The European Union faces a potential shortfall of almost 30 billion cubic metres (bcm) of natural gas in 2023 – but this gap can be closed and the risk of shortages avoided through stronger efforts to improve energy efficiency, deploy renewables, install heat pumps, promote energy savings and increase gas supplies, the International Energy Agency (IEA) says in a new report, entitled How to Avoid Gas Shortages in the European Union in 2023.
The report cautions that 2023 may well prove to be an even sterner test for Europe because Russian supplies could fall further, global supplies of liquified natural gas (LNG) will be tight – especially if Chinese demand for LNG rebounds – and the unseasonably mild temperatures seen at the start of the European winter are not guaranteed to last.
“We have managed to withstand Russia’s energy blackmail. With our REPowerEU plan to reduce demand for Russian gas by two-thirds before the end of the year, with a mobilisation of up to 300 billion euros of investments. The result of all this is that we are safe for this winter,” said European Commission President, Ursula von der Leyen. “So we are now turning our focus to preparing for 2023 and the next winter. For this, Europe needs to step up its efforts in several fields, from international outreach to joint purchasing of gas and scaling up and speeding up renewables and reducing demand.”
Especially reducing natural gas consumption could save around 30 billion euros in 2023 alone (based on current forward gas prices), at the same time reducing the likelihood that governments will again be asked for emergency support to shield consumers from excessively high prices.
“The European Union has made significant progress in reducing reliance on Russian natural gas supplies, but it is not out of the danger zone yet,” said IEA Executive Director Fatih Birol. “Many of the circumstances that allowed EU countries to fill their storage sites ahead of this winter may well not be repeated in 2023. The IEA’s new analysis shows that a stronger push on energy efficiency, renewables, heat pumps and simple energy-saving actions are vital to head off the risk of shortages and further vicious price spikes next year.”
In order to incentivise faster improvements in energy efficiency, the report recommends expanding existing programmes and increasing support measures for home renovations and the adoption of efficient appliances and lighting. To speed up permitting for renewables, the report proposes adding administrative resources and simplifying procedures. It also proposes more financial support for heat pumps and changes to tax laws that penalise electrification.
The IEA estimates that a total investment of around 100 billion euros is required for the additional actions that close the remaining gap of 27 bcm in 2023. Around half of this is for efficiency improvements, primarily building retrofits and 40 per cent is for renewables. The remainder is for heat pump installations, biomethane and projects to cut flaring and methane.