Four Reasons For Europe’s Record-Breaking Drop In Natural Gas Demand

Authored by Tsvetana Paraskova via OilPrice.coim,

According to the IEA’s quarterly gas market report, natural gas consumption in OECD Europe saw its steepest decline in history last year.

The IEA said the estimated 13% drop in demand was driven by changes in the energy mix, economic activity, weather, and consumer behavior.

It remains to be seen how much, if any, of the decline will be permanent.

Europe’s natural gas demand fell by the most on record last year, with the decline equivalent to the gas volumes required to supply more than 40 million homes, the International Energy Agency (IEA) said in a commentary on Tuesday.

 

Natural gas consumption in OECD Europe fell by an estimated 13% in 2022, its steepest decline in absolute terms in history, IEA said in its quarterly gas report at the end of February. Demand in Europe fell amid mild winter weather and demand reduction in industry due to high prices.

Significant changes in the energy mix, economic activity, weather, and consumer behavior were responsible for the dramatic shift in natural gas consumption in Europe last year, IEA’s analysts Peter Zeniewski, Gergely Molnar, and Paul Hugues wrote in the commentary.

Record additions of solar and wind power helped lower gas demand, but record-high gas prices in the summer of 2022 also led to a lot of industry curtailments and lower consumption by industries and businesses, according to the IEA.

Yet, the extent to which the high prices will lead to permanent reductions in demand in gas-intensive industrial sectors remains unclear, the IEA’s analysts say.

In Europe’s industry, gas use fell by 25 bcm, or around 25%, in 2022, due to production curtailment and fuel switching, as the energy-intensive industries were the first to respond to the gas price shocks last year, the IEA said.

In household consumption, “Policy measures – such as renewable support schemes, grants and preferential loans for housing retrofits and heat pump installations, alongside campaigns to encourage behavioural change – all played a part in moderating gas demand,” according to the analysts.

The European Union managed to beat its target for cutting gas demand this winter, Eurostat data showed last month.

According to the data, the EU’s winter demand has so far dropped by 19.3% compared to the five-year average, beating the 15% goal it set for itself to help it survive the winter without gas shortages.