Gas infrastructure has become a major focus for the EU. In response to energy security concerns, the European Commission is promoting new gas pipelines and LNG terminals, including through EU funds. Behind these supply-side efforts, however, the realities of EU gas consumption are changing. In a new briefing paper, E3G assesses recent trends in EU gas demand and the systematic overestimation of gas demand in official projections, and highlights implications for EU infrastructure investment and energy security.
In contrast to official projections, EU gas demand is falling and is now 23% below its peak. Demand is falling across all three major sectors: power, industry and residential. 80% of gas demand comes from seven western European nations with strong renewables and efficiency policies in place.
Europe has a poor track record on projecting gas demand
European Commission projections for gas consumption have had to be revised downwards every year since 2003. Despite these recent trends, however, most scenarios used for planning new infrastructure continue to project sharp increases in demand, of 15-50% over the next 20 years.
Inflated gas consumption projections can skew the economic evaluation of new projects.
Gas infrastructure investments made in expectation of rising demand are at risk of becoming stranded assets if the increase in gas demand does not materialise. Public money (including the Connecting Europe Facility and European Fund for Strategic Investment) is at risk of being diverted to uneconomic projects as a result of unrealistic demand projections, leading to higher value projects in other sectors losing out. Overinvestment in gas infrastructure can also create ‘lock in’ to levels of gas consumption that are in conflict with EU decarbonisation goals.
A reality check is needed on EU gas demand and gas infrastructure investment plans.
This briefing highlights the fact that energy efficiency and renewable energy deployment, changes in industrial demand and reduced electricity consumption have led to structural changes in Europe’s gas demand. These changes now need to be fully incorporated into the EU’s approach to energy security and to infrastructure investment.
You can download Europe's Declining Gas Demand (PDF) 4 page short version or download Europe's Declining Gas Demand (PDF) full text 26 page.