EU acts to conserve gas in 2022 with new regulations

By bne IntelliNews January 18, 2023

In an effort to mitigate the energy crisis in 2022 the EU has introduced a raft of reforms to better preserve its gas supplies, but with the International Energy Agency (IEA) predicting there will be a 30bn cubic metre shortage of gas in 2023 there is more to do to avoid another energy crisis in the next heating crisis.

Russia’s share of gas imports to Europe decreased from around 55% in 2021 to around 20% in 2022 as a whole, as volumes from the Netherlands and Belgium as well as LNG increased.

Things have been made easier after natural gas consumption fell by 14.8% compared to the previous year; milder weather, and EU initiative to reduce demand by 15%, and demand destruction of 10%, equivalent to 50 bcm, of which 10 bcm was due to factory closures, has taken some of the pressure off, but gas and power still remain at historically record levels.

At the same time investment into renewables has continued the move away from combustibles. The share of renewable electricity in electricity consumption rose to almost 47% in 2022, but the IEA says that the rollout of new renewable resources needs to triple to close the gap. Electricity generation from natural gas fell by 13.9% in 2022, partly offset by electricity from renewable energies and coal

Thanks to the EU’s Green Deal, many of the reforms to end Europe’s dependence on gas were well underway, but now they have been accelerated.

Alongside the broader structural changes targeted by the Fit for 55 package and the REPowerEU plan, there have been major additional policy initiatives and infrastructure projects that seek to increase the resilience of European gas markets, strengthen solidarity and limit excessive price spikes. The IEA named the following measures in its recent report “How to Avoid Gas Shortages in Europe in 2023”:

  • Introduction of minimum gas storage obligations: The European Union adopted a new storage regulation in June 2022, according to which storage sites must be filled to at least 80% of their capacity before the winter of 2022-23, and to 90% ahead of all following winter periods. Several EU member states adopted more stringent regulations, aiming for fill targets above 90%. The EU intermediate storage targets for 2023 include a 45-55% fill level for 1 February.
  • A regulation on co-ordinated demand reduction measures for gas: This targets a 15% voluntary reduction in EU gas demand between 1 August 2022 and 31 March 2023, compared with its five-year average. The European Commission has adopted the European Gas Demand Reduction Plan with best practices and guidance for member states to help them reduce gas demand.
  • EU Action Plan to digitalise the energy system: the European Commission presented an Action Plan in October 2022 on the digitalisation of the energy sector, to improve the efficient use of energy resources, facilitate the integration of renewables into the grid, and save costs for EU consumers and energy companies.
  • Energy diplomacy: the European Union intensified its international outreach to strengthen energy partnerships with key natural gas and LNG suppliers. The EU and the United States announced a Joint Task Force in March 2022 to strengthen European energy security. Among other such initiatives, the European Commission signed a memorandum of understanding (MoU) in June 2022 on a Strategic Partnership in the Field of Energy with Azerbaijan. The EU Energy Platform is intended to aid with a coordinated approach.
  • New floating storage regasification units (FSRUs) and the expansion of existing regasification terminals will allow the European Union to have 25% more regasification capacity in 2023 than in 2021
  • Several interconnectors were commissioned ahead of the 2022-23 heating season that facilitated internal gas flows and diversification of gas supply, including between Central and Eastern European countries that have historically had a higher reliance on Russian pipeline gas.

 

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