The size of both its population and economy makes China a major force in determining whether the world community achieves its common objective of halting the global threat of climate change. China is not only the world’s largest emitter of carbon dioxide (CO2), producing nearly one third of global emissions, but also, as the world’s second largest economy, it could also be a key driver in the global green transition to carbon neutrality.

There is strong interest in many countries to work with China on combating climate change, especially in cooperation between industries that offer green solutions and climate friendly technologies. All the Nordic countries—Denmark, Finland, Iceland, Norway, and Sweden—have, for example, bilateral partnerships with China in such areas as renewable energy, electrical grids, electric power transmission, energy efficiency, and smart solutions. Together, the five Nordic countries recently completed a four-year project (2018–2021) called Nordic Sustainable Cities that focused on renewable energy solutions and sustainable development for Chinese cities.

Iceland and China have a long-standing bilateral collaboration in the integration and use of geothermal energy in China, which has contributed to reducing the country’s carbon footprint. This cooperation started at the government-to-government level but later led to a commercial joint venture. Other Icelandic technologies developed to reduce carbon emissions have subsequently entered the Chinese market. Whilst these developments have been market driven, they have benefited from the goodwill of the governments of Iceland and China, which have actively fostered this cooperation. On multiple occasions, most recently on the occasion of the 50th anniversary of diplomatic relations in December 2021, China and Iceland have reiterated their commitment to collaborate further in areas that work towards the common goal of halting climate change.

Emissions Targets and Commitments

Both Iceland and China have made commitments to reduce greenhouse gas emissions and combat climate change. Iceland is committed under the COP 21 Paris Agreement of 2016 to cut emissions by 40% by 2030 and took on further emissions reduction commitment in 2019, pledging to cut emissions by 55% by 2030 as a part of common effort with other EEA countries (Norway and the member states of the European Union). Iceland’s ultimate goal is to achieve carbon neutrality before 2040.

China has pledged, under the Paris Agreement, to reach a peak in CO2 emissions before 2030 and achieve carbon neutrality before 2060. China intends to attain these goals by cutting CO2 emissions per unit of GDP by more than 65% from 2005 levels, improve energy efficiency in key industries to meet international standards, implement green building standards in new structures, increase the share of new energy and clean energy-powered vehicles, enhance carbon removals through forestry, increase the installed capacity of wind and solar to more than 1,200 gigawatts, and increase the share of non-fossil energy to about 25% by 2030 and 80% by 2060.

Both countries have national action plans to attain these objectives. The Climate Action Plan of Iceland contains 48 individual actions aimed at reducing greenhouse gas emissions and increasing carbon uptake from the atmosphere. It outlines climate mitigation actions in transport, fisheries, energy, industry, chemicals, agriculture, waste management, afforestation, revegetation, and wetland reclamation. Furthermore, the Action Plan takes into account the United Nations’ Sustainable Development Goals, adopted in 2015. Consistent with these goals, the action plan requires active co-operation with and participation of numerous and diverse stakeholders.

Iceland also participates in the EU Emissions Trading System (EU ETS) and aligns its actions with other members of the European Economic Area (EEA) in reducing emissions from agriculture, transport, waste management, and buildings, and in enhancing carbon removals from land use and forestry.

Climate change actions in China are guided by two policy documents, notably the Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality and the Action Plan for Carbon Dioxide Peaking before 2030. These policy documents call for improved climate governance, legal and regulatory reforms, green innovation and low-carbon science and technology, incentives and constraint mechanisms, market mechanisms and sectoral policy goals for reducing emissions, and carbon removals through land-use management, afforestation, and revegetation.

The Importance of Geothermal Energy

Renewable energy plays a key role in the climate strategy of both Iceland and China. In Iceland, renewable energy supplies 85% of the energy consumed—65% of which is supplied by geothermal energy and 20% by hydropower—and all the electricity consumed in Iceland and the district heating is supplied by renewable energy. Already, Iceland has thus achieved 100% carbon neutrality in the production of electricity and energy for district heating. The next step is the transition to clean fuels in transportation.

