structural:expansion, structural:scholar_edition
Energy

Renewable sources — geothermal and hydropower —provide effectively all of Iceland's electricity and around 85% of the nation's total primary energy consumption, with most of the remainder consisting of imported oil products used in transportation and in the fishing fleet. Iceland's largest geothermal power plants are Hellisheiði and Nesjavellir, while Kárahnjúkar Hydropower Plant is the country's largest hydroelectric power station. When the Kárahnjúkavirkjun started operating, Iceland became the world's largest electricity producer per capita.

In 2023, battery electric vehicles constituted 50.1% of new registrations and around 18% of the country's vehicle fleet was electrified in 2024. Iceland is one of the few countries that have filling stations dispensing hydrogen fuel for cars powered by fuel cells.

Despite this, Icelanders emitted 16.9 tonnes of CO per capita in 2016, the highest among EFTA and EU members, mainly resulting from transport and aluminium smelting. Nevertheless, in 2010, Iceland was reported by Guinness World Records as "the Greenest Country", reaching the highest score by the Environmental Sustainability Index, which measures a country's water use, biodiversity and adoption of clean energies, with a score of 93.5/100.

On 22 January 2009, Iceland announced its first round of offshore licences for companies wanting to conduct hydrocarbon exploration and production in a region northeast of Iceland, known as the Dreki area. Three exploration licences were awarded but all were subsequently relinquished.

Iceland's official governmental goal is to cut greenhouse gas emissions by 40% by the year 2030 and reach carbon neutrality by the year 2040. As a result of its commitment to renewable energy, the 2016 Global Green Economy Index ranked Iceland among the top 10 greenest economies in the world.