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October 28, 2011 5:11 pm

Recovery driven by exploitation of untapped energy resources

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It is now three years since Iceland’s President Geir Haarde ordered RUV, the national broadcaster, to interrupt its daily output for an address that would stun the nation.

Lehman Brothers had collapsed the week before, credit markets had dried up and Iceland was on the brink. Without immediate support from the IMF the country would not be able to support its overblown banking sector and would go bankrupt.

Three years on and Europe itself is on the very brink, with Greece lurching ever closer to default. And yet, while the continent is being rocked to its foundations, Iceland has already starting to build afresh following the IMF’s successful intervention.

It is a recovery that, in part, is going to be driven by the exploitation of Iceland’s untapped energy resources – all of it 100 per cent renewable and competitively priced. The state-owned national generator, Landsvirkjun, has recently tabled an ambitious plan to double its energy output from 12 to 23TWh by 2025. It is an impressive plan that sees a number of large-scale hydroelectric and geothermal power stations brought on line and is expected to be a major contributor to Iceland’s medium to long-term recovery.

The construction of these plants would revitalise the building sector and, more importantly, will attract a host of energy-demanding businesses to cluster and grow around them. Data centres, large-scale greenhousing, and silica and hydrogen manufacture are just some of businesses that are probabilities. We look at three green tech businesses in the audio visual presentation as part of this FT special report.

Although there is cause for optimism, a note of caution should be sounded. Recent events in Europe, Greece in particular, have cast the Icelandic recovery in a certain fashion that is in danger of obscuring the country’s true plight.

Investment is needed and this has all but dried up. International investors need to be persauded that Iceland is both an attractive and safe place to invest, and that is no simple task in the current economic environment.

A presidential election, a probable court case with the EFTA Surveillance Authority over the $3.4bn Icesave dispute, lawsuits from disgruntled bank bondholders, a general election and likely referendum on full EC membership are major events that will effect how swiftly Iceland recovers as well as the extent to which the country returns from its isolationism to be an active participant in the global economy.

Written and narrated by Robert Jackson

Photography, production and direction by Ed Robinson

Designed by Steve Bernard

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