With its sparse population and powerful glacial rivers, Iceland has long been identified as an attractive location for large hydro-electric dams. In 1995 the Ministry of Industry and Landsvírkjun, the national power company, set about selling off the country's energy resources and published a brochure entitled “Lowest energy prices!!”  The brochure was sent to some of the most energy intensive industries in the world, advertising cheap energy and “a minimum of environmental red tape.”

The result was an influx of aluminium smelters, expanding one of the most energy intensive industrial processes in the world, powered by multiple large dams as well geothermal plants. The pylons, dams and factories are carving up the country's unspoilt wilderness (the largest in Western Europe), pollute the air and water and heavily increase Iceland’s greenhouse gas emissions (63% on 1990 levels by 2012 if all plans go ahead).

The Kárahnjúkar dam, one of Europe's largest hydro-complexes, was completed in 2006 and flooded 57 square kilometers of stunning highland wilderness, including 60 waterfalls and much of the country’s reindeer breeding grounds. All the energy produced by the dam powers one smelter in the Eastern fishing village of Reyðarfjörður.

On top of the existing three smelters and a steel factory, which already use eight times the domestic energy requirements of Icelanders, another two new smelters are under construction and planning, and all facilities are to be expanded in the coming years. Ultimately, every major glacial river and geothermal hot spot in the country will have to be developed if the plans are carried out.

Groups such as the Iceland Nature Conservation Association and international grassroots campaign Saving Iceland have been fighting the plans for many years. The country’s severe financial economic crisis has increased Icelander's doubt about the upcoming mega-projects, yet the government, aluminium companies and power utility press ahead.