WHAT HAS HAPPENED

Natural gas consumption in OECD Europe fell by an estimated 13% in 2022, its steepest decline in absolute terms in history.

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,

WHY IT HAS HAPPENED

Four factors responsible for the dramatic shift in natural gas consumption in Europe last year:

1. Changes in the energy mix,

• Record additions of solar and wind power helped lower gas demand,

2. Economic Activity

• 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 ​​​​​​​

3. Weather

• 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.

4.Consumer behavior 

• 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

KEY INSIGHTS NOT IN ARTICLE

• Indeed, Energy security has superseded sustainability 
• Gas supplies whether from Russia, USA or Middle-East nevertheless spell dependence 
• The myth that Gas is the Energy Transition fuel is being challenged
• Europe at least is moving away from Fossil fuels; relying mostly on renewables (Solar & wind)
• Even nuclear and coal is preferred over gas now???
• However, Renewables all rely heavily on minerals that need t to excavated/mined elsewhere and require proactive supply chain management
• The switch to  renewables requires an unprecedented ramp-up in Renewables to meet Paris climate requirement. The government policies and securing supply chains are nowhere near the requisite demand

BOTTOMINE

The uncertainty in commodity prices and Energy Transition will remain unless governments takes proactive policy framework for energy companies to make credible energy transition plans and make necessary reduction and break from fossil fuels.