, and has been trying to find a buyer for almost two years. The smelter’s original owner, United Silicon, went bankrupt in January 2018, but in December 2017 they too were searching for buyers.

According to Stakksberg’s homepage, the idea was to have the smelter up and running in the last quarter of 2020.

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Arion Bank says that because of “uncertainty in the market, several manufacturers have reduced their production or closed smelters. Thus unused manufacturing capacity is available that might well have a negative effect on the sale of the silicon metal smelter in Helguvik”.

If they have done their homework, potential buyers – if there are any – would be aware of the problems faced by PCC Bakki Silicon in the north, who asked for more funding last year. PCC have also had unexpected problems with Iceland’s winter weather, and say that the problems they have encountered were not those they were expecting – despite using best available technology, etc. None of this would be of any comfort to prospective buyers of the Helguvik smelter down south.

People involved in ASH, the campaign group against the reopening of the Helguvik silicon smelter, are overjoyed however, as there was a lot of opposition by locals to the smelter during the short time that it was operating.

It’s not just the silicon metal industry that is facing problems. Because of worsening conditions in the aluminium market, which are “very demanding”, Iceland’s oldest aluminium smelter is going to operate at 15% reduced capacity in 2020, with a corresponding decrease in electricity use. The plant is currently Iceland’s second largest user of electricity.

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This smelter, which is situated on the outskirts of the capital city, is currently owned by Rio Tinto Alcan but was searching for a new owner two years ago. Norsk Hydro was going to buy it but the sale fell through seven months later.

Update, 12 February 2019: Rio Tinto has just announced that it will do a strategic review of its Icelandic smelter at Straumsvik, due to high electricity costs – which Icelanders consider are actually very low – and “historically low” aluminium prices. They may even close the smelter. The review is expected to be completed within the next few months.

 

Social impact assessment important in accessing perceptions of projects

Iceland’s environment ministry has just held a symposium on social impacts of energy projects in Iceland, in particular in relation to new power plants envisaged as part of the 4th Master Plan for Nature Protection and Energy Utilization. Key speakers were a couple now living in the Netherlands: an academic from the University of Gröningen, Frank Vanclay, and his practitioner wife, Ana-Maria Esteves, who works with the International Association for Impact Assessment (IAIA).

Much of the symposium was related to social environmental assessment itself, irrespective of country. So for instance when a fracking project is announced, there might be impacts from vehicle noise of various types, exhaust fumes, increased accident risk, injury or even death, costs of road repair from increased traffic, and changing character of the town (less peaceful, etc.). These are balanced by the potential for local income from spending by drivers, plus other services for drivers.

Everything is social, Frank said: landscape analysis; archeological and heritage impacts; community, cultural and linguistic impacts; demographic and economic impacts; gender issues; health and psychological impacts; political issues such as human rights; resource issues, and indigenous issues. Social impacts depend on project characteristics, as well as characteristics of the community, individuals and any proposed mitigation. Impacts cannot be measured in advance, but social impacts should be done before environmental impacts. Speculation starts as soon as there is even a rumour of a proposed development, he says. If there is no consensus, projects should not proceed.

As an activist, I found his slide on the different types of protest interesting.

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Ana said that “the purpose of benefit-sharing is to retain part of a project’s economic benefits in the region where the project is located”. These may be voluntary or non-voluntary, monetary or non-monetary. Who decides, who distributes, who benefits? And how do people perceive negative aspects?

The Icelanders who spoke brought up local issues. Birna Björk Árnadóttir from the Planning Agency brought up the case of a proposed hydropower plant, Hvalár, in an isolated region of northwest Iceland where people have been divided into two factions: proponents (mainly locals) who say “this is our project, let us decide” and opponents, who say “to whom do the fjords belong”?

In line with some of what Ana said earlier in the symposium, developers of this project have promised various benefits for the local villagers.

In terms of social impact assessments for power plants, the following should be covered: access to electricity and electrical safety, population changes, land use, employment, property value, fringe benefits and perks, public health, cultural heritage, and tourism and recreation. Employment weighs heavily in the assessments, whereas tourism and recreation are usually the most-researched factors.

