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European Natural Gas through the 2020s: the Decade of Extremes, Contradictions and Continuing Uncertainties

Author

Listed:
  • Yaroslav Melekh

    (UCL Institute of Sustainable Resources)

  • James Dixon

    (UCL Institute of Sustainable Resources)

  • Katrina Salmon

    (UCL Institute of Sustainable Resources)

  • Michael Grubb

    (UCL Institute of Sustainable Resources)

Abstract

The European gas system has entered a structurally volatile phase defined by post energy crisis overbuild, dislocated demand trajectories, and a decoupling mandate under REPowerEU. This paper interrogates the contradictions between fossil lock-in through LNG import capacity and overcontracting, and policy-driven demand reduction. The EU’s pivot to flexible LNG procurement exposes pricing to global volatility, while decarbonisation hinges on electrification, demand-side retrofits and hydrogen feasibility—each encumbered by cost, infrastructure lag, and political friction. We assess Europe's gas outlook through the decade's residual volatility, policy ambivalence, and the emerging global LNG oversupply regime — a clash with geopolitical energy security imperatives, domestic backlashes against capital-intensive green technologies and market inertia. We argue that Europe’s energy system now operates in a zone of structural ambiguity—where security, sovereignty, economy and climate ambition remain deeply entangled, but as yet far from operationally aligned.

Suggested Citation

  • Yaroslav Melekh & James Dixon & Katrina Salmon & Michael Grubb, 2025. "European Natural Gas through the 2020s: the Decade of Extremes, Contradictions and Continuing Uncertainties," Working Papers Series inetwp233, Institute for New Economic Thinking.
  • Handle: RePEc:thk:wpaper:inetwp233
    DOI: 10.36687/inetwp233
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    File URL: https://doi.org/10.36687/inetwp233
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    More about this item

    Keywords

    Natural gas trade; LNG; European energy scenarios; European energy security; RePowerEU;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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