Four nations in race to be first to go carbon neutral

Iceland, New Zealand, Norway and Costa Rica are all hoping to turn their economies green, but the challenges they face are formidable

It's the race for the greenest of the laurels, the contest for the ultimate ecological accolade. Four countries are competing to be the first of the world's 195 nations to go entirely carbon neutral.

They make a disparate line-up of runners, comprising the world's most northerly and southernmost independent countries, its third largest oil exporter, and a state that long ago dispensed with its army.

The starting pistol was fired last month in Monaco – better known for its gas-guzzling Grand Prix than for such a determined race in the other direction – at the annual meeting of the Governing Council of the United Nations Environment Programme.

Iceland, New Zealand, Norway and Costa Rica formally signed up to go zero carbon, joining the Climate Neutral Network launched at the meeting. Achim Steiner, UNEP's executive director, calls it "an idea whose time has come, driven by the urgent need to address climate change and the abundant economic opportunities emerging for those willing to embrace a transition to a green economy."

He spells out the diverse challenges facing each of the contenders. Norway's main issue, he said, was "emissions from oil and gas", whereas most of New Zealand's pollution came from agriculture. Iceland's "central challenge" was "transport and industry, including fishing", while Costa Rica faced the special circumstances of being a developing country.

In fact one UN member state already claims to have beaten then all. The Vatican announced last September that it was becoming the world's first – but is widely held to have cheated. It said that it was winning the prize by offsetting its entire emissions for 2007 though planting trees to restore an ancient forest in Hungary.

But critics say that the true champion will have to achieve carbon neutrality at home – and point out that the Holy See has failed to count the carbon emitted by its travelling officials, or emissions from its buildings outside the Vatican City.

All the main contenders get much of their energy from renewable sources. Iceland has gone the furthest, already achieving almost complete carbon neutrality in heating buildings and in electricity generation. Its greatest asset is disclosed in the name of its capital city, Reykjavik, which means "bay of smokes", referring to the plumes rising from its hot springs. Such geothermal energy now heats it and much of the rest of the country.

Only 1 per cent of its homes are heated by fossil fuels, and 99 per cent of its electricity is generated by geothermal and hydroelectric power. "But we have not entirely kicked our carbon habit", writes its Environment Minister, Thorunn Sveinbjarnardottir, in the forthcoming issue of UNEP's magazine, Our Planet.

"Our fishing fleets and our cars are still running on fossil fuels. Our car fleet is one of the biggest, per capita, in the world. And Icelanders tend to like big cars, as any visitor to our country will soon notice." The country will give people discounts to buy eco-friendly vehicles and fit fuel cells to fishing boats, aiming to reduce its relatively small national emissions of carbon dioxide by 75 per cent by 2050.

On the other side of the world, New Zealand's Prime Minister, Helen Clark, has already set her country the goal of being the world's first carbon-neutral country. It aims to generate 90 per cent of its energy from renewable sources by 2025, and to halve its transport emissions per head by 2040. But the country has a particular problem with agriculture, which accounts for half its emissions of greenhouse gases.

Norway has set an even more ambitious target, aiming for carbon neutrality by 2030, despite being the world's third largest oil exporter. It already gets 95 per cent of its electricity from hydroelectric power, and heavily taxes cars and fuel: a 4x4 costs four times as much as in the United States. And it is planning to capture and store carbon in old North Sea oil fields. But Frederic Hauge – the head of Bellona, the country's largest environment pressure group – is sceptical. "We are a nice little country of petroholics and that has made us lazy", he says.

On paper at least, the poorest of the four countries is in the lead – Costa Rica plans to reach its goal by 2021. It has just released a plan of action, which relies heavily on planting trees to soak up emissions. Last year it planted five million of them, a world record, and the banana industry – the country's largest exporter – has promised to go carbon neutral.

However, its number of cars has increased more than five-fold in the past 20 years and its air traffic more than seven-fold in just six, making its task far harder.