What gas strategy for a European energy system in transition?

What gas strategy for a European energy system in transition?

This article in German.

The first test of the success of the Energy Union is the infrastructure choices that are made. This means making hard decisions about what new fossil fuel infrastructure Europe actually needs as its energy transition unfolds. In this new briefing note we argue that a strategy on natural gas is needed to solve damaging contradictions between current gas policy and wider energy and climate policy.

The European Commission is currently developing an ‘EU strategy for Liquefied Natural Gas (LNG) and gas storage’ to be launched in 2016, essentially driven by security of supply concerns and diversification of energy supply routes. To ever have a chance to be successful, the EU’s approach to LNG and gas infrastructure needs to coherently cope with significant challenges.

First, Europe needs to address both security concerns and decarbonisation commitments – While there is some scope for decarbonisation through coal-to-gas switching and use of gas in the transport sector, achieving EU climate objectives will mean limiting the unabated combustion of fossil fuels, including gas. A European gas strategy must include a strategy to manage the planned decline of European gas use.

Secondly, the internal market for gas is not suited to alleviate existing security concerns – It is not credible that existing underutilised capacity in Western Europe is used to alleviate security risks in the East. A European gas strategy must prioritise the case of Member States most vulnerable to interruption in Russian gas supply.

Thirdly, European consumers are exposed to uncertain future gas demand level & prices – Europe’s track record of forecasting gas demand is poor, and in recent years EU gas demand has been considerably overestimated. Misevaluating future gas demand can have significant implications, from diverting scarce public money away from high value projects in other sectors or regions, to creating ‘lock in’ to levels of gas consumptions that are in conflict with EU decarbonisation goals, for which European consumers ultimately bear the risks. A European gas strategy should define safeguards to limit the risk of public money being spent on projects bringing little value to consumers.

Finally, the nature of the energy security challenge facing the EU is changing. Since the beginning of the most recent Ukrainian crisis, the European Commission’s strategy on energy security has focused on diversification of gas supply via a number of import routes, none of which are without problems. The reliability of new trading partners is more important than the number of import routes, and a coherent European gas strategy would focus on reducing Europe’s exposure to an increasingly uncertain and competitive geopolitical landscape.

Keeping these challenges in check would require the European Commission to refocus their efforts away from a strategy solely dedicated to LNG and storage towards defining:

  • A broad gas strategy for Europe which sends a strong political message that the EU is serious about lessening its gas dependency, guides Europe through the necessary decline of unabated gas, places safeguards protecting European consumers against wasting money uneconomic projects;
  • An action plan to specifically target Member States most vulnerable to disruptions in Russian gas supply and help them develop alternatives;
  • A Foreign Policy Strategy to reduce Europe’s exposure to an increasingly uncertain and competitive geopolitical landscape.


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