This is Vatnajökull, the largest ice cap in Europe and three times as large as Luxembourg, with something like 30 glaciers descending off its top and at least one active volcano smoldering underneath.
I had seen this ice cap from the air (see picture below) and kept trying to get a glimpse of it on our drive to Höfn, but the weather was just too bad. On our way back to Reykjavik, the sun came out, the clouds disappeared, and there was Vatnajökull, or at least a tiny portion of it.
The Vatnajökull ice cap from the air: