There are two possibilities the ice was described as "green as emerald". The first is the symbolism attached to "green". In these verses the crew is worried that the albatross's death will cause some kind of disaster, like the lack of winds. But when the day comes, the breeze blows and they begin to feel nature is not angry with them and things are back to normal. The color green is associated with nature and this may be Coleridge's signal that the men feel nature is back to normal. The color green supposedly would have been caused when sea water froze and became ice.
The second explanation is that an account by John Davis of a voyage taken where "Rime of the Ancient Mariner" was set appeared in a book called "The Principal Navigations, Voiages and Discoveries of the English Nation". This book describes the many of the same conditions as Coleridge did, and many critics believe the author used this text as the basis for much of his poem.
Good question. One of our textbooks attributes this to an out of date and inaccurate source-book on the south pole. The book claimed that icebergs were really green. Of course, Coleridge, having never been to the south pole or seen an iceberg took this as truth and it found its way into the poem.
However, as I'm sure you noticed, as the poem progresses the imagery employed takes on a nightmarish or surreal quality. So Coleridge may have also used the imagery of an emerald iceberg to help reinforce this imagery.