The International Energy Agency (IEA) has warned that Europe must take "immediate action" if it is to avoid gas shortages next year.
In a report published on Thursday, the IEA noted that a potential complete cessation in gas deliveries from Russia, coupled with an expected increase in Chinese demand for liquefied natural gas (LNG), could lead to Europe failing to replenish its gas reserves to an adequate level next summer. This, in turn, will almost inevitably lead to severe energy shortages next winter.
"We are sounding the alarm to European governments and the European Commission for next year: we believe that Europe must take measures now to avoid the risks of a lack of gas in 2023-2024," said IEA Director Fatih Birol.
No room for complacency
The IEA also exhorted Europe to avoid complacency about its current energy situation: Europe's gas reserves are currently close to capacity and the continent is also benefiting from lower-than-expected gas prices and unseasonably warm weather.
"The cushion provided by the current mild temperatures, lower gas prices and high storage levels should not lead to overly optimistic predictions about the future," the report noted.
In particular, the report pointed out that Europe is currently "benefitt[ing] from two factors that might not be repeated in 2023".
The first is a relatively bountiful supply of Russian pipeline gas, which is predicted to reach 60 billion cubic metres (bcm) by the end of this year. Yet the IEA warns that this "will in all probability drop to less than half that amount" in 2023, and "could cease completely".
The second is lower Chinese LNG demand, a consequence of the country's strict 'zero-Covid' policy and general economic slowdown. More specifically, the report warns that China's anticipated economic upturn is likely to lead to its capturing 85% of the 20 bcm expected increase in LNG supply next year.
If this happens, the global increase in LNG supply will be insufficient to cover Europe's expected pipeline loss from Russia.
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Given the projected absence of a significant increase in global gas supply, the IEA recommends that Europe implements "accelerated structural changes" in order to suppress demand.
"More rapid deployment of energy efficiency measures, renewables and heat pumps is needed to reduce the risk of a worsening energy and gas crisis," the report noted. "This will require immediate action from governments. A further push to accelerate structural changes and reduce gas consumption is essential not only for Europe’s clean energy transitions but also for its energy security and the wellbeing of its citizens and industries."
The IEA's report comes at a time of soaring inflation and a general cost of living crisis that has already inflicted enormous pain on households and businesses across Europe.
"We are by no means at the end of our sorrows," Birol said.
