Energy for debts: a potential solution for Iceland?

planckThe ‘Energy for Debt’ proposal is able to revitalise the Icelandic economy very quickly and direct structural development in the right (i.e. 21st century, with all its energy/resource deficit-based) direction. Good for Iceland, good for the UK, good for Holland.

The following is a letter to IceNews received from the Planck Foundation. All IceNews readers are welcome to send material to news<at>icenews.is which may be published in whole or in part, subject to editorial standards.

Dear IceNews,

As you know President Grimsson of Iceland Tuesday announced at a press conference in Reykjavik that there will be a referendum concerning the bank deposit insurance law.

As he has stated he was very much impressed by the discussion last week in the Icelandic parliament, the media articles, and above this all, by the more than 25% of inhabitants -in terms of voters- signing the petition (www.indefence.is).

For the Icelandic Administration (led by Prime Minister Ms. Jóhanna Sigurðardóttir) this choice of President Grimsson for a referendum was not easy, as the consequences of it could be huge and all ministers had worked hard to reach, for the Althingi (parliament), an acceptable agreement and the negotiation attitude of UK and NL was severe and hard.

The ‘Energy for Debt’ proposal made by the Planck Foundation to UK/NL/IS is a very valid alternative, which is in the benefit of both all three nations (UK/NL/IS) and their inhabitants, both financially and energy wise. The ‘Energy for Debt’ solution fits with mutual principles and suits every party involved in solving this issue and creating a working future perspective.

This ‘Energy for Debt’ proposal is able to revitalize the Icelandic economy very quickly and direct structurally in the right (i.e. 21st century, with all it energy/resources deficits based) direction. Good for Iceland, good for the UK, good for Holland.

The geothermal energy resources of Iceland are huge, very huge, and (relative to the potential) yet mainly not explored. Unlike hydropower, geothermal also has only positive environmental impacts and almost unlimited supply.

Supporting Iceland, the UK and Holland by building the energy business case, engineering the geothermal, tidal, wind and HVDC technology, engineering the overall finance model, attracting global energy/data players and making the case open to any business in UK/NL/IS is something we within Open Foundation really would like to do in 2010.

For Europe (besides from the energy perspective) the ‘Energy For Debt’ issue is certainly a better option, as the current repayment text is as soft as warm butter in legal terms (the text is more a commitment to discuss later instead of a hard agreement). Or loosing Iceland for the EU or even NATO.

An EUR 12,000 extra debt per Icelandic citizen for an economy with not much of an outlook is certainly a heavy weighted issue. It’s even more per Icelandic family (E UR 30,000) and yet even more with the 5.5% interest cumulation at the end of the road (EUR 40,000 per family).

It does take genialness to understand that this is not a working plan. In fact: it’s no plan at all, nor for the debtor, nor for the creditors: it just creates and maintains a financial desert, with no economic success chances whatsoever. It was just the first plan try-out. No offence. Expecting bullseye in just one shot is not realistic. Let’s create a new plan that builds Iceland and covers the incurred loses all together. Let’s not get hard to the negotiators on all sides: they were sent into the situation into a total new territory. let’s learn from Versailles, not repeat it.

In the UK or NL perspectives (relative to number of inhabitants) this would result in huge numbers in debt figures: just do the maths and you’ll see that the current payment proposal was not realistic. Certainly for a very small economy of only 318,000 people that mainly also has to start all over again almost from scratch. This translation to own proportions/figures is something the UK and NL haven’t done (openly or in silence, that’s not important for the outcome).

This proportionally large debt is something that can’t be solved with a long payment holiday period: this is a structural economic burden for companies and households for a decade long. Iceland had the choice of becoming the ‘Cuba of the North’ (isolation) by not signing, or becoming the Haiti of the North (poverty) by signing. A difficult choice.

Without multilateral support to get the debtor back on its feet, this could have some severe external consequences (for example: an exit of Iceland from NATO etc), due to the internal consequences of a bankrupted nation with not much of future perspectives: a potential greenhouse for a Weimar-like situation.

Helping a debtor, and by this taking care of the energy supply for the UK and Holland, is certainly an opportunity. Helping them to get on their feet is certainly part of the European tradition.

