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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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IEA: Europe’s Gas Demand Set To Decline In Favor Of Coal

Europe’s natural gas demand is set to decline this year as buyers begin to favor lower-priced coal, the International Energy Agency said in the latest edition of its quarterly gas market report.

According to the IEA, gas demand on the continent is seen declining by 4 percent this year, after rising by more than 5 percent last year. The decline will be partially driven by a reduction in gas burning in the power sector, the agency said, which is seen declining by 6 percent this year.

The decline will be partially compensated by renewables, according to the IEA, which should see a “strong expansion” this year, but also “high gas prices continue to weigh on its competitiveness vis-à-vis coal-fired generation.”

“Exceptionally high gas – and by extension electricity – prices have hurt consumers, utilities and wholesalers, and are likely to have a lasting negative impact beyond the current seasonal tension,” the agency warned, adding that the adverse effects of the gas shortage were not limited to Europe.

The report noted that developing markets were particularly vulnerable to energy supply shocks that they were already experiencing. On top of this, there was also concern for food supply due to tighter availability of gas-based fertilizers, the International Energy Agency also said.

Global gas supply is seen remaining tight, the IEA also said, citing production outages, project delays, and a slow pace of new investment decisions on new production capacity.

“In the absence of strong policies to curb demand growth to achieve net zero emission targets, gas supply adequacy could emerge as a concern for the medium term on a combination of recent LNG project delays, the relatively small number of new LNG final investment decisions (FIDs) in 2020-2021 and a structural decline in upstream spending since the early 2010s,” the IEA said in the report.

By Irina Slav for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on January 31 2022 said:
    Coal is enjoying a renaissance thanks to hasty EU policies to accelerate energy transition at the expense of fossil fuels and the hapless IEA’s net-zero emissions 2050 roadmap calling for immediate halt to investment in oil and gas. These policies along with a mismanagement of the gas market by the EU and ineptitude in filling its gas storage ahead of winter led to skyrocketing gas prices and a shift from gas to coal.

    The gas-to-coal shift hasn’t only retarded the drive towards net-zero emissions by many years but also exposed the inability of renewables to satisfy the EU’s energy and electricity demand because of their intermittent nature.

    Yet, governments, environmental activists, divestment campaigners, the IEA and investment banks continue to call for the ditching oil and gas in order to achieve net-zero emissions by 2050 which will never be achieved by 2050 or ever. Their dogma and fanaticism have blinded them to the fact that without fossil fuels the world will starve.

    Fertilizers are a by-product of oil. Shortages of fertilizers and rising prices are happening at a very inopportune time when the world is already facing high food prices and even food shortages in some part of the world thus exacerbating hunger which is already acute in some parts of the world.

    And the most shameful thing is that environmental activists and their collaborators are calling for an expenditure of $275 trillion between 2021 and 2050, or $9.2 trillion in annual average spending on energy transition when such mind-boggling sums could be more efficiently and charitably used to provide fertilizers, COVID jabs, electricity and clean water to people who could never have them on their own.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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