In the middle of a lava field on the Southern Peninsula of Iceland, the crew of “The Fires” is setting up the next shot. In the production village, producer Grímar Jónsson and other crew members are taking a coffee and pastry break in an RV near a picture car on a truck bed in what appears to be a crater. A few hundred feet away, as steam from the famous Blue Lagoon rises in the distance, a makeup artist fights the gusting wind to touch up the lead of the volcano romance disaster movie.

The striking setting is par for the course in the island country that has seen a surge in production since its already healthy 25% production rebate was increased two years ago to 35% for qualified larger productions.

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Shooting on location for Icelandic volcano romance “The Fires” Photo: Pat Saperstein

“The Fires,” with a 28-day shoot, is the most recent project to wrap in the small country, which has been attracting some big names including HBO’s “True Detective: Night Country” in 2023, and this year, CBS Studios/BBC historical series “King and Conqueror” and Lasse Hallström’s Nordic noir “The Darkness,” also for CBS Studios.

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“The Fires” has a modest-sized crew — certainly much smaller than its director, up-and-coming helmer Ugla Hauksdóttir oversaw when she was shooting FX’s large-scale series “Alien: Earth” earlier this year. But the commercially targeted project based on a popular and prescient Icelandic novel couldn’t be timelier — the town of Grindavik, near the set, was recently evacuated after the Sundhnúksgígar series of volcanoes erupted. The volcano erupted again just last week, blanketing the nearby Blue Lagoon parking lot in lava.

Jónsson says keeping the crew safe was the biggest challenge when filming near an active volcanic area. “We had a great collaboration with the police, the Icelandic Association for Search, Rescue & Injury Prevention, the Icelandic Coast Guard and the Met Office,” says Jónsson.

Iceland has long been popular for producers seeking jaw-dropping locations like Thorufoss Falls, seen in “Game of Thrones,” or the Vatnajökull glacier, which was the ice planet in “Interstellar.”

Now the increased rebate has brought millions in production dollars — approximately $29 million in the case of “True Detective,” the largest foreign investment in culture ever in the country. The shoot was so high-profile that some local filmmakers began to worry that lawmakers might be prioritizing foreign investment over the homegrown creatives who rely on the government film fund to help finance their films.

Director Baltasar Kormákur, one of the Icelandic film industry’s biggest champions, says that’s not the case. The owner of RVK Studios, which provides a state-of-the-art home to both Icelandic and international productions, says spending by international productions benefits local filmmaking in several ways: “It’s really changed the industry for the better.”

He contends it’s harmful to accuse the rebate of causing wage inflation or monopolizing crews. “Are you saying you should keep people without work so that you can get them cheap? When an industry grows, there’s all kinds of demands, and people want more salaries, and they get better, and that’s healthy. So I’m all for that, I don’t want to keep people down,” Kormakur says.

But, Jónsson, “The Fires” producer, warns that the government needs to continue strong subsidies for local producers, especially as international shoots have caused wages and production costs to go up. “In my view, focused political attention is needed to support domestic production and maintain a healthy balance,” he says.

When Kormakur acquired the property in an industrial district just outside Reykjavik, he decided to build RVK Studios with the kind of amenities he wished he had experienced on other stages. Instead of large, noisy blowers, the soundstages’ vast floors are heated with Iceland’s famous geothermal energy, and Kormakur asked for the stages to include windows, so crew members could see the light of day even when toiling on productions for long shoots.

Kormakur is also developing a nearby neighborhood that will eventually offer apartments, restaurants and shops to create a vibrant production community. After “True Detective” moved its “Alaskan” research facility set off the stages, RVK Studios most recently hosted the historical drama series “King and Conqueror,” starring James Norton as King Harold of Wessex. Kormakur directed the first episode and co-produced the series, which spread out across the studios for more than six months with a wealth of historical costumes and sets.

Iceland Film Commissioner Einar Hansen Tómasson emphasizes that varied locations and screen tourism are just a fraction of the picture. Part of the goal of the increased incentive is to help develop other areas of the business — from VFX to scoring — using local orchestras.

“We want the productions to stay longer in Iceland. We want them to use the infrastructure that the Icelandic producers have taken the risk of investing in,” he says.

Tómasson says it helps the crews gain experience to work with the likes of Clint Eastwood and Christopher Nolan. And he points out that local productions also get the production incentive.

“This is not one versus the other. This is one ecosystem from which we all benefit,” says Tómasson.

“Overall, the system strengthens the Icelandic industry.”

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