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Iceland

ManagEnergy is a technical support initiative of the Intelligent Energy - Europe (IEE) programme of the European Commission which aims to assist actors from the public sector and their advisers working on energy efficiency and renewable energy at the local and regional level.

The Cinderella story in the history of energy-system-changes in transportation

Type: CaseStudy

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Summary

Metan Ltd. is a marketing and promotional company for Icelandic bio-methane located in Reykjavik. Between 2000 and 2009 the number of vehicles running on bio-methane in the capital area increased gradually to 120. However, by then the total fuel usage amounted to less than 10% of the production capacity via the collection of biogas at the local landfill site. With two service locations and cost savings of 40-50% compared to the price of petrol, along with the obvious environmental and social benefits, the hope was that the municipalities – as well as private fleet managers – would make the switch to bio-methane, thereby helping to increase the production of the resource. However, more work was needed to make this a reality.

In July 2009 Metan Ltd started a new marketing campaign directed at citizens/households, schools and universities, policy makers, local and regional authorities, transport and car sales companies, the media, as well as financial institutions and the scientific community. By the end of 2010 the number of vehicles running on bio-methane in Iceland had increased by over 300% from 120 vehicles to close to 400. Today, forecasts indicate a great increase in demand for bio-methane in Iceland, with the number of vehicles using the fuel expected to reach 1000 by the end of 2011.

Results

In 2010, a total of 580,000 Nm3 of bio-methane was used in the capital area of Reykjavik replacing the equivalent of 620,600 litres of petrol –  based on energy equivalency (there is approx. 7% more energy in one Nm3 of Icelandic bio-methane compared to a litre of 95-octane petrol).

The greenhouse gas emissions savings due to the usage of bio-methane in Iceland amounts to 1,334,000 kg of CO2 of fossil origin given 100% replacement of 95-octan-petroleum. Projected sales of bio-methane in 2011 have doubled the amount sold in 2010. In 2013, forecasts indicate that production capacity may reach 3,500,000 Nm3.

As a response to this fast changing demand for bio-methane the seven municipalities operating the landfill sight in the Reykjavik area have moved forward plans to build a methane production plant in line with EU regulations regarding the disposing of organic materials in landfills.

The intended plant size is currently being re-estimated in light of the recent increase in demand. Metan Ltd. launched a research project last year which investigates the option of using wastewater for methane production, in addition to using biological raw materials from industry, agricultural waste and energy crops.

Lessons learned and replicability

No matter how good a product is, or how socially responsible it is to use it, one has to fight for any share of the market in an effective way. Furthermore, one must regularly re-evaluate the strategy for achieving that share of the market. Marketing bio-methane in a small country like Iceland might be considered easier compared to doing so in a municipality, city or country with a population of millions. Yet one can argue that it is even harder to get through all the levels of resistances to change in a small country than a large one.

The nature of the challenges which must be met and overcome in Iceland are presumably quite similar in shape and form as those in a much larger country. Our experience of a bottom-up-multi-level-marketing-approach for the bio-methane message might easily be replicated in a larger market. Furthermore, this approach might be of great use in making the case for bio-methane under different external conditions. This Cinderella story in the fuel-system exchange history of Iceland could make an excellent case for what is achievable.