In Iceland, social impact assessment has only been carried out with large projects such as construction of the dam and aluminium plant in East Iceland. Given the proximity of the currently non-operating silicon metal smelter in Helguvik, south-west Iceland, to local communities, it would have been better if a social impact assessment had been carried out there first. Stakksberg, the company set up by Arion Bank to see to the amendments and potential sale of the smelter, could still decide to carry out a social impact assessment for the project – but I doubt they will.

 

 

Are Iceland’s aluminium smelters in trouble?

Aluminium companies in Iceland have not been doing too well recently. The original smelter just outside the capital at Straumsvik, which was opened 50 years ago and is now owned by multinational Rio Tinto but is up for sale, had an “incident” 10 days ago when an arc flash formed within one of its pots. Luckily, it happened at a time when no one was present in the room, as otherwise it could have been fatal.

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For safety reasons, all of the 160 pots in that pot room have been switched off – this represents about a third of the smelter’s production and represents a serious dent in the company’s operations. Last year, the company made a loss of about $US 41.3 million, so this setback doesn’t help – and won’t make the smelter easier to sell either.

Don’t bother looking for information about the incident on the company’s Facebook page or their website, as it isn’t there!

What has sparked my curiosity is that both the CEO of  East Iceland Fjardaal aluminium smelter, Magnus Thor Guðmundsson, and the Icelandic Senior Vice-President of Alcoa globally, Tomas Mar Sigurdsson, have announced their resignations very recently. Tomas Mar started off at the Icelandic plant before becoming involved with Alcoa Europe. He only became Senior Vice-President in November last year – not long ago.

Magnus Thor has been in various positions of responsibility within the East Iceland plant.

So is it coincidence that both decided to leave at a similar time? Well, the mother company’s finances have not been good. In the first quarter of 2019, Alcoa corporation announced a loss of $US 199 million while the second quarter loss was $US 402 million. So possibly they sensed that something was coming.

Alcoa, however, always add a paragraph about “forward-looking statements” to their annual reports, which presumably prevents them from being sued. This term seems to be American in origin but I suspect can be used in a variety of industries. Check out this explanation that they give:

Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning.

This concept is interesting in itself and can surely be applied to many companies who want to be somewhat ambiguous in their intentions.

The third aluminium company, Nordural, is owned by Century Aluminium and located at Grundartangi in West Iceland. Unlike the other smelters, this plant was operated with a profit of just over $US 94 million, though profits were down on the previous year by nearly $US 25 million.

Heavy industry in Iceland accounts for 82-83% all electricity produced. The Fjardaal smelter is the biggest user, and is responsible for 34% of the country’s electricity usage (and pays the lowest cost for it of all three smelters). Rio Tinto is responsible for 23% of electricity used and the Nordural plant uses 12%. Other heavy industry accounts for the rest.

Update, 12 February 2019: Rio Tinto has just announced that it will do a strategic review of its Straumsvik smelter, due to high electricity costs – which Icelanders consider are actually very low – and “historically low” aluminium prices. They may even close the smelter. The review is expected to be completed within the next few months.

 

 

Ambitious climate programme ignored

Is climate change considered unimportant by Iceland’s citizens? Early in the week, the Icelandic government unrolled an ambitious Action Plan to tackle climate change, with the goal of being carbon-neutral by 2030. But no one is talking about it. Progressive trade union leaders, politicians and the general public remain stuck in the traditional “we need more money to live on” mindset and criticize elements of the Budget related to that.

Iceland’s PM, Katrin Jakobsdottir, is from the Left-Green Party, which is the second-largest party in the parliamentary Althingi and is part of a three-party ruling coalition with the conservative Independent Party (the biggest party in the Althingi) and the central Progressive Party. The Left-Greens have been accused of pandering to the Independent Party and ignoring their own demands. There may be some truth in that, given that it’s a difficult situation and requires a balancing act to get matters through.

