Europe faces further gas squeeze in 2023, International Energy Agency warns

Europe faces another year of natural gas shortages in 2023, a new report from the International Energy Agency (IEA) warns.

Russia this year squeezed European supplies of natural gas, needed to generate much of the region’s electricity, driving up Irish energy bills to the point where the Government is subsidising all homes in the Republic.

An IEA report published on Monday warns that Europe faces a further shortage next year as Russia continues to limit supplies, while competition grows from China for supplies of liquefied natural gas (LNG), which had helped bolster this winter’s stocks.

Basic demand in Europe is likely to hit 400 billion cubic metres (bcm) next year, but actual supplies will fall 57 bcm short of this total, the IEA estimates.

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Nuclear power, wind, solar and hydro-electricity, along with various energy-efficiency measures, will help plug that gap, according to the agency.

However, that will still leave Europe about 27 bcm short of its total likely requirements for 2023, which include building up stocks to maintain security of natural gas supplies through to spring 2024, the IEA predicts.

EU states, including the Republic, will have to spend about €100 billion next year on measures that will help the union tackle that shortage.

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These include speeding up the rate at which countries develop and connect wind, solar and other green electricity generators to their energy supply systems.

The IEA also advocates accelerating plans to electrify heating for business and homes, cutting their direct dependence on gas.

Similarly, it calls for quicker deployment of energy-efficiency measures that will cut demand for the fuel. The agency agrees that burning coal to generate electricity would also help, but discounts this option as it will add to carbon emissions.

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It calculates that its recommendations will cut gas bills by €30 billion, allowing countries to recoup the €100 billion over two to three years.

However, the IEA acknowledges that EU states will have to continue spending to shield homes and businesses from the worst impact of energy inflation.

The Republic is paying €600 in electricity credits over several months to each household in the State and has a €1.2 billion support scheme in place for business.

The IEA says that EU states are spending €330 billion in total on subsidies meant to offset the impact of this year’s energy price rises on families and employers.

“Such emergency measures may still be required in 2023, but need to be targeted to the most affected viable firms and to vulnerable households,” the report states.