For a country with lots of cold and snow, Iceland has plenty of geothermal and hydro power.  How it uses those resources is the subject of debate between politicians and environmentalists recently outlined in a New York Times piece.

About 80 percent of Iceland's electricity goes to heavy industry and mainly to the country's three big aluminum plants, says Iceland environment minister Svandis Svavarsdottir. The country embarked upon building up aluminum processing to diversify Iceland's economy away from fishing, but environmentalists are concerned that work has started to add one new plant in the southwest, with Alcoa planning to add a new smelter in north Iceland in the future.

Processing aluminum from raw ore takes lots and lots of energy, preferably cheap and clean energy such as is available from Iceland's countryside.  However, environmentalists are concerned about pollution in the form of hydrogen sulfide -- a natural byproduct of active volcanoes and one routinely managed when intentionally drilling a geothermal well.  According to a 2007 report published by the Geothermal Energy Association, over 99.9 percent of the hydrogen sulfide from geothermal gases gets converted into pure sulfur – a byproduct that can be used for soil and fertilizer feedstock.  Since 1976, hydrogen sulfide emissions have declined from1,900 lbs/hr to 200 lbs/hr or less, although geothermal power production has increased from 500 megawatts (MW) to over 2,000 MW.

Icelandic environmentalists are also worried about over potentially "tapping out" existing geothermal resources through overdrilling in order to feed the maw of new aluminum plants.  Overdrilling could deplete underground water tables, literally leaving energy production "dry" if not high -- a concern driving efforts by the government to evaluate Iceland's geothermal areas and ultimately to conserve some areas instead of drilling them.

From the government's perspective, Iceland may be now too heavily into aluminum production – instead of too much fishing, now it's too much metal.  Svavarsdottir said the country needs to be more selective with utilizing the power it has available, suggesting that putting it to use in data centers or the production of electricity or hydrogen for cars might be a more judicious use of a constrained resource.