The Silicon Valley of sustainability: Iceland as a model for Arctic development

By Arctic Studios March 11, 2025

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(David Phan)

Collaboration with Arion Bank

The Arctic region, with its pristine wilderness and unique climate, is emerging as a model for sustainable innovation. As global attention shifts to the urgent need for climate action, the countries of the Far North are uniquely positioned to lead in the development of green technologies, renewable energy, and sustainable practices. By capitalizing on its abundant natural resources, innovative governance, and strong financial know-how, the Arctic nations are poised to become the “Silicon Valley of Sustainability.”

Iceland: A Beacon of Sustainable Development

Among Arctic nations, Iceland stands apart for its track record of success in sustainable development. Known for its stunning landscapes and commitment to environmental stewardship, the country is already harnessing its abundant geothermal and hydroelectric energy resources to achieve nearly 100% renewable electricity production. This accomplishment positions Iceland as a leader in sustainable energy and provides a blueprint for other Arctic nations to follow.

Iceland’s approach to sustainability goes beyond energy production. The nation has invested in research and development, fostering innovation in rapidly growing sectors such as green technology, sustainable fisheries, and eco-tourism. By integrating sustainability into its national policies and collaborating with international partners, Iceland demonstrates how Arctic nations can balance economic growth with environmental protection.

Case Studies Highlighting Arctic Innovation

1. Data Centers Powered by Renewable Energy

Iceland’s cold climate and renewable energy infrastructure have attracted global tech companies to establish data centers in the country. These facilities benefit from natural cooling and are powered by geothermal and hydroelectric energy, significantly reducing their carbon footprint.

Verne Global, a leading data center provider recently acquired by Ardian, a world-leading private investment house with expertise across the private equity, real assets, and credit spectrum. leverages Iceland’s renewable energy resources to offer sustainable and cost-effective solutions for data storage and processing.

Verne recently deployed a new high-performance computing (HPC) cluster in Iceland for open-source computational fluid dynamics (CFD) software provider ENGYS and OCF.

CFD is vital to optimize engineering design in industries ranging from automotive companies like Formula One to construction, aerospace, and academia. This complex technology takes a lot of energy to run and comes at a carbon cost.

Iceland’s access to 100% renewable energy resources feeds the country’s famously stable grid, meaning collocating here is reliable and cost-effective. Access to 100% renewable hydroelectric and geothermal energy as well as free air cooling due to the temperate climate in Iceland means that compute runs at a vastly reduced carbon cost.

This model can be replicated across the Arctic, where similar climatic and energy advantages exist. By establishing renewable-powered data centers, Arctic nations can contribute to the global tech industry while minimizing environmental impacts.

2. Arctic Fisheries and Sustainable Practices

The Arctic Ocean is home to some of the world’s most abundant fisheries living in one of the most pristine ocean environments around the globe. Iceland has implemented rigorous policies to ensure the sustainability of its fishing industry, including quota systems and advanced monitoring technologies. These measures have helped maintain fish populations and generated one of the most efficient and innovative seafood industries in the world.

Land-based fish farming in the country is led by companies such as Iceland’s Samherji, GeoSalmo, and First Water, which is developing a state-of-the-art land-based Atlantic salmon farming facility in Þorlákshöfn, located 45 km from Reykjavík and 94 km from Keflavík International Airport. The project will be executed in six phases, with the first phase currently under construction. Each phase is designed to sustainably produce 8,300 tons of head-on gutted (HOG) salmon annually.

First Water’s land-based salmon farming project in Þorlákshöfn, Iceland, designed to set new standards in sustainable aquaculture.

Iceland’s success with offshore and onshore fidhries serves as an example for other Arctic nations facing challenges such as overfishing and climate change. By adopting similar practices and technology, the Arctic region can enhance marine resources for future generations.

3. Energy Innovations: Carbon Capture and Wind

Beyond geothermal and hydroelectric power, Iceland is exploring innovative renewable energy solutions such as hydrogen production, carbon capture technologies, and wind.

The CarbFix project has developed a method to capture and store carbon dioxide by turning it into solid minerals underground. This technology, already in use, has the potential to significantly reduce greenhouse gas emissions in the atmosphere and is gaining international attention as a scalable solution for combating climate change.

Coda Terminal is a reception and storage facility for carbon dioxide (CO₂). The CarbFix technology will be used for the permanent mineralization of CO₂, which will be transported to Iceland with specially designed ships. Coda Terminal can dispose of CO₂ that is captured from domestic heavy industry operations and directly from the atmosphere with air suction devices.

Also, this past August, Iceland granted its first wind farm permit, with the Icelandic Energy Authority approving Landsvirkjun’s plan for Búrfellslund, where 30 turbines will be built, according to the online news site Vísir.

