The European Union’s REPowerEU proposal aimed at reducing gas consumption could prevent only €47 billion in the bloc’s energy bill by 2030, according to a new analysis by think-tank Ember and Global Witness on Wednesday.
The EU’s current plan for natural gas usage could lead to an additional €250 billion in the bloc's energy bill by 2030 if the current high prices continue, the analysis found.
The EU's planned gas use levels under the "Fit-for-55" policy package would see at least €42 billion more being spent on gas in 2030 than originally anticipated when calculated with the current market gas price forecasts. However, based on sustained high prices, the additional bill would rise to a staggering €250 billion, it said.
It calculated the cost of EU natural gas imports and production under different scenarios for gas demand, comparing these to the cost forecasts originally prepared by the European Commission.
As the European Commission (EC) tries to reduce the bloc's dependence on Russian gas imports with its REPowerEU strategy, the analysis said it still relies heavily on natural gas with Europe exposed to a rise in its bill of €34 billion at the forecasted 2030 prices, or €203 billion at today's natural gas prices.
The EC assumed fossil gas prices of €19 per megawatt-hour for 2030 in its impact assessment for the Fit-for-55 policy package.
However, gas prices for the future European benchmark Dutch Transfer Facility (TTF) contracts put the 2030 calendar year price 70% higher at €33 per megawatt-hour, while this year's price is even higher at €98 per megawatt-hour.
The TTF prices this year hit record levels with the impact of demand and supply imbalances and the ongoing Russia-Ukraine war.
The EC's Fit-for-55 MIX scenario anticipates 2,825 terawatt-hours of fossil gas electricity in 2030, while current REPowerEU proposals could bring that down to 2,280 terawatt-hours even though more ambitious gas demand reductions are possible.
Renewables and energy savings offer remedy
According to the analysis, the solution is to put energy savings and renewable energy, like wind and solar, at the heart of the EU’s energy strategy.
"The joint NGO energy scenario for 2030 could significantly reduce its 2030 energy spend, with savings of at least €21 billion at the projected price, or a colossal €123 billion at today's price," the analysis said.
"Gambling on fossil gas is a losing bet. High and volatile gas prices are here to stay and will cost the EU dearly. The money is better spent on a transition that can bring stable, clean and affordable energy to all Europeans," Sarah Brown, a senior analyst at Ember, was quoted as saying in the analysis.
The analysis calculated that even minimal shifts in gas prices have huge cost implications as every €1 per megawatt-hour of additional gas use equates to a €3 billion invoice to the EU.
"Decades of over-reliance on fossil gas has made Europe incredibly vulnerable to volatile prices while empowering Putin. Our analysis now shows the Commission has massively underestimated the cost to consumers of continuing to rely on gas," Tara Connolly, a senior gas campaigner at Global Witness, said.
"It needs to go back to the drawing board on its current gas market proposals to ensure they deliver a rapid phase out of gas. Ending the EU's deep gas dependency protects people from price rises, helps us fight the climate crisis and denies Putin the funds for his brutal invasion of Ukraine," she said.
Ember and Global Witness called on the EU to accelerate the clean transition away from all fossil fuels, by ramping up renewables and energy savings.
"This must include increasing the EU's 2030 renewable energy target to at least 50% and energy savings target to 45%," it said in the analysis.