IEA calls for coordinated action across Europe to prevent major gas-supply shortfall

International Energy Agency (IEA) executive director Fatih Birol has proposed five steps that need to be taken if the European Union (EU) is to avoid a 12-billion cu m shortfall in natural gas supplies over the course of the coming winter. Birol made his recommendations in a July 18, 2022, commentary published by IEA.

Birol emphasized that available additional supplies will be insufficient to close the anticipated gap in supplies from Russia and that Europe must reduce its current gas consumption and store the saved gas. He noted that high prices have already led to some consumption decline but that more was required.  

According to the commentary, available supplies would be insufficient even if gas flows through the Nord Stream pipeline resume at the same levels in place before maintenance on it began, and “even if gas supplies from Norway and Azerbaijan flow at maximum capacity, if deliveries from North Africa stay close to last year’s levels, if domestic gas production in Europe continues to follow recent trends, and if inflows of LNG increase at a similar record rate” as first-half 2022.

Birol proposed five concrete steps to be taken immediately to avoid “much more drastic cuts and curtailments” in the future:

• Introduce auction platforms to incentivize EU industrial gas users to reduce demand. Industrial gas consumers can offer part of their contracted gas supply as demand reduction products for compensation, which can lead to efficiency gains and a competitive bidding process.
• Minimize gas use in the power sector. This can be done by temporarily increasing coal and oil-fired generation while accelerating deployment of low-carbon sources, including nuclear power where it is politically acceptable and technically feasible.
• Enhance coordination among gas and electricity operators across Europe, including on peak-shaving mechanisms. This can help reduce the impact of lower gas use on power systems. It should include strict cooperation on the operation of thermal power plants at national and European levels.
• Bring down household electricity demand by setting cooling standards and controls. Government and public buildings should take the lead on this to set an example while campaigns should encourage behavioral changes among consumers, Birol said.
• Harmonize emergency planning across the EU at the national and European level. This should cover measures for supply curtailments and solidarity mechanisms. To get through the current crisis, the EU needs unified action.

“If these types of measures are not implemented now,” Birol cautioned, “Europe will be in an extremely vulnerable position.”