Iceland, the world's leader in geothermal energy is going to work with China, the world's largest energy consumer, to develop geothermal resources in the Middle Kingdom, Bloomberg reports.

Speaking in Abu Dhabi this week, Iceland's President Olafur Grimsson said, "Both Premier Wen Jiaboa and Vice President Xi, who will be the next President of China, declared that on the basis of what China has done with Iceland in the field of geothermal, China now looks at Iceland as its primary partner in the geothermal transformation of China."

In an effort to meet an exponentially growing energy demand, as well as reduce its greenhouse gas emissions, China has become the leading investor in alternative energy technologies.  Last year it attracted US$34.5 billion in investment in clean technologies.

The world's largest emitter, China is dependent on coal-fired power to generate 80% of its power.  Wind, solar, and energy efficient transportation have received the bulk of attention in the country's push to generate 15% of its power from alternative sources by 2020.  But, Chinese officials want to geothermal power to represent a larger amount of this emerging energy portfolio.

President Grimsson says considering Iceland's energy story, there is no better partner for China in its endeavour to develop clean power:  "This is doing in China what we did in Rejkjavik.  When I was a kid, Reykjavik was heated by coal and oi, but now it's entirely clean geothermal.

China Petroleum & Chemical Corporation (NYSE: SNP), the second largest oil and gas producer in the country plans to make geothermal energy one of its main businesses.  Recently, it signed an agreement with Iceland's Geysir Green Energy to jointly develop geothermal power. 

This strategic partnership with China offers Iceland serious economic potential, a welcome sight given the economic woes that have been plaguing the island-nation for over two years.  It appears Iceland has found a hot commodity in its geothermal expertise, as President Grimsson said Iceland is working with India, East Africa, Abu Dhabi, Europe, and the United States to develop geothermal power.