Iceland’s Karahnjukar Power Plant Project & Environmental Assessment Process

The controversial issue about the Karahnjukar hydropower plant in Iceland came to my attention in the course of a previous EIA course during my undergraduate studies at the University of Ottawa and has stayed in my mind every since. In summary, the issue is centered on the building of an immense hydropower plant in Iceland’s pristine environment, with a goal of producing energy for an aluminum smelter. This project is intended “to make Iceland the largest aluminum producer in the world” and is deemed to be “the greatest project in the history of Iceland” (Dreamland trailer). Although the project was promoted as a benefit for Iceland’s weak economy, it received immense criticism from both the local community and environmentalists worldwide.

The following video, which is the movie trailer of the 2009 documentary Dreamland, presents an overview of the situation and of the concerns that are involved:

On the one hand, the project was welcomed because of the predicted positive economical impacts. Not only would this project create jobs in the area in which the power plant was built and contribute to the overall national economy, but it would also attract foreign investors.

Environmental concerns, on the other hand, were mostly rooted in the fact that the Icelandic highlands, that where the plant was built, is “one of the largest remaining wilderness areas in Europe” (Bosshard 2003). The impacts of the project were predicted to negatively impact the species living in this area, including geese, reindeer, and seals, amongst others. Other predicted impacts included the loss of vegetation and the destruction of several waterfalls.

Interestingly, the lack of serious consideration of the environmental assessment for the project indeed reflects the modern world’s most fundamental conflict of interests, that of economy versus environment. In 2001, the Icelandic Planning Agency rejected the environmental impact assessment, concluding that “it has not been demonstrated that the gains resulting from the proposed development of the Karahnjukar Power Plant would be such to compensate for the substantial, irreversible negative impact that the project would foreseeably have on the natural environment and the utilization of the land.” (Bosshard 2003). Landsvirkjun, the company at the head of the project, opposed the decision made by the Planning Agency and later that year, the Minister of the Environment ironically overpowered the decision and approved the Karahnjukar project (Bosshard 2003). The project was indeed completed in 2009.

The overruling decision of the environmental impact assessment of the project demonstrates Iceland’s environmental impact assessment process as one that is rather weak. Although the Icelandic Planning Agency deemed the project to have irreversible effects on the landscape, the project went through anyways, with certain conditions imposed by the Minister which were non-related to mitigation measures or alternative plans. Another flaw involves the fact that the government ultimately made the final decision for the project, and was indeed one of the key proponents of the project. According to Iceland’s Environmental Assessment Act, “the Minister’s ruling is a final ruling at the administrative level” (Skipulagsstofnun). Thus, no matter what the final verdict of the Planning Agency, the Minister can overrule it. If the project is highly supported by the Minister, chances are that the project will go through no matter the significance and magnitude of the predicted impacts of the project.

The case of the Karahnjukar power plant also demonstrates one of the key elements of environmental impact assessment. Environmental impact assessment does not have the goal of stopping development. Instead, it is meant to find ways to minimize the impacts of development. This, I think, is an essential element to remember as future EIA practitioners. Although alternatives might be considered for big projects such as this one, the economic incentives undeniably have an overall effect on the decision-making. Other important projects, such as the Tar Sands in Alberta, demonstrate this trend. The significant influence of the economic incentives does indeed make us question the sustainability of the EIA process as a whole. Are the environmental costs truly being considered in the approval and undertaking of such economically-beneficial projects?


Bosshard, P. (2003, June). Karahnjukar: A Project on Thin Ice. Retrieved November 10, 2011, from International Rivers:

Dreamland trailer with subtitles. (2009, March 16). Retrieved November 10, 2011, from Youtube:

Skipulagsstofnun. (n.d.). Environmental Impact Assessment Act. Retrieved November 10, 2011, from Website of the Skipulagusstofnun, the Icelandic National Planning Agency:


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