Iceland has the hottest showers in the world, and for good reason: on an island formed by volcanoes, partially covered by glacier ice and situated just below the Arctic Circle, a little hot water can mean the difference between misery and happiness – or between an icy wasteland and a green paradise.

Icelanders have harnessed the power of their geothermal hot springs to transform their chilly northern country into a world leader in environmentally-friendly, sustainable energy. From engineering wonders like a hot water-driven heating system, to leisure activities like the famous Icelandic geothermal pools, Iceland is one of the most environmentally progressive countries in the world, thanks to the fire and water flowing beneath its surface.

The country of about 323,000 people is both reliant upon -- and at the mercy of -- its volcanoes. Those volcanoes sleep restlessly and wake frequently, reshaping the landscape with fresh lava flows and occasionally interrupting European air travel, as the Eyjafjallajökull volcanic eruption did in 2010.

But people in Iceland aren't afraid of the volcanoes. They're more concerned with the rapid melt of their glacier ice, which continues to retreat even as it helps drive Iceland's power generators. Icelanders have spent centuries studying the temperamental nature of their ice-bound volcanic island, and they've learned to harness its power to transform their country into an eco-friendly oasis in the middle of the north Atlantic Ocean.

Iceland's capital city of Reykjavik is a modern engineering wonder made possible by the geothermal activity beneath it.

About 90 per cent of the buildings in Reykjavik rely on water – not gas – for their heating needs. Hot springs supply thousands of litres of water per day to the homes in Reykjavik, providing a constant and cheap source of heat that never needs to be adjusted.

Iceland environment expert Ari Arnorsson says there's no cost to heat the water, and it's "dirt cheap" to pay for.

"It's already there, it's already hot," Arnorsson said. "We just plug in."

Arnorsson says people in Iceland don't worry about wasting power either. "You would never yell at a child for leaving the lights on," he said.

Iceland's plentiful energy resources are fed by steam power and melting glacier water that drive turbines at several power stations scattered across the country.

The water for the steam comes up from geothermally-heated reservoirs under the island, which are constantly replenished by rain water that filters down through the porous volcanic rock.

As for the glacier water, it drives turbines at several hydroelectric dams in Iceland. The glaciers are melting fast, so there's plenty of water to help Icelanders keep the lights on – and then some.

The Hellisheidi power station is the largest geothermal power plant in Iceland, and a short 30-minute drive east of Reykjavik. It supplies the country's capital city with all of its electricity needs, and funnels much of its excess power into energy-intensive aluminum manufacturers that pay a premium for the much-needed juice.

Hellisheidi sits on an active volcanic hotspot, and gouts of steam boil out of the ground all around it. The power plant harnesses some of that steam from a super-heated underground water reservoir to drive turbines and generate massive amounts of energy.

The whole process is a sustainable, eco-friendly approach to power generation in a country that experiences the effects of global warming first-hand.

Icelanders also never have to worry about the shower heating up. Water harvested from the ground starts out scalding hot, and engineers actually have to put it into holding tanks to cool it down for use in the plumbing system.

These holding tanks sit at the top of Reykjavik's tallest hill and double as architecture for the city's rotating Pearl restaurant – one of the classiest joints in town.

The Pearl's holding tanks normalize water temperature to about 80 degrees Celsius. That's 20 degrees hotter than the European temperature-controlled standard, but Icelanders like their water hot.

Reykjavik's hot-spring pipes also feed its most popular public institution: the community hot baths and pools. Iceland's Blue Lagoon may be its most famous geothermal pool, but it's far from the only one. Reykjavik is dotted with more than 200 public baths where locals routinely gather to soak in the mineral-infused waters pulled up from deep underground.

A faint hint of rotten egg sulphur hangs in the air at these public baths, but it doesn't seem to bother the locals. Many frequent these baths like North Americans frequent coffee shops – to share stories, meet friends and discuss politics.

"You won't believe what I've overheard from people sitting next to me in the hot tub," Arnorsson said.

Iceland's volcanic geology makes it easy to access hot water, but hard for Icelanders to grow their own food.

Locals survive on a primarily meat-based diet of sheep, horse, fish, reindeer and whale, among other animals. But Icelanders also need vegetables and grains, and those are hard to grow in a country where there is little topsoil and less sunlight.

