When a business needs the very best engineering, it goes to Germany. For IT consulting, give India a call. Now Iceland is carving a niche in the hydrogen fuel market. Thanks to a new program called Sustainable Marine and Road Transport–Hydrogen in Iceland (SMART-H2), up to 40 hydrogen-powered passenger cars will be distributed to private users, showing off local expertise and moving Iceland toward a fossil fuel–free existence.

The small North Atlantic island, which barely cracks 300,000 inhabitants, can trace its efforts of transforming to a hydrogen economy to 1978, when University of Iceland professor Bragi Árnason first proposed that the country end its dependence on fossil fuels, all of which are imported.

Iceland is well-poised to develop and distribute hydrogen, Árnason explains, because it has already perfected other alternative-energy networks: The water from its wet Gulf Stream climate and the seasonal runoff from ice caps are converted to hydroelectricity, powering the entire country; Iceland also has a long history of tapping into the volcanic brew beneath its surface to heat buildings. Harvesting hydrogen from water requires a hefty jolt of power, but the abundant emissions-free energy from hydroelectric and geothermal sources makes it possible to produce and distribute fuel right at filling stations, cheaply and cleanly.

Factor in the country’s Lilliputian dimensions, Árnason says, and the goal of transitioning Icelanders’ cars and infrastructure to hydrogen is realizable. If a fuel-cell vehicle has a cruising range of 300 miles, “to be able to run such cars everywhere in the country, we would need only fifteen hydrogen fueling stations.” Switching the entire vehicle fleet to hydrogen would, Ármason points out, reduce Iceland’s greenhouse-gas emissions to 45 percent of its present level.

The next step toward a hydrogen economy involves SMART-H2, which is overseen by Reykjavik’s Icelandic New Energy. The 8-year-old company counts DaimlerChrysler, Norsk Hydro, and Shell Hydrogen among its key shareholders but has no plans to make a profit or take on the responsibility of switching Iceland to hydrogen. Through projects like SMART-H2, or the earlier Ecological City TranspOrt System (ECTOS) experiment with hydrogen fuel-cell buses, Icelandic New Energy aims to show consumers and car manufacturers that hydrogen can usurp fossil fuels. Currently SMART-H2 has eleven vehicles on the road, including fuel-cell cars from Daimler and internal-combustion hybrids adapted from Toyota Priuses that are powered by gas and compressed hydrogen. “We’re really trying to understand all the different implications of the technology,” says general manager Jón Björn Skúlason: They’re weighing an array of outcomes ranging from environmental impact and operation costs to consumers’ comfort with a new kind of fuel nozzle.

Already, the ECTOS bus program has been replicated in several European cities, as well as Beijing and Perth, Australia. But a more complete hydrogen revolution really depends on who commercializes the vehicles and the fuel network that will keep them running. Andreas Klugescheid is a spokesperson for BMW North America, which is currently evaluating its Hydrogen 7-Series cars. To build 12,000 hydrogen filling stations in Germany and stock them with renewable hydrogen, he says, would cost approximately €99 billion. But Klugescheid notes that cost isn’t as exorbitant as it first appears: “Most of the necessary facilities are available for 20 years. It’s not an annual investment.”

Skúlason admits there’s a long road ahead. “Changing from a fossil-fuel infrastructure to a greener infrastructure will cost a lot of money, and the question is who will pay for it in the beginning,” he says. “Even so, car manufacturers and others still view hydrogen as the solution for fossil fuels.” And certainly, they can look to Iceland for further answers on how to surge forward.

Story by David Sokol. This article originally appeared in Plenty in February 2008.

Copyright Environ Press 2008.