Trea­sures of the Ocean

Excellent Conditions for Algae Cultivation in Iceland

Icelanders have long been aware of the possibilities for sustainable harvesting, cultivation, and processing of algae. In recent months, it has become even more evident how many opportunities lie beneath the ocean's surface. Along the country's coastline, there is an abundance of wild algae, and Iceland offers exceptionally favorable conditions for algae cultivation, both on land and in the sea. Despite this, we have only just begun to enter the rapidly expanding global algae market. A recent World Bank report on marine algae predicts significant growth in the sector in the coming years.

Algae are divided into two types: macroalgae, which are seaweeds harvested directly from the ocean, both from algae farming and as wild vegetation, and microalgae, which are cultivated on land. Without our awareness, algae products are being used in numerous products such as food additives, dietary supplements, animal feed, fertilizers, cosmetics, plastics, cardboard, chemicals, and much more. Thus, algae cultivation and farming present enormous opportunities for innovation.

According to the Food and Agriculture Organization of the United Nations (FAO), global algae production is approximately 36 million tons, of which 35 million tons come from cultivation. China is by far the largest producer, along with other Asian countries, while Canada and the United States have been gaining ground. The European Union expects similar production in Europe to grow from 300,000 tons per year to 8 million tons per year by 2030, with the European market value reaching around 9.3 billion euros that same year. A report from the Ministry of Food from February this year indicates that Iceland has significant opportunities to participate in this growth.

World Leaders in the Field

Icelandic companies such as Vaxa Technologies and Algalíf are already world leaders in the cultivation and development of microalgae. The unique conditions in Iceland—geothermal energy, clean and cold seawater, pure water, and green energy—make Iceland an ideal location for such cultivation.

When it comes to cultivating marine algae in the sea, Iceland has lacked a regulatory framework. Looking at our neighboring countries, Norway issued its first experimental licenses for algae cultivation in the sea in 2009, and the Faroe Islands in 2011. However, it appears that improvements will be made in the coming months, which will accelerate the development of the industry in Iceland.

The green fields in the sea around the country contain many millions of tons of unused raw materials in the form of macroalgae, which entrepreneurs in Iceland see great opportunities to utilize sustainably. We have been using marine algae since settlement times, and the Seaweed Processing Plant in Reykhólar has been operating continuously for nearly 40 years, but beyond that, the utilization of marine algae has been minimal. To put things in perspective, exports of wild marine products from Iceland in 2022 were around 1 million tons, and aquaculture products about 40,000 tons. Algae could thus form the third pillar in the utilization of marine products in Iceland. As incredible as it sounds, the world's oceans fulfill less than 3% of the global food needs while covering over 70% of the Earth's surface.

Upon closer examination of algae, it becomes clear that this is an exceptionally environmentally friendly industry that contributes to carbon sequestration, both through the production of the algae themselves and through derivative products. If current trends continue, it is estimated that algae production in Europe will contribute to reducing the carbon footprint by more than 5 million tons and sequestering about 20,000 tons of carbon and 2,000 tons of phosphorus annually. The algae themselves bind more than 20 times the amount of carbon compared to an equivalent land area of forests, and algae cultivation products are well-suited to reduce the carbon footprint of other industries.

Environmentally Friendly Industry

Various innovative companies in algae cultivation and processing have emerged and established themselves, both in the capital area and in rural regions. Conditions for cultivating and processing seaweed appear to be favorable all around the country, making it likely that innovative companies in this sector will emerge widely, with corresponding positive effects on the economy and community life in the area. Arion Bank wants to participate in this development, and increased knowledge within the bank about algae cultivation and processing has opened eyes to the great opportunities in the industry.

Recently, a very successful international conference was held in Reykjavík focusing on algae, algae cultivation, and products made from algae. Participants included many of the world's leading experts in algae cultivation as well as representatives from companies, both domestic and foreign, that live and breathe in this world. The goal of the Arctic Algae conference was certainly to educate but also to assess the status of this growing industry in Iceland. The conference is a significant contribution to policy-making and decision-making regarding next steps in Iceland. At Arion Bank, we are proud to have been a sponsor of the conference, which hopefully has opened the eyes of Icelanders to the fact that a treasure chest of the sea awaits us in the form of macroalgae, and that the country's natural resources put us at the forefront of microalgae cultivation.