No need for additional oil and gas supply to meet dwindling EU demand
The European Union’s demand for gas is set to decline significantly in line with climate targets, eliminating the need to expand supply from new fields or infrastructure, including from its close neighbour Norway, according to the report “On Thin Ice” by Zero Carbon Analytics together with Greenpeace, Oil Change International, Transport & Environment and WWF Norway.
Existing oil and gas projects in the EU and its main supplier countries, along with existing contracts, are sufficient to meet declining European demand as long as the EU delivers on its long-term climate targets. The analysis includes a full phase out of imports of Russian oil and gas.
Key findings:
- Under the IEA’s announced pledges scenario (APS), the EU’s gas demand falls 32% by 2030. By 2035, supply from existing projects and contracts exceeds demand, with no need for any additional LNG or pipeline imports.
- Oil demand drops 30% by 2030, declining more rapidly than supply from current projects, making new projects redundant.
These findings challenge arguments that increasing oil and gas development and exploration is necessary to meet EU demand during the transition away from Russian exports.
The report warns that pursuing expanded oil and gas supply risks:
- Oversupply to the EU if climate targets are met, with buyers potentially required to pay for gas they do not need;
- Locking in high emission levels if new production is instead exported to other countries; or,
- Generating stranded assets in producer countries such as Norway.
It concludes that the development of new oil and gas extraction or export projects for the European market in producer countries, such as Norway and the US, are unnecessary. To accelerate the reduction in oil and gas demand needed to achieve its climate targets, the EU will need to implement further policy changes.
Quotes
“The EU’s decision to phase out Russian fossil fuels has prompted oil and gas producers to rush to expand supply. Our analysis shows this is not needed – the EU is heading to net zero emissions, its oil and gas demand is in structural decline and doesn’t require any new production.”
Murray Worthy, Senior Research Analyst, Zero Carbon Analytics
“Europe is building wind and solar power not only to reduce coal and gas use in the power sector, but also to replace gas in heating and oil in transport. Since 2021, over 3 million electric cars and 3 million heat pumps have been sold in the EU. And in the power sector, even with good progress on the EU’s coal phaseout, gas generation has fallen for four years in a row; in 2023, wind generated more electricity than gas for the first time. Wind and solar are attacking gas and oil demand from every angle.”
Dave Jones, Global Insights Director, Ember
“The decline in demand is coming much faster than Norway realises. Drilling for more oil and gas, like the Norwegian government is thirsting for in the vulnerable areas of the Arctic, is simply no longer necessary. Europe’s energy security is more than covered by today’s production, if the EU is to meet its climate targets. This is the beginning of the end of the fossil era. When its largest consumer is now transitioning away from fossil fuels, Norway must adjust its oil and gas policies in line with the demand.”
Karoline Andaur, CEO, WWF-Norway
