On Tuesday 21 September, the International Energy Agency (IEA) issued a statement to clarify the causes of recent increases in natural gas prices, particularly in Europe.
According to IEA Executive Director Fatih Birol, “recent increases in global natural gas prices are the result of multiple factors, and it is inaccurate and misleading to lay the responsibility at the door of the clean energy transition”.
In a statement similar to those recently made by European Commission Executive Vice-President in charge of the Green Deal Frans Timmermans (see EUROPE 12790/8), he went on to say that “well-managed clean energy transitions are a solution to the issues that we are seeing in gas and electricity markets today – not the cause”.
According to the IEA, the sharp rise in natural gas prices in Europe is due to a combination of strong demand and a lower than expected supply, alongside several weather-related factors.
The agency’s statement mentions, among other things, a particularly cold season in Europe last winter, resulting in an increased need for heating, along with a reduction in available wind power in recent weeks.
European prices also reflect the wider dynamics of the global gas market. The latter was characterised by strong demand for gas in Asia throughout the year and lower than expected liquefied natural gas (LNG) production due to a series of unplanned failures and delays around the world, along with delayed maintenance from 2020.
While 42 MEPs recently called on the Commission to investigate the possible manipulation of gas prices by Russian gas giant Gazprom, the statement further read that “based on the available information, Russia is fulfilling its long-term contracts with European counterparts”.
However, the IEA also said that Russia could do more to increase the availability of gas in Europe, while ensuring that adequate levels of gas are stored “in anticipation of the coming winter heating season”.
This surge in gas prices, combined with rising coal and carbon prices in Europe, has driven European electricity prices to levels not seen for over a decade, exceeding €100 per megawatt hour in many markets. Asked last Friday about this rise in energy prices, the European Commission assured that it was “monitoring the situation in the Member States”. It also singled out the significant increase in demand for natural gas - due to the economic recovery - as the main explanatory factor, while also stressing the stability of the cost of producing electricity from renewable energy sources.
See the IEA press release: https://bit.ly/3knWHmF See the MEPs’ letter: https://bit.ly/3nTdCQ9 (Original version in French by Damien Genicot)