As global investors increasingly prioritize ESG, sustainability, and renewable energy within their portfolios, more climate-focused funds have emerged. In 2025, investment in the low-carbon transition reached a record $2.3 trillion in 2025, reflecting an 8% annual increase. In addition, under BloombergNEF’s base Economic Transition Scenario, the average annual investment in the global energy transition is projected to reach $2.9 trillion in the next five years. As a result, exchange-traded funds (ETFs) that focus on renewable energy, climate transition, and sustainable economies are among the fastest-growing in the world.

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Within this trend towards cleaner economies, Iceland has become a pioneer in the global energy transition. Its economy, powered by nearly 100% renewable energy, and climate strategy leadership pave the way for economies turning towards renewables and clean energy. This leadership in renewable energy and Iceland’s stable economic growth are driving global investors to invest in Iceland.

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For investors exploring clean energy investing and ESG ETFs, the GlacierShares Iceland ETF naturally captures the global shift towards carbon neutrality within Iceland’s renewables-driven economy. Iceland’s economy provides a unique blueprint for a low-carbon future and has emerged as a compelling case for carbon-neutral growth and long-term sustainable investing.

 

An Economy Built on Renewables

Iceland’s transition toward renewable energy began in the 1970s following the global oil crisis. As oil prices surged, the country’s heavy dependence on imported fossil fuels became unsustainable economically, which prompted policymakers to seek long-term energy alternatives. Seeking energy independence and economic stability, Iceland invested heavily in its naturally abundant resources, specifically geothermal energy and hydropower.

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By harnessing these domestic energy sources, the country steadily reduced its reliance on fossil fuels and built one of the world’s most renewable-powered energy systems. Today, nearly 100% of Iceland’s electricity and heating are generated from renewables, primarily geothermal and hydropower. This transformation has placed Iceland at the forefront of the global energy transition.

In 2025, the global renewable energy market size was estimated at $1.602 billion and is expected to grow at a CAGR of 14.7% from 2026 to 2033. The worldwide shift to low-carbon energy and increased environmental regulations in developed economies remain major engines for growth in the renewable energy sector. As one of fourteen countries powered almost entirely by renewables, Iceland is positioned ahead of the curve.

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A Path Towards Carbon Neutrality

Not only is Iceland nearly fully powered by renewables, but the country aims to achieve carbon neutrality by 2040 and a 40% reduction in greenhouse gas emissions over the next decade. This goal is anchored in the country’s national climate policy and its commitments under the Paris Agreement. To reach this target, the Icelandic government has implemented a comprehensive Climate Action Plan, which includes more than 150 mitigation measures designed to reduce emissions across all sectors of the economy. These measures focus on transportation, industrials, agriculture, waste management, and fisheries.

 

Transportation is one of the largest contributors to Iceland’s carbon footprint. As a result, electrifying vehicles and reducing fossil fuel consumption in transport are central pillars of the country’s climate strategy. OCED projects that all newly registered passenger vehicles will be electric by 2030, with electric vans, trucks, and buses expected to be electric by 2040.

 

A detailed view of Iceland’s Climate Action Plan and progress can be found here.

 

World Leader in Carbon Capture

While Iceland is a leader in renewable energy, emissions still occur, including some from geothermal power plants and other energy-intensive industries. While these industries rely on renewable energy, they release carbon in the process.

To address this, Iceland invests heavily in carbon capture technologies that capture carbon dioxide from geothermal emissions and permanently store it underground. Iceland is a global leader in carbon capture and storage, hosting the world's largest operational direct air capture plants. These plants are operated by Climeworks and include Orca (2021) and Mammoth (2024). Orca is the first large-scale commercial plant, capable of capturing 4,000 tons of carbon dioxide per year while Mammoth is the current largest direct air capture plant and is designed to capture up to 36,000 tons per year. Powered by geothermal energy, these plants filter carbon dioxide from the atmosphere and use Carbfix technology to permanently mineralize it into rock underground.

These technologies are expected to play a major role in Iceland’s climate strategy and set it apart from other countries chasing carbon neutrality.

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How Gain Access to Iceland’s Economy

Because Iceland already produces nearly all its electricity from renewables, its decarbonization strategy focuses on sectors that are largely responsible for its carbon dioxide emissions, including transportation and industrials. As investors seek alternatives to ETFs dominated by fossil fuels, the Iceland ETF poses a natural alternative. The GlacierShares Iceland ETF provides access to an economy that is pioneering the global energy transition. Through Iceland’s renewable energy and decarbonization, Iceland is positioning itself as one of the world’s leading examples of a small economy transitioning toward full carbon neutrality.