Iceland Has Power To Burn

The tiny island nation can teach the United States valuable lessons about energy policy.

By Daniel Gross
Posted Wednesday, April 9, 2008, at 2:57 PM ET

The Blue Lagoon, Iceland's largest tourist destination, is a 100-degree melting pot. On a cold March day, as driving rain blows wisps of vapor from the nearby geothermal power plant, a group of Brazilian twentysomethings, a Japanese couple, and teens from St. Paul's, a New Hampshire prep school, wade through the milky water and coat themselves in silica mud.

The lagoon was created entirely by accident. In the 1970s, the Svartsengi geothermal plant began to discharge water rich in salt, algae, and silica, which turned into a kind of caulk. A pool formed in the featureless lava fields in western Iceland, and when locals jumped in, they found that it cleared up symptoms of skin ailments like psoriasis. Today, the Blue Lagoon sports a 15-room clinic and a spa that attracts 407,000 tourists annually. With revenue of $21 million and 200 workers, the Blue Lagoon is an Icelandic blue chip. "We are one of the 300 largest enterprises in Iceland," says Anna Sverrisdottir, managing director of the Blue Lagoon.