Landsvirkjun, which has been granted a license to produce 120 megawatts of electricity at Búrfellslund, equivalent to a third of the capital area’s current consumption, will determine the recipients of this energy once production begins, according to the report.

4. Ecotourism in the Arctic

Tourism in the Arctic is on the rise, driven by travelers seeking unique experiences in remote and pristine environments. Iceland has embraced ecotourism by promoting sustainable practices and educating visitors about the region’s fragile ecosystems. Initiatives such as guided glacier hikes, geothermal spas, and wildlife tours showcase Iceland’s natural beauty while emphasizing the importance of conservation.

Iceland’s Arctic Adventures won official recognition as a sustainable tour company by working in harmony with nature, local communities and the people living in them. The company, which has been operating for more than four decades, seeks to purchase local goods where possible, to reduce long-distance procurement and to abolish the use of goods made by companies who fail to recognize environmental guidelines. Arctic Adventures also undertakes voluntary work with local communities and landowners in the areas where tours are operated.

Sustainability-Focused Travel Itineraries

Itineraries can be designed with a focus on sustainability:
Use of Electric Vehicles and/or public transportation to minimize the carbon footprint;
Locally sourced food experiences featuring seasonal and sustainable ingredients;
Visits to natural and historical sites that emphasize the region’s commitment to conservation; and
Stays in eco-friendly, green-certified accommodations.

By prioritizing sustainable tourism, other Arctic nations can follow Iceland’s example in creating economic opportunities while preserving their natural heritage. Collaboration among Arctic countries can further enhance these efforts, ensuring that tourism development benefits local communities and protects the environment.

5. Iceland’s First ‘Unicorn’

Kerecis Iceland, founded by visionary entrepreneur Guðmundur Fentram, has revolutionized wound care through its innovative use of cod skin-based medical products, particularly Kerecis Omega3, which accelerates healing and prevents amputations.

Fentram, inspired by the challenges faced by diabetic and obese patients, leveraged Iceland’s natural resources and pioneered this groundbreaking approach, securing FDA approval in 2014. The company’s strategic focus on market knowledge, direct distribution, and regulatory navigation played a crucial role in its success.

In 2023, Kerecis was acquired by Danish medical device company Coloplast for $1.3 billion, making it Iceland’s first “Unicorn” (a tech startup with a valuation of more than $1 billion) and marking a historic milestone ensuring the company’s legacy of sustainability and innovation continues to thrive on a global scale.

Challenges and Opportunities for the Arctic

While the Arctic holds immense potential as a center for sustainability, the region also faces significant challenges. Climate change is altering ecosystems, threatening biodiversity, and impacting traditional ways of life for Indigenous communities. Additionally, the high costs of infrastructure development and limited access to resources pose barriers to progress.

Despite these challenges, the Arctic’s unique characteristics also present opportunities for innovation. The region’s abundant renewable energy resources, coupled with advancements in technology, provide a foundation for sustainable development. Collaboration among Arctic nations, international organizations, and private sector partners is crucial to unlocking this
potential.

A Vision for the Arctic’s Future

To realize the vision of the Arctic as the Silicon Valley of Sustainability, a comprehensive and collaborative approach is needed. Key steps include:

Investing in Research and Development: Arctic nations should prioritize funding for research on renewable energy, sustainable practices, and climate adaptation. Partnerships with universities and research institutions can drive innovation and knowledge sharing.
Promoting Indigenous Knowledge: Indigenous communities in the Arctic have long practiced sustainable living. Integrating their knowledge and perspectives into policy and development initiatives can enhance sustainability efforts and ensure cultural preservation.
Strengthening Regional Cooperation: Arctic nations should work together to address common challenges.
Encouraging Private Sector Engagement: Governments can incentivize private sector investment in sustainable industries.
Implementing Sustainable Infrastructure: Developing infrastructure that minimizes environmental impacts.

The Arctic’s transformation into the “Silicon Valley of Sustainability” is not just an aspiration but is seen by many as a necessity in the face of global climate challenges. Iceland’s success in leveraging renewable energy, sustainable practices, and innovation serves as a guiding example for the region. As the Arctic continues to evolve, it offers a unique opportunity to redefine what it means to balance economic growth with environmental stewardship. By following Iceland’s lead and fostering innovation, the Arctic can become a global beacon of sustainability.

Arion Bank: Financing the Sustainability Revolution

Arion Bank has emerged as a key player in financing sustainable development, both in Iceland and beyond. Through strategic investments and innovative financial products, the bank is enabling businesses and communities to transition toward greener solutions.

By continuing to invest in green solutions and working alongside policymakers and businesses, Arion Bank is committed to ensuring that Iceland—and the broader Arctic region—remains a global leader in sustainability for generations to come.