Ræða Ragnheiðar Elínar Árnadóttur á orkuráðstefnu í Búkarest, 26. nóvember 2013

ATH: Talað orð gildir

Ambassador, Ladies and Gentlemen,

It is a great pleasure to be here in Bucharest to take part in this launch event of the Renewable Energy Programme in Romania supported by EEA Grants.

Geothermal energy is at the forefront of Iceland's bilateral cooperation with beneficiaries of EEA Grants. We have considerable experience to share and expertise to contribute, having made geothermal energy into a viable and robust alternative to traditional fossil fuel based energy sources.

In addition to geothermal know-how Iceland also has extensive experience in building hydropower plants and refurbishing, modernising, redesigning and retrofitting components of older hydropower stations since we in Iceland, as here in Romania and in Norway, have a number of hydropower stations that need maintenance.  This is a field where the two donor states, Iceland and Norway, together with Romania, can work together to strive to increase renewable electricity generation.

I am convinced that this is an important step towards increasing the share of renewable energy here in Romania. I also hope and belive that this will strengthen our bilateral relations and reduce economic and social disparities in the European Economic Area.

But now, let's go a few decades back in time in the history of geothermal development in Iceland:
External factors are often the driving force for change. This was the case 40 years ago in Iceland when we changed the way we approached our energy demand, and this is the case in Europe today with the 2020 target to reduce carbon emissions.

When the oil crisis struck in 1973, fuelled by the Arab-Israeli war, the world market price for crude oil rose by 70%. At that time about half of all homes in Iceland where heated with oil, but concentrated efforts let to Iceland being transformed into a clean-energy economy within two decades. Today 99% of homes in Iceland are heated with renewable energy, nine out of ten of which are heated directly with geothermal heat through district heating systems.

This was achieved through concentrated efforts. A national energy fund offered loans to fund the initial cost of drilling and exploration, and if drilling turned out to be unsuccessful the loan would be defaulted on the state. Eventually geothermal heating became the norm. And with every well drilled, scientific understanding of the physical characteristics of the geothermal systems further improved. It turned out that the resources were dependable, involved significantly lower operating costs and were environmentally friendly.

Needless to say, these fundamental changes laid the foundations for a vibrant economy and high-quality living conditions on an island that can be described as having a rather inhospitable climate . . . at least for a part of the year!

But is Iceland unique here? Up to a degree, yes. But in the Pannonian basin and other areas here in Romania geothermal potential is far from being fully utilised. Geothermal can become a much larger part of the heating capacity in Europe; today it is practically non-existent compared to the size of the heating market. The potential is here. Although the heating capacity is not being used all year round, you do get cold periods when the cost of heating brings to the forefront the current social and economic disparities which EEA Grants strive to reduce.

The point I wish to make is that the benefits of harnessing geothermal energy are uncontested and fit well with the EU's ambitious agenda.

First of all, there are the overwhelming environmental benefits of reduced CO2 emissions and enhanced air quality. Secondly, there is the issue of cost. With rising oil and gas prices it is easy to argue for the long-term savings geothermal heating can bring about. And thirdly, I would like to underline security of supply as geothermal is a 24/7 dependable sovereign renewable energy source.

Why is it then that things haven't materialised as in Iceland? Firstly geothermal heat plants are competing with current district heating systems that by nature are monopolies, fuelled by gas, coal and wood for space heating.  Why would an operator of such a facility take the risk of moving over to geothermal indigenous production, even though the resource is a proven one, given that there is always a drilling risk no matter how competent the team is? And this also requires upfront investment, the equivalent of buying hundreds of barrels of oil for the next decade or so. This, in the current economic situation, is not bankable.

To this end, EEA Grants can play an instrumental role by funding geothermal pilot projects where we find the lowest hanging fruits, setting an example for European banks, public lending agencies and government institutions to follow.

Finally I would like to emphasise the importance for every country to use their domestic renewable energy resources and would like to congratulate you on launching the RONDINE Programme. I look forward to hearing how they progress.

I wish you the best of luck in all your efforts.