In China, the target is to increase the share of non-fossil energy to about 25% by 2030 and 80% by 2060. China is investing heavily in renewable energy and in the production of electric vehicles. Worth noting is that energy and carbon-intensity reduction targets and non-fossil targets in energy and electricity sectors were also included in the 14th Five Year Plan (FYP).

What is unique, however, is the prominence given to geothermal energy both in Iceland and China. Both countries have taken effective steps to increase their domestic capacity to tap into this important renewable energy resource. They have also cooperated for decades in advancing the use of geothermal energy.

Iceland started assisting China in exploring and using its geothermal resources more than 40 years ago, when Chinese experts started attending the UN University Geothermal Programme (UNU GTP) in Iceland, now the GRÓ Geothermal Training Programme (GRO GTP). The programme offers professional training in the use of geothermal technology, which Icelanders have used on industrial scale for more than half a century for district heating and the production of electricity.

In 2006, cooperation between Iceland and China in the use of geothermal energy took on a much larger dimension with a joint venture between the China Petrochemical Corporation (Sinopec) and the Icelandic company Arctic Green Energy. Operating under the name “Sinopec Green Energy”, the joint venture has become the largest geothermal district heating provider in the world. Today, it provides more than 70 cities and counties in China with renewable district heating. It is estimated that Sinopec Green Energy has reduced China’s carbon footprint by 20 million tons of CO2, whilst contributing to the improvement of air quality in major cities such as Beijing, Tianjin, Qingdao, Taiyuan, and Xiong’an as well as the provinces of Hebei, Shaanxi, Shanxi, Shandong, and Liaoning. The utilization of geothermal energy in district heating and cooling in Xiong’an is used as a case study in urban energy transition by the International Renewable Energy Agency (IRENA).

The Advantages of Geothermal Energy and the Opportunities of CCUS

Geothermal energy has number of advantages. Geothermal energy is renewable and provides energy systems with a base-load resource, a key attribute of geothermal energy. Its source is the molten core of the Earth, which is constantly releasing heat. This energy is often stored in the form of hot water far underground before it makes its way to the surface. With the right design to ensure heat exchange and pumping of used geothermal water back down to the reservoir, hydrothermal geothermal energy can be a very sustainable resource.

Next, there are the overwhelming environmental benefits. Geothermal installations have relatively little environmental impact if properly designed. The CO2 emissions from geothermal plants are minimal and can be captured and stored or reused. When used for district heating in colder areas, geothermal can greatly reduce local smog and air pollution.

The cost of harnessing geothermal energy has also proven to be both predictable and stable. After initial research and investment, production costs come down quickly and the energy prices to the consumers remain stable compared to volatile fossil fuel prices.

Moreover, using domestic geothermal energy, which is a sovereign energy source, also strengthens energy security. By using domestic geothermal energy resources, countries can substantially reduce their energy supply risks by reducing their dependency on imported fossil fuels. Finally, geothermal energy is a dependable form of renewable energy that is available 24/7 and is the only renewable that is baseload.

Geothermal technologies also have a multitude of secondary benefits, some of which have become more profitable than electricity generation. Geothermal energy is used in Iceland for heating green houses, for horticulture, aquaculture, algae Omega-3 cultivation, and for microorganism research. It is used for leisure activities and sports, such as for swimming pools and spas. Geothermal water is also used to make daily life easier by melting snow in parking areas and sidewalks. Geothermal water is moreover used in medical treatments and for producing food supplements, silica supplements, skin care products, cosmetics, and various other industrial uses.

