Gas is here to stay: EU gas industry looks to the future amid green transition

• Gas industry will live beyond 2040, speakers tell Eurogas conference  
• SEFE chief executive: Hydrogen will play a vital role, probably from 2035 
• EC expects natural gas demand to drop sharply 

Gaseous fuels will play a key role in decarbonising Europe’s energy mix but the industry needs to undergo significant transformations in order to be fit for the future, speakers told the annual Eurogas conference in Brussels on Thursday.  

Against the backdrop of more ambitious climate targets – the European Commission may propose a 90% CO2 reduction target next year – and expected lower demand for fossil fuels, the European gas industry is looking at how it can best position itself for the coming years and decades.  

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Annie Krist, vice president of the Brussels-based gas association Eurogas, told the conference that the transport and buildings sectors were among the hardest to decarbonise and that the gas industry would play a role in achieving this.  

“We are convinced that decarbonisation in both sectors will require the use of gaseous fuels in 2040 and beyond,” she said.  

Meanwhile, Matthew Baldwin, the European Commission’s deputy director general for energy, highlighted that demand for natural gas is expected to shrink. 

“We project gaseous fuels to decrease by somewhere between 54% and 68% between 2020 and 2040,” he said, adding that lower gas use would partially be compensated by biomethane and hydrogen consumption. 

“From a baseline of 400 Bcm in 2019, we expect around 215 Bcm [of natural gas demand] by 2030 and somewhere between 125 Bcm and 185 Bcm by 2040,” he said, noting that projections were subject to plenty of uncertainty. 

“Gas clearly remains a part of our energy mix in the future all the way through to 2049, but clearly also at a reduced level […] and we hope in an increasing clean form.” 

Production of clean hydrogen, though a nascent industry currently, could reach 75-100 mtoe by 2040, Baldwin said. Biomethane is also tipped for a role, and the 35 Bcm goal by 2030 is achievable, he added.  

Gas clearly remains a part of our energy mix in the future all the way through to 2049, but clearly also at a reduced level

“It is very promising that nearly all member states mention biomethane in their draft, updated national energy and climate plans,” Baldwin said, highlighting the potential in countries like France, Italy and Denmark. 

As for voluntary joint gas purchasing and pooling of demand, a mechanism that has become permanent under the EU’s Gas Package, Baldwin said the system had been successful so far and that the EC were looking to expand auctions to cover other commodities including hydrogen and raw materials.  

“Frankly, I was personally quite surprised by the scale of the response we had with sellers putting in around 97 billion cubic meters of possible supply.” 

READ EU companies request 34 Bcm of gas for mid-term delivery on joint purchasing platform 

On 11 April, the EC launched a survey on how joint purchasing can be expanded, potentially also covering long-term gas products. The survey will remain open until 2 May 2024.  

Plenty of work for next Commission 

Tatiana Marquez Uriarte, member of the EU cabinet led by energy commissioner Kadri Simson, highlighted that the incoming European Commission – which takes office towards later this year – should continue to support decarbonisation of hard-to-abate sectors that cannot be electrified. The work had already started with the EC’s Hydrogen Bank and Innovation Fund, she noted. 

“This is just the beginning. And t will be a big task for the next commission I think continuing with the decarbonisation path.” 

Meanwhile, Egbert Laege, CEO of Securing Energy for Europe (SEFE) – formerly Gazprom Germania – said clean hydrogen would start playing a big role in the next decade, probably from about 2035.  

READ EC backs €2.2bn German plan to cut industrial fossil fuel consumption 

“Gas is here to stay. And gas is something that will play a pivotal role for the energy transition,” he said. “There will be a gas industry in the future, well beyond 2040.” 

Rolling out hydrogen networks, partially by repurposing existing gas pipelines, will start now, the CEO said.  

“We are an operator and owner of 25% of the German gas infrastructure. We have some pipelines that can be easily converted [to transport hydrogen] and this is what we are going to do.” 

Laege highlighted that production of green hydrogen was cheaper in the Middle East and South Africa, for example, compared with Europe and that hydrogen from these jurisdictions would start finding its way to the EU from the end of this decade. - AW 

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