Ræða iðnaðar- og viðskiptaráðherra á "Geothermal Roundtable" í Brussel, 19. sept. 2014

Vice President and Commissioner Öttinger, Ambassador, Ladies and Gentlemen. 

It is a great pleasure for me to be here today, to discuss the opportunities and importance of utilizing Europe's  geothermal resources. 

This event is arranged through a mutual initiative from the European Commission and the Icelandic Government and I would like to use this opportunity to thank Mr. Öttinger, and his staff, for making this event possible.

Geothermal energy, the topic of today's meeting, is essentially the heat of the earth from its core. It sometimes happens that we have quite a visual display of this powerfull source, as we are for example currently witnessing in Iceland today with the volcanic eruption north of Vatnajökull (“Holuhraunseldar”).

We should however bear in mind that while volcanos are an expression of geothermal energy, we certainly do not need volcanic activities as such to utilize geothermal energy.

The key question at this Geothermal Roundtable is how can we promote further utilization of geothermal energy in Europe in a sustainable way, and what obsticles and challenges have we been facing in this effort.

We know as a fact that there are vast possibilities in Europe for geothermal utilization. We also know that utilizing geothermal resources, not only for power generation, but primarily for heating purposes, represents great opportunities with social, economical and environmental benefits.

Geothermal energy is a domestic renewable energy source and as such has a great role in energy security. It can provide an important factor in a secure energy supply and reduce the need to import non-renewable energy, and therefore increase energy independency.

In Iceland we have a long history of geothermal utilization and this is one of the cornerstones of our energy sector. 

The use of geothermal water for house heating already started in Reykjavik in 1930, but the main drive came in 1973 when the oil crises struck and crude oil prices on the world market increased by 70%.

At that time about half of all houses in Iceland were heated with fossil fuel, but concentrated efforts led to Iceland being transformed into a clean-energy economy within two decades. Today 99% of houses in Iceland are heated with renewable energy. Nine out of ten are heated directly with geothermal heat, through district heating systems, and the remaining 10% with renewable electricity.

The social and economical benefits of this development have been substantial. The macro economical benefits of the geothermal district heating system annually amounts to around 7% of our GDP.

Building a geothermal district heating system is not only a way to establish a domestic and secure energy source, it is also a way to establish industry knowledge and create jobs. For example, in Iceland, we have an active geothermal industry which participates in various geothermal projects around the world; including research, consulting, design and construction.  

Enough about Iceland.

The point I want to emphasize here today is that there are many places in the world that have huge geothermal resources and in Europe geothermal district heating has great potentials of replacing a significant part of EU's demand for imported energy. Amongst other things, this should be our focus of attention today.

In Europe, geothermal is now used for house heating in various places. I am told that there are over 240 geothermal district heating systems operated around Europe today and in addition there are about 5,000 district heating systems using other energy sources, mainly fossil fuel.

There are clear opportunities and potentials to expand the use of geothermal, both for new district systems as well as the use of geothermal instead of fossil fuel in systems that are already in operation today. 

I was for example not aware that one of the largest geothermal district heating systems in the world is in Paris, and that there is still huge potential to extend that system. I am sure that there are many people that are unaware of this fact.

Why is it then, that geothermal energy has not been promoted or utilized to a greater extent  in Europe?

One of the main problems that many geothermal projects are facing is financing. Despite technological innovation, there is still the initial risk that is always present when drilling for new geothermal resources. 

There are various ways to address this challenge of financing, and this we will discuss further at today's meeting.

I can mention that in Iceland we addressed this issue already in the sixties by establishing a National Energy Fund which offers loans to fund the initial cost of drilling and exploration. If this initial drilling turn out to be unsuccessful, the loan defaults to the state. In the case of Iceland, this policy promoted the expansion of geothermal energy more than anything else.

Mind you, we are not promoting hasty drilling, but trying to incentivise proper research and preparation that will be beneficial to all concerned. With every new well drilled, scientific understanding of the geological systems has further improved.

I believe that there should be a general policy towards the promotion of geothermal energy in Europe. Such a policy would generally be in accordance with the EU Energy and Environmental policy for 2030. It would be beneficial to develop innovative financial incentives that are right for geothermal expansion.  Furthermore, it is important that funds are available to train and support technicians and decision makers of regional and local authorities in order to provide the technical background necessary to approve and support projects.

The main point that I wish to make is that the benefits of harnessing geothermal energy are undeniable and fit well with the EU's goals of promoting secure and clean energy and environmental long term policies.

The promotion and development of geothermal energy will require concentrated and combined efforts. New geothermal heat plants are competing with well-established district heating systems, that by nature are monopolies, fuelled by gas, coal and wood for space heating.  Why would operators of such facilities take the risk of switching to a domestic geothermal production? Perhaps it is the upfront investment to make the switch that scares them away. The expense of the switch may be equivalent of buying hundreds of thousands of barrels of oil for the next decade or so. This, in the current economic situation, it is not bankable, and therefore this is one of the main challenges we need to dicuss and work on.

Ladies and Gentlemen,

I look forward to the discussions we will have here today at this Geothermal Roundtable, with so many distinguished key-players of the industry involved. Again I would like to thank the EU Commission for arranging for this event in cooperation with the Icelandic Government, and I wish you fruitful discussions and sharing of experience.

Thank you!