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A Viking range (right to left): Hjálmar Árnason, a former member of the parliament and an early supporter of pro-hydrogen legislation; hydrogen pioneer Bragi Árnason; and Icelandic New Energy's Jón Björn Skúlason and Thorsteinn Sigfusson. | Photo by Rob Howard

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Icelandic Hydrogen's dispenser prototype, part of its plan to build small-scale stations able to fill three to four cars per day. | Photo by Rob Howard

Iceland is an anomalous place. First, thanks to the Gulf Stream, it isn't all that icy. That would be Greenland, named by Erik the Red, the inventor of travel marketing. That's not to say Iceland doesn't have weather -- I experienced four seasons in 30 minutes on a visit to the Gullfoss waterfall. There is an elemental war going on here: The clouds blot out every bit of light, then the sun stabs through in displays of horrible beauty; the postcard-perfect mountains look impermeable, but up close, it's clear they've been raked by watery claws of snow and rain; the ubiquitous lava fields wrestle with hummocks of grass and moss.

Depending on your point of view, Iceland was either the last part of Europe to be settled or the first part of North America to see Europeans. It sits on both continents, astride the Mid-Atlantic Ridge, where the earth's plates are gradually pulling apart, making Iceland a bubbling vessel of magma-heated water. Since its settlement by Vikings in AD 874, the country has remained remarkably isolated. The people -- all 300,000 of them, roughly the population of Aurora, Colorado -- are as homogeneous as the weather and the terrain are not. Iceland is Appalachia with different rocks.

Their remoteness, however, seems to have made Icelanders particularly resourceful. Faced with essentially no arable land, they built greenhouse farms to raise cucumbers and tomatoes and even bananas. In the fish-rich but almost uninhabitable north, Icelandic fishermen needed special clothing, which spawned 66° North high-tech outerwear, now sold in 15 countries. Icelanders have even managed to turn their own lack of diversity into an advantage: deCODE Genetics, based in the capital, Reykjavik, has built the largest DNA database of its kind (on a per capita basis) to spot disease-causing mutations and use them to develop biotech drugs.

But Iceland's primary innovation, the one that puts it on the map for some of the world's largest companies, centers on renewable energy. The country has no coal, no petroleum reserves, and no trees. (The Vikings leveled the timber centuries ago, leading to this bit of local wit: "What do you do if you're lost in an Icelandic forest? Stand up.") Rather than continue to import every calorie of fuel, Icelanders figured out how to heat their homes with their copious geothermal supply; before long, they were generating geothermal electricity as well. Today, Iceland imports essentially no coal or oil for heat and power: 70% of its energy is renewable. Reykjavik is at the center of this energy vanguard, filling all of its needs from green sources, either geothermal or hydroelectric.

It is here that Iceland's ambition becomes clear. Having shown that it knows what it takes to move from one fuel source to another, this rocky little outpost is ready for something bigger. "We would like to be the world's laboratory for exploring a carbon-neutral future," says Ingibjörg Sólrún Gísladóttir, the country's foreign minister and former mayor of Reykjavik. Reykjavik Power, the world's largest geothermal heating company, and other local firms already export expertise to markets including China and the United States (which is the world's largest consumer of geothermal power and which hopes to boost that usage exponentially). The next step: Proving that cars can run on something other than gasoline. That they can run, in fact, on hydrogen.

Energy Island

On my trip to Iceland last November, I became the first person in the world to rent a hydrogen-powered car. That I could do so was testament to the sheer force of will exerted over 30 years by people like Bragi Árnason. A now-retired chemist at the University of Iceland, Árnason started arguing back in the 1970s that hydrogen could power cars. People mocked him, but he weathered the barbs and slowly won converts, including a wisecracking energy physicist named Thorsteinn Sigfusson, who took the hydrogen-fuel concept out of the faculty club and into the market. Sigfusson helped found Icelandic New Energy (INE), a consortium of energy companies, and was its chairman until recently, when he was asked to run the Icelandic Innovation Institute.

At 6 feet, 4 inches and weighing something like 300 pounds, Sigfusson is part offensive tackle, part Katie Couric. "I'm a people whisperer," he says. Which means he likes to suggest ideas to others and then get out of their way, letting them make it happen. His affable nature has made him Iceland's unofficial ambassador of energy, and he greets groups interested in the country's green-energy prowess with gigantic air bear hugs. "Welcome, friends," he intones in his friendly baritone. "Welcome to Energy Island." During a serious presentation about energy physics, he'll slip in a playful slide on the diet of an energy society, comparing renewables, oil, and coal to proteins, carbs, and fat.