When a geothermal power plant started spewing hot water into the barren, volcanic landscape of Iceland’s Southern Peninsula in 1976, the locals turned the steaming lake into a health spa that’s now frequented by half a million people a year. Now a small Icelandic company is hoping to turn a profit from waste carbon dioxide from the same plant.

Carbon Recycling International has built an adjacent plant that converts the carbon dioxide into methanol, a fuel and feedstock for making plywood, paints, and other products. It may be the first company anywhere to demonstrate a commercially viable way of making liquid fuel directly from carbon dioxide, something that could help reduce greenhouse gas emissions.

So far, though, the economics work only in rare places that have cheap power and cheap carbon dioxide. For carbon dioxide recycling to make a big dent in greenhouse gas emissions, we’ll need breakthroughs in catalysis and almost certainly a tax on emissions of carbon dioxide to provide an incentive to capture and use it.