Iceland actually has some trees. But in that climate they don't grow very tall.
Also, much of Iceland is a desert of lava, glass, and black sand; some other parts are covered with ice. Not many plants can survive in such a landscape, and those which do are usually not trees.
Deforestation in Iceland predates industrialization.
“Deforestation is a major issue that is highly prevalent throughout the world. The country of Iceland has been hit especially hard by this catastrophe. A nation that once had forests covering 40 percent of its countryside began to lose its tree cover, when the Vikings arrived in the 9th century. By the early 20th century, however, this tree cover was reduced to just 0.5 percent. To this day, the government of Iceland is working towards reviving the lost forests and restoring the land, in order to work towards a more sustainable future. This problem relates to the course of Sustainability for the Common Good because it covers the environmental issue of deforestation as well as the solutions that are being put into play to make the land more sustainable”