Fall in EU gas demand

Russia’s invasion of Ukraine and the ensuing energy crisis in Europe have brought into sharp focus how the EU’s reliance on imported gas exposes it to significant security and economic risks. Despite this, ongoing discussions show an appetite to lock in further gas dependence through new infrastructure. Recent Ember analysis shows that by 2030 the EU will have increased its LNG import capacity 54% compared to 2023, significantly exceeding demand.

Analysis of the NECPs further emphasises the probability of over-investment in the bloc’s gas infrastructure. The plans reveal that the EU is set to reduce its total gas demand by 7% in 2030 compared with 2023, from 326 billion cubic meters (bcm) to 302 bcm. This extends a decline already in progress, with gas demand falling sharply between 2021 and 2023, from 404 bcm to 326 bcm. With this downward trend expected to continue beyond 2030, the EU’s demand for gas is now in terminal decline.

Recent EU-level initiatives may add momentum to this pathway of decline. The European Commission’s Roadmap towards ending Russian energy imports, published after the NECPs were submitted, sets out a very strong ambition to reduce gas demand in order to strengthen energy security. Achieving this could mean a steeper fall in gas demand by 2030 than the 7% set out in the NECPs.

In order to minimise security risks and maximise competitiveness, the EU will need to reduce fossil fuel consumption across all economic sectors and replace it with domestically generated clean electricity. Doing this will mean electrifying current technologies that are fossil fuel dependent, for example by replacing transportation that uses internal combustion engines with electric vehicles and replacing fossil-consuming heating and cooling with electrically-powered heat pumps. To reap the benefits of this shift, clean power must meet the additional power demand of those new technologies at the same time as displacing fossils’ share in electricity.

One indicator for aligning these two crucial aspects of the energy transition is electricity demand. The EU’s demand for electricity has remained relatively unchanged for the past two decades and in fact underwent a sharp decline between 2021 and 2023. However, 2024 saw a small 1% uptick in demand compared with 2023. Analysis of the NECPs suggests that this rebound is set to continue as EU Member States plan to increase demand in coming years. Of the 17 NECPs that report 2030 electricity demand, all show a demand increase compared with 2023.

The NECPs show that this increase in demand will happen hand-in-hand with a ramp up in electrification. The rate of electrification describes the share of electricity in the final energy demand of all sectors of an economy. The NECPs show that across all Member States, the EU is planning to achieve an electrification rate of 30% by 2030. This is a significant step up from today’s rate of 23% and is quite close to the EU-level indicative 2030 electrification rate target of 32-33% set out in the Action Plan for Affordable Energy.

These indicators taken together show that in the EU, new electricity demand and electrified technologies will increasingly be met by clean power, not gas. This puts the EU on the cusp of the next phase of energy transition: where the focus is not solely on ramping up renewables, but on a whole-system transition of the EU’s economy to be backed by clean power.

Investors, policymakers and industry stakeholders should take note of this trajectory. Falling gas demand is not a temporary blip, but evidence of a wider structural shift towards domestically produced clean electricity and away from fossil fuel imports. Equally, this also highlights the urgency with which Member States need to plan and implement the smart and flexible electricity infrastructure that will facilitate the electrification of the EU’s economy.