One of the fastest developing climate-related technologies growing out of the geothermal sector are Carbon Capture, Utilization, and Storage (CCUS). Icelandic companies are world leaders in developing these high-tech cutting-edge technologies. One technology involves Direct Air Capture (DAC), capturing CO2 from industrial plant emissions and/or from the atmosphere and storing the carbon dioxide in the bedrock. Another leading technology involves capturing CO2 from industrial processes and recycling the carbon dioxide into green methanol for industrial use or as fuel for cars, trucks, buses, and ships. Both technologies help to reduce greenhouse gas emissions from industrial facilities, and thus reduce the impact of industrial carbon emissions on the environment.

China emits some 11.5 billion tonnes of CO2 per year and will clearly have to complete a major energy transition to renewable energy and apply effective energy efficiency measures to reduce its carbon emissions. However, even so, there will still be significant industrial emissions to deal with. In such instances, Carbon Capture, Utilization, and Storage (CCUS) technologies can help China in reaching its carbon neutrality target of 2060.

The Icelandic company Carbon Recycling International (CRI) has brought its technology for recycling carbon into green methanol to China. With this technology, industrial facilities in China can capture their carbon emissions and transform them into methanol for use as fuel or for industrial processes. The first plant to use this technology in China is in the city of Anyang in Henan Province, where CRI has constructed the largest CO2-to-methanol reactor in the world. Two other such plants are currently under construction in Lianyungang (Jiangsu Province) and Guxian County in Shanxi Province. With rapidly growing interest in this technology, CO2-to-methanol technology has the added advantage of providing both road and sea transport with more climate friendly fuel whilst other technological alternatives are being developed.

Global Geothermal Cooperation

By using geothermal energy for district heating and cooling and for production of electricity, many countries can significantly reduce their carbon emissions, as well as their dependence on imported energy; this has been the experience of Iceland. The long-term economic and environmental benefits of geothermal energy outweigh the initial high costs, because the use of geothermal energy provides the general public with low and stable energy prices; it reduces air pollution and thus improves public health; and it ensures that public and private utilities generate stable and profitable income.

It is widely recognized amongst experts, however, that geothermal energy is an underutilized renewable resource. Electricity is produced using geothermal energy in some 26 countries and for district heating in 70 countries. With constantly advancing technologies like heat pumps, geothermal and thermal energy can become an even larger part of the global electricity production as well as the heating and cooling of cities, which is perhaps its greatest value.

Considering the many advantages of geothermal energy, it is surprising how little attention has been given to the utilization of this resource. Part of the answer is found in the lack of awareness of policymakers and lack of technical expertise. Part of the answer is also found in the competitive advantage that subsidised carbon fuel has over renewable energy. To increase the share of geothermal energy in the global energy profile, these two thresholds need to be levelled. Iceland has worked actively to address this issue and promote geothermal energy by raising awareness, capacity building, and initiating multilateral funding to lower the initial costs and risks of building geothermal operations on industrial scale.

Iceland’s experience shows that in order to reap the long-term economic benefits of geothermal energy, effective government support is required to apply geothermal energy on a large scale. In Iceland, the Government played a major role in advancing the exploration and use of geothermal energy, supporting institutions to generate the knowledge necessary to use geothermal resources and geothermal power in Iceland, and by directly supporting geothermal projects by providing drilling insurance as well as grants and direct funding of geothermal exploration projects.

As a result, geothermal energy has today become a highly competitive industry in Iceland and much of the research costs, investment, and operational costs have been transferred to private and public companies that operate on the energy market on a competitive basis. Furthermore, the renewable energy sector in Iceland has fostered the development of robust and diverse expertise, businesses and companies that cover all aspects of geothermal energy and hydropower utilization from exploration and assessment to consultancy, design, engineering, energy production, and designing of secure high voltage energy transportation systems. Many of these companies have entered the global market, offering their services, expertise, and investment resources in geothermal projects in many countries in Africa, Asia, Central America, and Europe.

