Green energy up for grabs in Iceland

There are news about major international companies using bribes and local corruption to get deals and to “smooth things” so they can get their plans going. Iceland Talks reported about the Daimler Benz bribery case here. Today there is a story about the aluminium giant Rio Tinto Alcan who owns the Alcan Iceland Ltd. that runs a large aluminum smelter in Iceland.

The aluminium smelter at Straumsvik was a life saver 40 years ago when Iceland had no industry and this project was a massive boost for the small economy. Today it is a polluting energy draining monster that is active in local politics in order to get their own way.Icelandic aluminum smelter

The Social Democratic Alliance party held a vote for the town of Hafnarfjörður about the possible enlargement of the smelter on its doorstep. This election was failed a few years ago, but now there might be another one, and this time they will have another chance to win. It is the classic story of the large corporation against the small town.

But why do they get another chance to vote? And why is it so important to the politicians who seem to lobby for them? They claim it is for the good of the town that will generate money from taxes paid by Alcan as well as other economical boosting side effects. That might be true, but the main question is still remains to be answered. Why are the politicians lobbying on behalf of the company?

The same is happening with the other large aluminum company, Alcoa who want to build a smelter in Húsavík and Keflavík to name a few places. That has been set partly on hold due to the economic collapse in Iceland. The same arguments are used to boast the claims of Alcoa, and as before the local towns politicians and the members of parliament are lobbying for them. They are doing everything they can to make sure that Alcoa gets it’s wishes.

There are benefits of course to getting large industrial companies into the tax system and the multiple economic side effects can be good. But that is not the case all the time.

Energy prices in Iceland are the lowest in the world, so low in fact that the competition states like China, Venezuela and other such states are making money by selling energy. Iceland is not. At least not any serious money. This has been so bad here that the best guarded secret in Icelandic economics is the price paid by the international companies to the state. And there is a good reason for it. They are almost giving the energy away, and at the same time making Iceland a dump site for polluting industry that nobody wants.

An example of this stupid political thinking that can be summarized so; “It is better to give the energy away or loose the companies to other nations”, is a bill that failed to pass through parliament in 1983. At that time there was only one major company here, AluSuisse (later became Alcan). The smelter they ran, was at that time a massive company on the Icelandic scale, and in fact saved the nation when it was built, from bad economic political management.

That was over 40 years ago. But the same political practices have remained and the result is Iceland today. Icelandic aluminum smelter 2

The bill was aimed at making the aluminum industry pay 65% of the general user price. Actually it was talked about then to make it a law that energy prices would never go under 65%, but that was talked down by the Independence party. The result is that Iceland is now believed to be getting around 20-30% of global market price.

One can only wander why the prices are such as secret, and why so many politicians and “prominent members of the public” do lobby so hard to get those smelters to Iceland on knock down prices.

The only explanation that seems to make sense when one cuts through all the bullshit, has to be bribery. There has to be a personal gain for those involved, because Iceland and those local councils are not reaping the benefits, that is for sure.


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