Iceland has by far the highest share of renewables in energy supply among OECD countries. After an overview of the country’s energy mix, this chapter examines the environmental impact of the energy sector, including on landscape, water, biodiversity and emissions of greenhouse gases and air pollutants. The energy market and prices, as well as the role of energy-intensive industry, are also discussed. This chapter studies the institutional and policy framework for integrating energy and environment, with a focus on the planning of renewable energy infrastructure. Finally, it reviews the opportunities and obstacles to improve energy efficiency in residential heating, transport and the fishing industry.