Fuel Use Forecast

The forecast estimates fuel consumption in Iceland for the period 2008-2050. The consumption is divided into domestic usage as well as that for international transport, and estimated both for several consumption groups and various fuel types. All fossil fuels are imported and oil has by far the largest share of fuel imports. The consumption is much less of coal, gas or alternative fuels such as methane or hydrogen. The forecast estimates the share of fossil fuels that will, over the coming decades, change to different energy sources. The new energy sources are not defined, but they could be e.g. electricity, geothermal, methane, hydrogen and fuel derived from biomass such as plants. The forecast is based on presently available statistics and assumptions regarding population, economic growth, fishing and domestic and international transport.

The Fuel Forecast is produced by the fuel group of the Energy Forecast Committee, which is a venue of cooperation between several of the main companies, institutes and energy organizations of Iceland, including Statistics Iceland, Icelandic Property Registry and the Ministry of Finance.
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In 2007, the domestic consumption of oil (excluding residual oil) was 601 thousand tons and oil sold in Iceland for international transport, including foreign fishing ships, was 228 thousand tons. About 95% of the oil consumption is for fishing and transportation where there is no alternative energy source in common use at present, but other energy sources are expected to be well established in these fields by the end of the forecast period. Automobiles and machinery are the largest consumption group, followed by fishing ships. The largest increase over the last few years has been in the automobile and machinery group.

According to the forecast, domestic consumption will decrease to a minimal degree through 2020, but at the end of the forecast period new energy sources will increase their share significantly with a corresponding decrease in consumption of fossil fuels. A considerable increase in the use of fossil fuels for international transportation is expected, but this is estimated to stay flat for the next two years due to the economic crisis in Iceland and neighbouring countries, then start to increase again with increasing air transport. At the end of the forecast period, fossil fuel consumption is expected to have stopped increasing i.a. due to the availability of new energy sources as well as saturation effects. Near the end of the forecast period, consumption due to international transport is estimated to be larger than domestic consumption.

Two industrial companies, Elkem Iceland at Grundartangi and Iceland Cement in Akranes, consume almost all coal import to Iceland or 164 thousand tons in 2007. Gas consumption in Iceland is relatively little and was about 3 thousand tons in 2007 and is expected to more than double by the end of the forecast period.