Although the Climate Action Plan has elements from six ministries in it, it was primarily the responsibility of the environment ministry and its minister, Gudmundur Ingi Gudbrandsson. And he is from the Left-Green Party. Jakobsdottir signalled the plan as a watershed in Icelandic environmental matters, with increased funds put aside to follow up the 34 actions on the list.

The main emphasis is on alternative forms of energy for vehicles, especially land-based ones, as registration of new vehicles fuelled by diesel or petrol will not be allowed from 2030. Increased carbon sequestration by forestry and land reclamation is another emphasis, along with wetlands reclamation – maybe this will include increased funding for the Wetland Fund, which was set up earlier this year. The ministries used the services of environmental consultancy Environice during the development of the strategy.

The Action Plan is only available in Icelandic, but can be downloaded here. Mention is made of food waste in Iceland, which is the first time I’ve seen quantifiable figures, namely 120 kg per person from the catering and restaurant sector and 60 kg/person from individuals.

It’s worthy of consideration and shouldn’t be ignored.

Electric cars on the rise in the Nordics

I went to the annual meeting of Orkustofnun, the Icelandic National Energy Authority, last week. Interesting. Two of the talks focused on electric vehicles (EVs) in the Nordic countries. A comprehensive report on EVs in the Nordic countries can be downloaded here.

Sweden and Iceland have both seen great growth in electric cars, but Norway is still the leader. However, publicly available chargers have not increased in line with the sale of electric vehicles. Though the majority of electric vehicle owners charge up their cars at home – 75% in Norway and 85% in Iceland – publicly available chargers are vital for those who travel long-distance and for holiday-makers who hire cars. The EU aims for one charger for every 10 EVs by 2020, and 4 million EVs on the road by 2030 which could save 8 megatonnes of CO2 equivalents. Denmark and Finland have already reached this target and Sweden is not far behind. Norway and Iceland, however, still have some way to go.

Exemptions on registration taxes are common in the Nordic countries. This helps to make them more attractive to consumers. Plug-in hybrid electric vehicles are preferred in Sweden, Iceland and Finland whereas battery electric vehicles are most popular in Denmark and Norway.

A recent survey showed that 43% of Icelanders would consider buying an EV in the future. Iceland is now installing more charging points, so it is now possible to drive around the island in an electric car without worrying about running out of battery. Because Iceland’s electricity is 100% renewable, the CO2 output of an EV in Iceland is virtually none.

Nevertheless, 40% of new cars in Iceland are bought by car rental firms. Icelanders then buy these cars as nearly-new a year or two later. These companies have been reluctant to take on vehicles using alternative fuels such as EVs, and thus the supply of these cars in the near future is likely to be limited.

Sweden aims at carbon-neutral concrete

Sweden’s concrete industry is developing a road map for climate neutralisation in conjunction with Fossil Free Sweden (FFS), a government body set up prior to COP21 in Paris. It will be submitted to the Swedish Prime Minister in March 2018. The process will be led by the Concrete Initiative, an alliance of concrete companies, municipalities, organisations and builders.

Cement production accounts for more than 90 percent of the climate impact of concrete and represents the largest source of emissions to the concrete industry. In 2016, greenhouse gas emissions from Sweden’s concrete industry amounted to about 5 percent of total emissions in Sweden.

Climate-neutral cement production is technically possible today through the use of carbon capture and storage but is 70 percent more expensive than conventional cement, so the technology has to be further developed if it is to become competitive. About 30 percent of cement’s climate impact can be reduced with a transition to non-fossil fuels, but other measures, such as carbon dioxide separation, are required for the remaining 60-70 percent. Climate neutrality also involves dealing with the residual carbon dioxide arising in the cement production itself.

Despite the high additional cost of climate-friendly concrete, it only adds 0.5 percent to the cost of a completed building.

According to FSS, in Germany and Poland the company Thomas Betong is looking into reducing the amount of cement clinker (which represents the majority of the CO2 emissions) by using different kinds of binding material, while one of the Swedish cement companies is collaborating with Norway on carbon capture and storage. However, the Swedish initiative is probably the most ambitious in terms of environment-friendly concrete.