Blaming doesn’t deliver any solutions: not for the UK, nor for Holland, nor in Iceland. Polarization within Europe doesn’t help Europe further. Polarization within Iceland doesn’t help Iceland further. It’s time to solve the occurred problems. The ‘Energy for Debt’ option is the only one that provides a valid solution for all stakeholders.

Iceland could supply the UK and Holland all the energy it needed generate in a mix of wind and geothermal. Clean, cheap and with no negative geopolitical consequences like we’re used regarding to oil. The geothermal energy generation potential if Iceland is larger than our imagination: it’s both just what we need and exactly what we like.

This ‘Energy for Debt’ option could give the UK and Holland a wider head start in becoming the digital/fiber crosspoints of Europe. This addresses the main port strategy, already implemented in seafreight, airfreight, airplane passengers, oil, natural gas, power and fiber.

The dutch state owned power infrastructure company Tennet has already done an Iceland/UK/Holland power cable feasibility study. All HVDC cables has build-in fiber cables for datatransport. Both Tennet and Novec (the daughter company of Tennet that operates the state owned wireless towers and fiber wires) certainly can be a part of this european cross point strategy in both power and data.

The recent Eon network purchase of Tennet in Germany is a proof of this strategy. When Desertec (power from the desert) also will be operational, Holland than will have a head start in international power transmission management.

Furthermore: The datacenters of the world certainly will go ‘up north’, as cooling requires ‘up north’ almost no energy (‘down south’ it takes +70% on the server/storage energy use). For example: Within Google is moving up north the only valid option (as moving off shore on sea is too expensive in terms of insurance). The colder climate of Iceland is certainly an attractive environment for datacenters.

In our ‘Energy for Debt” proposal UK and NL help (both by engineering and capital funding) Iceland to develop its geothermal resources with an HVDC cable network to the european mainland and repayments will be done from-out a surplus and not a deficit. The capital is funded within the business case and will not burden the Icelandic state, but is fully generated by the business case.

In all HVDC (High Voltage Direct Current) cables there is also fiber installed. When the cables are redundant Iceland will become beside energy supplier of Europe, also the datacenter location of the world (as cooling takes all over the world +70% extra energy on top of the servers/storage energy use and in Iceland this could be only 5%. All the big data companies (Google, Yahoo, Microsoft, Sun, IBM, etc) will open datacenters in Iceland.

Helping another nation to get strong again (after a set back) is very much in the european tradition. As we all know Versailles has proven to be not the right answer, and this situation is also much more different to the post WW I situation.

In our perspective is helping the Icelandic economy back on its feet and by this solving also the debt issue the only right way. The other way around is no a workable plan we think.

For more details on our solution basic principles please visit www.openfoun.org. For testimonials concerning our economic concepts please visit www.planck.org.

I know for sure that the ‘Energy for Debt’ option will give Iceland a new perspective in 2010. It will also give Iceland, the UK and Holland more energy diversity and more energy security. A good financial and energy system are the two main builders of prosperity. Something we’ve certainly forgotten in the last years.

Iceland has very valid/crucial items (energy diversity and energy security) to offer to Mainland Europe. That’s the base line of our ‘Energy for Debt’ proposal.

It changes the focus of the discussion to mutual cooperation tone of voice, and give Iceland an economic impulse plus energy independence, plus both the UK and Holland regional originated and clean generated energy.

What’s could be the planning for the ‘Energy for Debt’ solution? First things first. First the Administrations of UK/NL/IS need to agree on the mutual benefits of this ‘Energy for Debt’ possibility. Let’s do that first, it’s simple and has huge impact on normalization of the relations. From there it’s ‘down hill’ in terms of complexity, as irritation then will replaced by mutual interests based cooperation.

The finance of the ‘Energy for Debt’ solution can be done by the US designed Open Finance Model, a model that by its design performs, even in times of a Credit Crunch (what has caused all this turmoil).

If we do it right, this not very pleasant situation for all three nations, can be the birth-ground of the energy transition to a more 21st century suitable model for all three nations. Severe loses than become major advantages. Let’s do it. The model is available.

Gijs B. Graafland

Director Planck Foundation (www.planck.org).

Initiator Open Foundation (www.openfoun.org)

(The above is an external submission and is not the view of IceNews. All external submissions will be considered for publication, subject to editorial discretion.)

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