Based on this experience, the Government of Iceland, Icelandic experts, and Icelandic geothermal energy companies work actively at promoting the use of geothermal energy through such international fora as the International Renewable Energy Agency (IRENA), the Global Geothermal Alliance (GGA), the European Geothermal Energy Council (EGEC), the International Geothermal Association (IGA), the Iceland Renewable Energy Cluster and the Geothermal Research Cluster (GEORG). The Government of Iceland also hosts the GRÓ Geothermal Training Programme (GRO GTP) (formerly the United Nations University’s Geothermal Energy Training Programme), which is a postgraduate training programme that offers capacity building in geothermal exploration and development. The programme offers training courses for practicing professionals from developing and transitional countries with significant geothermal potential. The programme also offers MSc and PhD scholarships in Icelandic Universities to former fellows, and short courses and workshops in Africa, Central America, and Asia.

Iceland has also initiated a special fund created through the World Bank to provide grants to cover the initial exploration costs of geothermal projects, known as the Global Geothermal Development Plan (GGDP) and led by the World Bank’s Energy Sector Management Assistance Program (ESMAP). The objective of the GGDP is to assist developing countries in scaling up the use of their geothermal power. The GGDP differs from previous efforts in that it focuses on the primary barrier to geothermal expansion: notably the cost and risk of exploratory drilling, by providing substantial new concessional financing.

Iceland also supported the East Africa Geothermal Exploration Project in partnership with the Nordic Development Fund (NDF) to enhance knowledge and capacity building in geothermal exploration, as well as to finance the early stages of geothermal development, specifically test drilling. Iceland also works closely with IRENA and UNEP, as both organizations have dedicated workstreams on geothermal.

However, more can be done to promote geothermal energy, especially in Asia. The Icelandic capacity building programme has been brought to China through an initiative by Arctic Green Energy, launching the first Sino-Icelandic geothermal training programme in late 2019. Delayed by COVID-19, the geothermal training programme is planned to be re-launched in the autumn of 2023. The university level training programme will be particularly useful for cultivating expertise in the use of geothermal energy in China’s neighbouring countries. Arctic Green Energy has also initiated the establishment of the Sino-Icelandic Geothermal Technology R&D Centre, to conduct high-level joint research, enhancing the training of and exchanges between researchers to encourage technology transfer and strengthen the geothermal capacity building in Iceland and China. Finally, the company has partnered with the Beijing Research Institute of Uranium Geology (BRIUG) to work together to develop high-temperature geothermal fields in China.

In addition to such capacity building and research cooperation, Iceland and China could join hands in encouraging Multilateral Development Banks (MDBs) such as the Asian Infrastructure Investment Bank to devote more resources to assist countries with installation of necessary infrastructure to develop their geothermal energy resources and for CCUS installations.

Conclusions

Iceland is a successful example of the commercial development and application of geothermal energy and Icelandic businesses and experts lead the way in cutting-edge research and development. As a leader in geothermal energy, Iceland is committed to sharing its experience and knowledge with other countries and to work with China to promote the use of geothermal energy and new climate-related technologies, such as carbon capture, utilization, and storage.

China has taken an important step in further embracing and promoting geothermal energy and related carbon reducing technologies by hosting the World Geothermal Congress (WGC) in Beijing in September 2023. The Congress is scheduled every two to three years and was last held in Reykjavik, Iceland, in 2021. The Congress is attended by leading experts as well as policymakers, business leaders, investors, and NGOs who come together to discuss and exchange information about geothermal technologies, policies, regulations, and markets throughout the world. There are also field-visits, exhibitions, and workshops as well as hundreds of enterprises that showcase their businesses.

By combining their knowledge, technologies, and business resources, Iceland and China can continue to work together within the international arena to raise awareness amongst policymakers and build support for the development of geothermal resources and for a more extensive use of carbon capture and reuse technologies as alternatives to carbon-based energy resources.

Geothermal energy is destined to remain a vital contributor to a global green energy future—a future Iceland wants to share with China and the world.