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Iceland the first to an Oil-Free Economy?

"Sometimes I have to explain to passengers that it's just water vapour," the driver said of white clouds trailing after his bus along the streets of the capital, Reykjavik. "When it's very cold there's a lot of white steam."

With almost unlimited geothermal energy sizzling beneath its surface, Iceland has an official goal of making the country oil-free by shifting cars, buses, trucks and ships over to hydrogen by about 2050.

By then, in theory, the only oil used on the volcanic North Atlantic island will be in planes visiting Reykjavik airport.

Other countries, such as the United States, where President George W. Bush is a strong backer of hydrogen, face a far tougher path.

About 70 percent of Iceland's energy needs, from home heating to electricity for aluminium smelters, are already met by geothermal or hydro-electric power. Only the transport sector is still hooked on polluting oil and gas.

"When the Vikings came here they were only using renewables, like wind and solar energy," said Bragi Arnason, a professor of chemistry at the University of Iceland who is known as "Professor Hydrogen".

SOLAR ENERGY

"Like the rest of the world they were in a solar energy civilisation," he said. "Now we are watching the first steps towards a hydrogen economy. That could be one step back to the way of the Vikings."

Hydrogen's big drawback is that it is very expensive to produce -- either by splitting water into its components of hydrogen and oxygen or by separating hydrogen from natural gas or methane.

With current technology, burning oil to make hydrogen to run a bus produces more pollution than simply running the bus on oil. Iceland sees itself as a testing ground, where almost unlimited heat from hot springs can be tapped for experiments.

Car makers from Tokyo to Detroit have visited Iceland's hydrogen projects to discuss fuel cell design, Arnason said. The world's first hydrogen filling station, run by Shell, opened in Reykjavik in April 2003.

"People say Iceland is a very small country and can't be copied. But it's a real society, with infrastructure similar to big societies," Arnason said. "We can start in Iceland on a small scale."

Bush, for instance, wants to break reliance on Middle Eastern oil supplies as part of a wider quest for national security with a $1.2 billion scheme to promote hydrogen.

BETTER THAN KYOTO?

Washington says new technologies like hydrogen are a better long-term way to cut pollution and combat global warming than the UN's 128-nation Kyoto protocol.

Bush dismayed even US allies by pulling out of Kyoto in 2001. Kyoto seeks to rein in emissions of heat-trapping gases, mainly released by burning oil and gas in factories, cars and power plants.

Hydrogen bus projects have also been launched in cities including Barcelona, Chicago, Hamburg, London, Madrid, Stockholm, Beijing and Perth, Australia.

The efficiency of the hydrogen fuel cells will decide if the ventures take off into the wider car market.

"The idea is that the buses should be twice as efficient as an internal combustion engine," said Jon Bjorn Skulason, general manager of Icelandic New Energy Ltd, which is in charge of seeking new applications for hydrogen like the bus fleet.

Greater engine efficiency would compensate for the inefficiency of producing hydrogen.

Among other problems, some scientists say the atmosphere might simply become too cloudy in a hydrogen economy, emitting vast amounts of water vapour, perhaps reflecting sunlight back to space or trapping it and warming the globe.

Iceland's buses, made by DaimlerChrysler, cost about 1.25 million euros ($1.67 million) each, or three to four times more than a diesel-powered bus, Skulason said. It takes about 6-10 minutes to refill a hydrogen bus, giving a range of 400 km.

In Reykjavik, hydrogen is produced using technology developed by Norwegian energy and aluminium group Norsk Hydro. Competitors include Canada's Stuart Energy and the German industrial group mg technologies.

The Reykjavik bus driver said diesel and hydrogen buses were similar to drive. "But the hydrogen bus is less noisy. Sitting in a diesel bus for nine hours sometimes gives you a headache. These buses don't have that problem."

REUTERS NEWS SERVICE