FOR IMMEDIATE RELEASE
February 21, 2024
European Union does not need expanded oil and gas supply to meet declining energy demand
A new report finds that the EU’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. In the report, On Thin Ice, the authors model how EU’s gas demand matches future supply in various forecasted scenarios.
It concludes that existing oil and gas projects in the EU and its main supplier countries, along with already contracted volumes, are sufficient to meet declining European demand in scenarios aligned with the Paris Agreement’s 1.5C warming limit. The analysis includes a full phase out of imports of Russian oil and gas.
Under the International Energy Agency’s Announced Pledges Scenario, based on government’s delivering their existing long-term climate targets, the report finds:
- Fossil gas demand in Europe falls 32% by 2030. By 2035, supply from existing projects and contracts exceeds demand, with no need for additional LNG or pipeline imports
- Any new contracts risk significant oversupply of gas, with buyers potentially paying for gas that is not required.
- Oil demand declines 30% by 2030. Production from existing fields of top suppliers peaks then declines, meaning new projects are not required.
The report warns that pursuing expanded oil and gas supply risks either oversupply if climate targets are met, or locking in high emission levels if production is instead exported to other countries, which would create the risk of generating stranded assets. Its 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 concludes that producers such as Norway and the US should stop exploration and development of new oil and gas extraction or export projects. The EU should ensure its policies will accelerate the reduction in oil and gas demand needed to achieve its climate targets.
In response, key campaigners and experts said the following:
Silje Lundberg, North Sea Campaign Manager at Oil Change International:
“This report is another piece of evidence of just how incompatible Norway’s current oil and gas policies are with climate goals. The Norwegian government needs to open its eyes for the realities of the EU’s climate policies – they’re on a path to phase out oil and gas. Norway needs to ensure a transition away from oil and gas, and stop all new exploration and expansion plans.”
Murray Worthy, Senior Research Analyst (and author of this report), Zero Carbon Analytics:
“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.”
Silvia Pastorelli, Climate and Energy Campaigner, Greenpeace European Unit:
“To align with Paris Agreement goals, the EU must follow-up its Fit for 55 and REPowerEU legislation with a plan for a managed wind-down of oil and gas consumption and infrastructure, not expansion.”
Paal Frisvold, Greenpeace Norway:
“It is high time the Norwegian government’s oil and gas policies are addressed by the EU policy makers. Norway’s EEA membership allows Oslo to go under the EU policy radar and engage in communicqués directly with the Commission without proper debate and assessment by EU Member States and Parliament. This report will provide a new set of facts and data vital to future EU policies to implement the Green Deal.”
Karoline Andaur, CEO, WWF-Norway:
“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.”
Dave Jones, Global Insights Director, Ember (A London-based energy think tank)
“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.”
Linda Kalcher, Executive Director, Strategic Perspectives (Brussels-based think tank):
“The findings make clear: the EU has initiated their phase out of oil and gas. The decline of European demand is irreversible as consumers and business choose green technologies as they’re getting more affordable. Countries like Norway better see the writings on the wall and shift their export model, investing in new drillings and infrastructure could turn into a major economic risk.”
Jens Mattias Clausen, EU Programme Director, CONCITO (Danish think tank):
“This analysis clearly shows that approving expanded oil and gas supply is incompatible with Europe’s climate targets. Policymakers should resist industry lobbying and focus on deploying renewable energy and energy efficiency solutions. Likewise, investors should think twice before building new infrastructure with the aim to export oil and gas to Europe.The market is quickly dwindling.”
Agathe Bounfour, Oil program lead at Transport&Environment:
“The EU does not need nor will benefit from Norway’s declining oil production. The research shows that Norway is not likely to significantly increase its market share to the EU, even if it goes on with the development of new oil projects.”
Note for Editors:
- The analysis assesses the extent to which any new oil and gas supply is needed to meet future demand in a range of scenarios. For this, the authors have used data on oil and fossil gas production from existing and new fields, forecasts of overall supply to the EU, and data on gas to be supplied to European buyers under long-term contracts from the consultancy Rystad Energy. The analysis includes a complete phase out of imports of Russian pipeline gas and LNG by 2027.
- This supply data was compared against three scenarios: the IEA Stated Policies Scenario (STEPS) based on current policies, the IEA Announced Pledges Scenario (APS) which assumes long-term climate targets will be met, and DNV’s Pathway to Net Zero Scenario (PtNZ).
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