SNo matter how full the storage tanks are, the situation could become tricky if Europeans stop paying attention to gas consumption. The Federal Network Agency called on people on Monday to save gas. “The total savings are only 13 percent,” warned President Klaus Müller. 20 percent is required. “If this remains an outlier, we don’t have to worry,” he said. However, it will remain cold for the next few days. It is therefore important “that we don’t let up on our savings efforts and hold out through the whole winter”.
In winter 2023/2024 the situation will look different anyway. Then the EU is threatened with a supply gap of 30 billion cubic meters of gas, as the head of the International Energy Agency (IEA), Fatih Birol, confirmed on Monday in Brussels on the occasion of a new report by the agency on the 2023 supply situation. In view of these figures, EU Commission President Ursula von der Leyen called on the member states to quickly agree on the controversial price cap for gas and thus clear the way for the two blocked laws on joint gas purchasing and the acceleration of the approval procedures for wind and solar power make. EU energy ministers are expected to reach an agreement at a special meeting in Brussels this Tuesday. But it could also be the case that EU leaders will have to deal with it at their summit at the end of the week.
The looming gap is equivalent to around half of the gas the EU needs to replenish its storage in 2023 – and the gap could be even larger. According to the analysis by the IEA, there will only be 30 billion cubic meters if the EU continues its current policy of reducing consumption and diversifying supply. Otherwise 60 billion cubic meters are missing. In its analysis, the IEA assumes that no more gas will flow from Russia to the EU by 2023. This year, despite all the cuts, it was still 60 billion cubic meters. In addition, the IEA expects Chinese demand for liquefied natural gas (LNG) to return to 2021 levels and there will be no mild winter.
Birol therefore called on the Europeans to intensify their efforts to decouple gas supplies from Russia. The EU must accelerate the roll-out of wind and solar energy again. You have to reduce consumption by investing in energy efficiency, for example in the renovation of social housing or the use of LED lamps for street lighting. The EU must promote the installation of heat pumps in order to use less natural gas for heating. In addition, they must use campaigns and price signals to persuade consumers to save more energy. Reducing the room temperature from today’s average of 22 to 21 degrees could save 10 billion cubic meters of gas.
Money for the Repower EU program
Birol does not see much scope to increase gas imports. In 2023, the world would probably only have 20 billion cubic meters more LNG available than this year. China has a right of first refusal for more than half of them. However, there is potential for additional gas supplies if the EU pays countries such as Algeria or Egypt to flare off less gas than before during production.
The head of the Energy Agency put the investments required for these steps at 100 billion euros – 90 percent of which for investments in energy efficiency and the expansion of wind and solar power. But the EU will recoup the money within just two years through lower energy bills. If the EU does not take countermeasures quickly, the gas storage facilities in the EU will be 70 percent empty by the end of 2023, according to the IEA report. This will most likely lead to widespread supply shortages and extreme pressure on February 2024 prices.
Birol described the proposal for a gas price cap as a fundamentally good idea to react to the historically high prices. These are still seven times as high as usual, although the price has fallen sharply since the summer and is now less than 150 euros per megawatt hour. In summer it was up to 350 euros. But a lot depends on how the price cap is designed. Berlin is opposed to a strict price cap because it sees it as a threat to gas supplies.
Von der Leyen reiterated that the EU needed more money for the Repower EU program to decouple from Russian gas and oil. This is also part of the EU’s response to the controversial US subsidy program for green technologies, the Inflation Reduction Act. But she gave no numbers. In the medium term, the EU will then need the sovereignty fund that has already been announced.