Companies from both countries have already collaborated on projects in China to use geothermal energy for heating. Geothermal power plants provide more than a quarter of Iceland’s energy.

Under a new agreement signed during Chinese premier Wen Jiabao’s visit to the country, Iceland's Orka Energy and Chinese oil company Sinopec will expand geothermal heating in China.

The partners will also look into developing geothermal energy for electricity in high-heat areas such as Tibet.

China