By Lowana Veal
REYKJAVIK, Dec 5 2006 (IPS)

Nature conservationists are becoming increasingly more concerned that Iceland will soon have more aluminium plants than it can handle because it has an abundant supply of cheap, renewable energy.

Environmentalists are concerned that Iceland could exceed its Kyoto quota if all new aluminium plants and the expansion of plants goes ahead. Under the Kyoto protocol, a limit has been set for industrial emissions for the period 2008-2012. Companies will have to pay for emissions above an allotted level. Emissions are believed to cause global warming, and consequently, disruptive climate change.

The agency Iceland News Briefs reports that “the emissions of Icelandic aluminium smelters will far exceed the 1,600,000 tonnes permitted under the Kyoto Convention for the latter part of its commitment period if all of the planned smelter projects materialise. The average emissions for the period, however, will be below the limits agreed to. Following expiration of the convention, emissions could increase by up to 2.2 million tonnes per year.”

Last week the company Norsk Hydro announced its intention to reopen an office in Iceland. The company had earlier proposed to operate an aluminium plant being constructed in East Iceland, but pulled out at the last minute, opting for an aluminium plant in Germany instead.

But Norsk Hydro has said it has decided to return to Iceland to explore possible energy sources for an aluminium plant “some time in the future.” But Bjarne Reinholdt, the Iceland representative of Norsk Hydro has emphasised that the company’s presence would be low-key for the time being.

The company Alcoa is also looking at the feasibility of operating an aluminium plant in North Iceland. Three potential sites were considered, but they are now considering a site in Northeast Iceland.

The site is close to the volcanic Mid-Atlantic Ridge, but a study has revealed that the area is not prone to earthquakes. Gunnar Gudni Tomasson from HRV Engineering Group said in a statement that there are no active fissures at the proposed site, and that the risk of earthquakes should not prevent the construction of a 250,000 tonne per year aluminium plant at the site.

The Bakki plant, if constructed, would be fuelled by geothermal energy, which is not as environmentally damaging as hydroelectric power. “But Alcoa intends to start small and then expand,” said Arni Finnsson from the Iceland Nature Conservation Association. “And if they expand, they will probably use hydropower derived from a glacial river in North Iceland. We would oppose that.”

Two aluminium plants are currently in operation in Iceland, one at Straumsvik near Hafnarfjordur on the outskirts of Reykjavik, and the other at Grundartangi, 50 km north of the capital.

Straumsvik is owned by Alcan, and is the oldest plant in Iceland. It began operating in 1969 but only has a capacity of 178,000 tonnes a year. Alcan wants to expand the plant to 460,000 tonnes a year capacity. “We need to expand the plant in order to be competitive in the long term,” Alcan spokesperson Hrannar Petursson told IPS.

Powerful opposition has arisen in Hafnarfjordur to Alcan’s expansion plans, and a cross-party, broad-ranging protest group called Sun has emerged. Some members are concerned with real estate prices, others with environmental aspects, and still others with planning aspects.

The local council is also unhappy, and is refusing to grant planning permission for the expansion. Ludvik Geirsson, mayor of Hafnarfjordur, says that their opposition stems from the feared emissions, along with other environmental factors.

For the company, expansion of the plant is crucial. “If the expansion does not go ahead, the lifetime of the Straumsnes plant will be shortened by a matter of decades,” said Petursson.

The Grundarfjordur plant is owned by Nordural, a subsidiary company of Century Aluminium. It has recently been expanded, from 90,000 to 220,000 tonnes a year capacity. It will expand to its full size next year when it will have a capacity of 260,000 tonnes.

Energy to fuel the extra capacity was originally to come from a hydroelectric project in the Thjorsarver valley in South Iceland, but this proposal was abandoned in the face of opposition. Instead, an existing geothermal plant was expanded, and another one built.

Century Aluminium are also investigating the possibility of building an aluminium plant at Helguvik in Southwest Iceland, with a proposed capacity of 250,000 tonnes a year.

Meanwhile, Alcoa will operate the Fjardaal aluminium plant in East Iceland that is currently being constructed with a planned capacity of 346,000 tonnes a year. The plant has been controversial, not least because its environmental impact assessment was only approved in August this year, although construction started in 2003.

The London Metal Exchange reports a record price for aluminium at the moment. This benefits the Icelandic economy, partly because the electricity cost paid by the aluminium companies is linked to the market cost of aluminium.

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