The paper describes a path towards a future hydrogen energy economy in Iceland. The national energy situation is reviewed as well as production of hydrogen based fuels for transport and fishing sectors in Iceland by combining hydroelectric hydrogen and carbon oxides emission from metals industries. Finally the establishment of The Icelandic Hydrogen and Fuel Cell Company including five phases of a gradual transformation of Iceland into a hydrogen economy in a European research venture is discussed. (C) 2000 International Association for Hydrogen Energy.