To compensate for this challenge, Icelanders use greenhouses heated by hot water pipes to grow vegetables like tomatoes, cucumbers and cauliflower.

These veggies routinely appear on dinner plates at restaurants like the Pearl, where they're offered in small, finely-chopped quantities and accompanied by generous dashes of rosemary or leafy herbs.

It doesn't take an expert to recognize the way volcanoes shape Iceland's geography. The wilderness just outside Reykjavik has been shaped by thousands of years of volcanic activity. Metre-high mossy crags jut up out of the ground, and there's not a tree in sight. Steam rises from geysers and hot springs in volcanically active areas. Iceland's main highway climbs layer after layer of ancient lava flows as it travels east, weaving its way through low green mountains.

The clouds are low and misty even in the summer, when temperatures hover around 10 degrees Celsius. It rains softly and intermittently through these damp, mild months.

Iceland is one of the most active volcanic hotspots in the world. The country is a giant mass of lava rock formed by the intersection of two tectonic plates in the Atlantic Ocean. Those tectonic plates are floating on top of the Earth's molten magma interior, and magma often boils up when the plates shift to open new gaps in the Earth's crust.

The country experiences a volcanic eruption about once every three years, but some regions shake with small volcanic earthquakes on a regular basis. The greenhouse town of Hveragerdi, for instance, carries the nickname "Shaky Town" for the constant mini-quakes its people endure.

Iceland's most recent volcanic eruption is one that's still happening. The Bardarbunga volcano began to erupt in late August 2014 and it's been going on ever since.

Fortunately, the eruption is in a sparsely-populated region of the country and away from major flight paths.

The last major eruption before Bardarbunga was not so convenient. When the Eyjafjallajökull volcano erupted in 2010, the cloud of ash it generated was enough to snarl air traffic in Europe for nearly a week. The ash cloud stranded more than 10 million passengers, nixed 80 per cent of European air travel and forced more than 104,000 flights to be cancelled. It had an estimated economic impact of about $5 billion in U.S. dollars.

It's no secret the world's glaciers are melting, but that climate change boogeyman is an obvious reality in Iceland.

The island's southernmost glacier is Solheimajökull, a fast-shrinking offshoot of the Myrdalsjökull glacier and a popular destination for tourists.

Daniel, a local guide who leads tours onto the glacier each day, says the melting ice changes his route every single time he ventures out. No two trips are the same because the glacier terrain is changing melting all the time. That's why Daniel and his fellow guides insist every hiker wear spiked crampons – to avoid a potentially disastrous slip down an unknown crevice.

Walking on the glacier in September is like trekking over a dirty snowbank at the end of winter. The air is warmer than freezing, and the snow is dirty white. Melting water pools in small reservoirs and cuts deep, narrow fissures in the snowy landscape. Melted glacier water flows out into rivers that feed the ocean at various points.

Tour guide Daniel keeps his hikers behind him in a tight line, following his path as closely as possible so as not to risk someone wandering onto a weak ledge of ice. Despite the slippery terrain, Daniel is supremely confident in his pathfinding abilities on the glacier.

The only danger that worries him is Katla, the nearby volcano that last erupted in 1918. Daniel carries rations and an inflatable raft in his massive hiking pack, just in case he gets a warning via walkie-talkie that Katla is about to erupt.

Warning could come as soon as 45 minutes before an eruption, he says, and there'd be no time to get back to safety with a group of tourists behind him.

If that ever happened, Daniel says he and his tour group would hop in the raft and hope to survive the resulting tide of melted glacier water.

"It would lift us up and wash us out to sea," he says. "And then, you wait for rescue."

Iceland is cold, dark and wet. The country is sparsely-populated and still recovering from an economic crash that brought it to its knees in 2009. Its culture is strongly rooted in its Viking past, and a significant portion of its population still believes elves and trolls lurk in the wilderness.

But Icelanders have figured one thing out: they know how to live in harmony with their environment. They've transformed a volatile chunk of ice-covered volcanic rock into a geothermal paradise, fuelled by the ice on its surface and the water and fire beneath it.

Hot water heats their homes, warms their greenhouses, powers their lights and soothes their muscles at their spas.

The weather might be cold in Iceland, but the showers are always hot.