Climate-enhanced concrete is currently available for concrete for building construction and the development of cement and concrete for infrastructure. This includes work with alternative binders, climate-smart recipes, optimization of design and construction, transport and energy supply.

Svante Axelsson, national coordinator for FFS, points out that “if we are to build the volumes of housing and infrastructure required in the coming years while living up to the climate targets, climate-neutral concrete production is a prerequisite.”

Note: This article was originally written for ENDS Europe but deemed not newsworthy enough. But I think it’s fascinating so decided to use the material as a blog instead.

Iceland now has a Left-Green Prime Minister

Katrin Jakobsdottir, leader of Iceland’s Left-Green party, has become Iceland’s latest Prime Minister (within the last two years there have been four of them). Unfortunately, although she initially began discussions about forming a government with the Pirates, Social Democrats and the centre Progressive Party, the latter opted out at the last minute and so she started discussions with the PP and the Left-Greens’ “arch enemy” – Bjarni Ben’s Independent Party – much to the disgruntlement of many Left-Green voters and two L-G politicians. The Left-Greens demanded that Katrín would be made Prime Minister, even though normally BB would have become PM because his party got the most seats.

Surprisingly, those discussions have resulted in a government and they produced a manifesto yesterday (in Icelandic) outlining their plans. Environmental issues rank highly, and they may well establish a national park in the central highlands. The Icelandic Environment Association has been pushing for this for a few years, and the managing director of the NGO has now been made environment minister (the French environment minister also has a background in environmental actions). That’s a good move.

Katrin promises a new way of working so we’ll see what happens. Unfortunately, we have the same Minister of Justice, who was very unpopular in the last government. BB is Finance Minister, and elements of his party’s policies can be seen in the manifesto. Otherwise, it is thought that the Left-Greens and PP have left a definite mark on the agreement, so you never know….

This is what I wrote for ENDS Europe today:

Iceland plans to raise carbon taxes by 50% immediately as part of a raft of new environmental measures announced by the country’s incoming government on Thursday.

The measure, outlined in an agreement between the parties of the coalition government, follows a commitment by the previous government in the draft budget for 2018, which noted that the country’s current carbon tax is generally considered low in comparison to that of other Nordic countries.

The tax will apply to petrol, diesel, fuel oil and associated transport fuels. After the initial doubling, the carbon taxes will be increased in the following years in line with the country’s climate change action plan.

The coalition government – formed by the Left-Greens’ Katrin Jakobsdottir with the centre-right Independence Party and the populist Progressive Party – intends to take measures to develop a bioeconomy, using incentives to reduce the environmental impact of food production. Organic production, which is currently low in Iceland, will be strengthened, according to the agreement.

Despite the black picture depicted by the National Audit Office and the Institute of Economic Studies earlier this year, Iceland now aims to go further than the goals of the Paris Agreement and become carbon-neutral by 2040 at the latest.

The agreement states that all the government’s major programmes will be evaluated in terms of climate change objectives, and a climate change board will be set up. The coalition parties also aim to ban the use of heavy fuel oil in shipping in Iceland’s economic area and to support international agreements on marine protection.

Instead of building new power plants, which is always controversial in Iceland, the existing distribution network will be improved to better utilise existing energy production. New legislation will be implemented regarding wind turbines.

The government intends to tackle the problem of single-use plastic waste, with emphasis on preventive measures and the removal of plastic waste from both land and sea.

Legislation on protection, conservation and hunting of wild birds and mammals will also be reviewed. As Iceland is not a member of the EU, it has not implemented the Habitats or Birds Directives.

The new environment minister, Gudmundur Ingi Gudbrandsson, was the managing director of the Icelandic environment association Landvernd until his appointment on Thursday. He is a biologist by training.

No one really expects this government to last the full four years either, and political analysts say that a 3-party coalition has never lasted out. But it’s an experiment.