Upstream Activities of Energy Intensive Projects Does Government support benefit Arctic Communities? - Indications from energy intensive industry in rural Iceland 2013 Arctic Energy Summit, October 8 th -10 th, 2013 Akureyri, Iceland Hjalti Jóhannesson, Researcher and Assistant Director University of Akureyri Research Centre

„Upstream activities“ Wikipedia definition „The upstream sector includes the searching for potential underground or underwater crude oil and natural gas fields, drilling of exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface.”

Upstream activities in hydro- and geothermal energy? Researching –Energy potential of glacial rivers and geothermal fields Orkustofnun (e. National Energy Authority) In 2003 Orkustofnun‘s GeoScience Division was transferred into a self-financed, state owned, non-profit institution ÍSOR (e. Iceland Geosurvey) Harnessing - and researching –Landsvirkjun (a state owned power company) processes 75% of all electricity used in Iceland

A long history of research and planning

Kárahnjúkar (or similar project) had been prepared since the 1960s

A recent megaproject in east Iceland Kárahnjúkar hydro power plant: 690 MW / 4,600 GWh –Owned by Landsvirkjun –Highly automated, 13 local jobs needed to operate –Operation period since 2007 Alcoa-Fjarðaál aluminium plant: –350,000 tons of aluminium annually –Some 500 direct jobs and a total of estimated jobs –Operation period since 2007

Monitoring the megaprojects

Kárahnjúkar hydropower project Alcoa aluminum plant

Celebration! March 2003

Reyðarfjörður; a fishing village of some 600 was converted into a manufacturing town

Why government emphasis on this type of development? Utilization of Iceland´s domestic/renewable energy sources Regional development –200,000 of 320,000 inhabitants live in the capital region –Other regions generally sparsely populated

East Iceland following a well-known path Out-migration Uneven age- and gender structure Low income Low housing price Diversity of jobs limited Infrastructure limited Service base weak Slower pace of life (East Iceland, Dec. 2002)

Population development Central area1,6871, Northern area Southern area Research area total

Some positive lessons Population increase Local economic impacts –New jobs, higher income, tax base of municipalities Optimism and positive local spirit Infrastructure improvement Improvement of services –More population and income in addition to the aluminium plant itself have increased demand Experience and know how –Engineering companies and Landsvirkjun

Diverse  Large size of workplace compared to the local labour market –Dominant company –Much impact on the social rhythm Work shift pattern (12 hours) –Strain on families Decrease of jobs in traditional fields of the economy, fisheries and fish processing –Also part of a general trend Male oriented –Gender balance more even than in other aluminium plants in the country but males are however dominant (75%)

Diverse  Some spin-off jobs arrived later due to economic crisis Staff turnover was relatively high –Work shift pattern, not suitable jobs, troubles of newcomers adjusting to local community Increasing commuting over longer distances –Challenging landscape

Negative  Massive housing bubble Not right type of housing Competition among municipalities –Competed for new inhabitants –Excessive spending in municipal infrastructure Lost opportunities in town planning Limited geographical scope of impacts –High hopes raised by proponents Short construction time –Strain on the community and the economy