Natural gas is a versatile energy source and plays a vital role in Europe's energy mix.
Natural gas is used in a variety of industrial processes and is converted into heat and electricity. In households it is used for heating and cooking.
It is a fossil energy source formed through the slow decomposition of biological matter over millions of years. It is often found in the same places as oil. The gas is odourless, colourless and composed of approximately 90 percent methane.
Gas is an important energy source in the EU
Gas consumption increased in 2015 by approximately 4% compared with 2014, according to the latest estimates from Eurogas. This rise, the first in four years, was mirrored by an increase in liquefied natural gas (LNG) imports highlighting further diversification of supply.
Initial estimates for 2015, published by Eurogas today, suggest that gas consumption in the EU-28 was 4 603.6 terawatt-hours gross calorific value (TWh GCV), equivalent to 426.3 billion cubic metres (bcm) or 356.3 million tonnes of oil equivalent net calorific value (mtoe NCV). The EU is a net importer of natural gas, mainly from Russia, Algeria and Qatar. Europe's largest natural gas producers (excluding Russia) are:
- the Netherlands
- the UK
Large differences between countries
There are large differences in gas consumption between countries in Europe. The main markets are Germany, the UK and Italy (an aggregate 50 per cent of EU gas consumption), followed by the Netherlands, Spain and France.
The Netherlands has the largest gas field in Europe, Slochteren in Groningen, and almost all households (98%) are connected to a complex web of more than 200,000 km gas grid since the 1960s.
In supplying society with energy, a balance must be struck between three key dimensions: competitiveness, security of supply, and the environment and climate. No single energy source is optimal from all dimensions. This energy triangle illustrates the pros and cons of natural gas.
Climate and environment: Combustion of natural gas emits CO2, though to a lesser extent than the combustion of other fossil fuels. Natural gas can thus be a transition fuel in the conversion to a sustainable energy system. The role of natural gas as balancing power will increase as renewable energy sources with fluctuating production – such as solar and wind power – gain significance.
Security of supply: Natural gas allows a high degree of flexibility in electricity generation, enabling it to function as balancing power. Supplies can be somewhat uncertain, and some regions that export natural gas face political instability. The development of unconventional shale gas may serve to decrease these uncertainties. Technological advances will allow a greater amount of natural gas to be extracted with more efficient and inexpensive methods, increasing security of supply.
Competitiveness: Natural gas is a more expensive energy source than other fossil fuels and is subject to significant price variations partly due to the coupling with the oil price. Natural gas will become more competitive as CO2 prices rise.