Smokestacks in a white wilderness divide Iceland

NORTH OF VATNAJOKULL GLACIER, Iceland: In the depths of winter there is almost nothing to see here but snow and rock: snow across the uneven, unearthly landscape, snow on the mist-shrouded mountains, snow stretching to what looks like the edge of the world.

But tucked into Iceland's central highlands, where the Karahnjukar mountain meets two powerful rivers flowing north from Europe's largest glacier, a nearly completed jigsaw of dams, tunnels and reservoirs has begun to reshape the wilderness.

This is the $3 billion Karahnjukar Hydropower Project, a sprawling enterprise to harness the rivers for electricity that will be used for a single purpose: to fuel a new aluminum smelter owned by Alcoa, the world's largest aluminum company. It has been the focus of the angriest and most divisive battle in recent Icelandic history.

The culmination of years of effort by the center-right government to increase international investment in Iceland, the project has already begun to revitalize Iceland's underpopulated east. But it has also mobilized an angry and growing coalition of people who feel that the authorities have sacrificed Iceland's most precious asset — the pristine land itself — to heavy industry from abroad.

Now, with proposals on the table for three more power-plant-and-aluminum-smelter projects, environmentalists say the chance to protect Iceland's spectacular, and spectacularly fragile, natural beauty is running out.

"If all of these projects get through, then it's a total environmental apocalypse for the Icelandic highlands; they'll have developed every single major glacial river and geothermal field for heavy industry," said Olafur Pall Sigurdsson, one of the organizers of Saving Iceland, a coalition of groups opposing further development.

"It is a very rare nature that we are the guardians of, and we are squandering it," he said.

The basic issue of how to balance development and nature is the same here as in environmental fights everywhere. But the details are always slightly askew in Iceland, which sits temperamentally as well as geographically on its own, floating between Europe and America.

One of the most unspoiled places in the developed world, Iceland is slightly larger than Indiana, with a population of about 300,000 people (Indiana's is 6.3 million). Two-thirds live in the capital, Reykjavik; the rest are spread across 39,800 square miles of volcanic rock, treeless tundra and scrubby plains. Seventy percent of the land is uninhabitable.

Icelanders tend to view their unpredictable environment — carved from volcanoes and ice and full of stunning waterfalls, geysers, fjords and glaciers — with respect and awe. The air is so pure that the Kyoto Protocol gave Iceland the right to increase its greenhouse emissions by 10 percent from 1990 levels.

The pending proposals call for four more dams, as many as eight new geothermal and hydroelectric power plants, two new smelters (one owned by Alcoa) and the expansion of capacity at an existing smelter. If all are built, foreign companies would have the capacity to produce as much as 1.6 million tons of aluminum in Iceland a year.

They are also allowed to pollute: another Kyoto exception gave power-intensive industries that use renewable energy in Iceland the right to emit an extra 1.6 million metric tons of carbon dioxide a year until 2012.

As a whole, the new smelters would require about eight times the amount of electricity currently used for all of Iceland's domestic consumption, putting a huge strain on the country's rivers and thermal fields, said Hjorleifur Guttormsson, who was Iceland's energy and industry minister from 1980 to 1985. Guttormsson, a naturalist, said pollution was another concern: aluminum plants are heavy emitters of sulfur dioxide, hydrogen fluoride and other chemicals.

But Alcoa says it has fitted state-of-the-art pollution controls in its new plant and has already fulfilled its companywide pledge to reduce total greenhouse gas emissions by 25 percent from their 1990 level.

A spokesman for the company, Kevin Lowery, said the new smelter would produce 1.8 metric tons of carbon dioxide for every metric ton of aluminum it produced — a total of 541,000 metric tons a year — compared with 13 metric tons of carbon dioxide per metric ton of aluminum for a coal-fired smelter. "The emissions from this facility will be less than for any other facility of this size elsewhere in the world," he said.

Jon Sigurdsson, minister of industry and commerce, said the proposals were subject to multiple hurdles, including, in some cases, local referendums. The government has always applied rigorous environmental standards to development projects, he said, and is preparing legislation that would set out a master plan for the country, designating which areas are to be protected and which have the potential for development.