Compared to other parts of the world, the European Union is somewhat insulated from the disruption to gas supplies caused by the US-Israeli war against Iran and the virtual closure of the Strait of Hormuz. Though 20 percent of global liquefied natural gas (LNG), mainly from Qatar, passes through the Strait, only 8 percent of EU LNG imports arrive from Qatar. Consequently, unlike the 2022 energy crisis triggered by Russia’s invasion of Ukraine, the EU’s gas supply is not in immediate danger. The report explains how Europe should respond and how it shouldn’t.
Ben McWilliams, an Affiliate Fellow at Bruegel, gives a short summary on LinkedIn:
What not to do
- Indiscriminately cutting prices (or weakening the ETS) is a mistake, weakening incentives to reduce demand and boost alternative investment
- Re-opening Russian gas is a non-starter, even entertaining such short-sightedness is quite frankly incredible.
What to do
- Take advantage of summer season to prepare for winter demand. Storage filling regulation mandates that countries reach 80-90% full storages by November, which they have done each year since 2022. This will imply crowding out some summer demand.
- Reduce vulnerable household demand. Heat pump sales jumped in 2022 but have slowed since, another boost is now needed. The 11 million HPs installed between 2022 and 2025 cut European gas demand by between 30 and 60 TWh each year, or 3 to 6 percent of household gas demand.
The full report is here.
External link
Energy in Demand - Sustainable Energy - Rod Janssen 