Europe’s energy future

European gas demand will not increase greatly during the 2013–2030 period.

But, the requirement for gas imports will increase.

Europe will only be able to replace around half of the decline in conventional gas with unconventional/renewable production until the second half of the 2020s.

It remains unclear exactly how fast coal will be displaced, especially in the power sector where some countries are still building new coal-fired stations. Europe’s gas demand could be lower than expected if it remains expensive on a relative basis (Henderson & Mitrova, p. 45).

Europe’s energy mix

Oil, natural gas, and coal constitute the dominant fuels in Europe’s energy mix. In 2009, coal accounted for 17 percent of Europe’s total primary energy demand, oil accounted for 35 percent, and gas for 25 percent. Nuclear made up 14 percent and renewables 9 percent of primary energy use in Europe.

Rise in import dependence

Europe is crucially relying on energy imports to satisfy its needs. In 2009, the EU imported more than half of its energy from non-EU countries. This number has increased in recent years, rising from less than 40 percent of gross energy use in 1980 to 55 percent at present. If the present trends continue, European import dependence is likely to steeply increase in the near future. a function of policies aimed at reducing carbon-intensive fuels such as coal with comparably less carbon-heavy fuels such as gas, but also due to declining domestic production, notably in the North Sea.

Decline in indigenous conventional gas production

Two countries represented 70 percent of the indigenous production in 2013 – Norway: 109 bcm and the Netherlands: 86 bcm. projections from Norway’s Ministry of Petroleum show gas sales in the range of 100–125 bcm in 2020, and 75–115 bcm in 2025. Total production peaked in 2010 and since then has declined marginally. Production from the UK continental shelf (UKCS) is still significant, at about 38 bcm, but it only represents about half of the national needs (Dickel 2014, p. 13).

[Indigenous conventional gas production in 2013-2030] (BCM)

*Source: Ralf Dickel et. al., p. 14.

Prospects for unconventional gas supply

Recoverable shale gas reserves are estimated to be 16 trillion cubic meters (tcm), far above tight gas at 3 tcm, and coal bed methane at 2 tcm. The most advanced market is Poland. The next most advanced country is the UK. Despite high expectations for shale gas production, it is unlikely that this will significantly change the supply landscape until 2030 (Dickel, p. 14).

Future of nuclear power and renewables

The question of nuclear power in Europe is creating significant debate, with countries such as Germany, Italy and Belgium seemingly committed to removing nuclear from their energy mix, while others such as France and the UK seem equally ready to maintain or expand their use of nuclear as a means to reducing carbon emissions. Renewable energy as a source of clean fuel in the power sector is becoming increasingly competitive with fossil fuels. Solar power and onshore wind in particular are approaching grid parity (Henderson & Mitrova, p. 46).

References:

• Ralf Dickel et. al., “Reducing European Dependence on Russian Gas: Distinguishing Natural Gas Security from Geopolitics,” Oxford Institute for Energy Studies, OIES Paper, No. 95, October 2014.
• James Henderson and Tatiana Mitrova, “The Political and Commercial Dynamics of Russia’s Gas Export Strategy,” Oxford Institute for Energy Studies, OIES Paper, No. 102, September 2015.