As noted by Vísir, the rules include, among other things, changes to the European Emissions Trading System (EU ETS), which would now require airlines to pay for emission allowances in a progressive measure (airlines have, until now, received them mostly for free). “The EU’s intention is that free emission allowances for airlines will decrease by a quarter by 2024 and by half by 2025. They will be completely eliminated after 2026,” Vísir notes.
The Icelandic government has been open about its belief that the rules harm the competitive position of Icelandic airlines and fail to take into account Iceland’s geographical location, which makes its citizens more dependent on air transport than other residents of the mainland.
Source: Iceland’s Free Emissions Allowances Extended Until 2026
They should just use solar electricity to power high speed rail to and from Iceland. That would solve the problem /sarcasm.