Opportunities to get EU industry off natural gas quickly
Authors: Julien Defauw, Benoît Martin, Julien Pestiaux
Context and goal of the study
The European natural gas market has been under tension for the last year in the context of the post-covid economic recovery and, lately, the war in Ukraine. This gave rise to growing awareness about the need for Europe to reduce its dependence on natural gas imports, particularly from Russia. Indeed, the total 155 bcm of natural gas imported from Russia accounted for around 45% of the EU’s gas imports in 2021 and almost 40% of its total gas consumption. While this is a major challenge, it also represents an opportunity to accelerate the climate transition to a more efficient energy system fuelled with cleaner energy. A coherent strategy shouldn’t be focused on shifting to alternative fossil fuel and import sources (i.e. LNG).
The three largest gas consumers in Europe are the energy production, buildings and industry sectors (Fig. 1). The buildings sector has a large reduction potential through insulation and electricification of heating and energy production through the uptake of decarbonized energy sources. With over a third of EU consumption for each, these two sectors represent 70% of natural gas use in Europe and must be addressed. The industrial sectors however are often left aside as they already have gone through waves of energy efficiency improvements. Nonetheless, they represent 27% of natural gas use in Europe and concrete actions can be taken in industry too, with many options that were not attractive at lower fossil fuel prices or with less geopolitical pressure.
Figure 1 Total natural gas consumption (incl. feedstocks) in EU27 by sector [% TWh].
Source: Eurostat, Energy balances
This study aims at (i) identifying hotspots in natural gas consumption through EU industry and (ii) propose a first assessment of the alternatives to natural gas in these industrial sectors. The study assesses the extent to which natural gas use in EU industry could be reduced in the coming 5 years provided that mature technologies or alternatives to natural gas are fully leveraged in the identified industrial hotspots across Europe. Hence, it must be seen as an ambitious scenario of the potential to cut natural gas use in the EU industry. The study did not consider the use of biomethane, which is a clear alternative for natural gas. However, sustainable biomethane production in the EU is limited and will not allow the decarbonisation of all applications. Its use should therefore be channelled towards sectors with uncompressible gas use, such as feedstock for petrochemicals and fertilisers.
Three industrial sectors contribute to two thirds of EU industry’s natural gas demand: chemicals, food and non-metallic minerals (glass & ceramics) (Fig. 2). Implementing all available alternatives in these sectors could help reduce up to 25% of the total EU industry gas consumption in the next 5 years.
Figure 2 Breakdown of 2020 natural gas consumption in EU27 induistry per subsector and subprocesses [TWh]
Source: Climact computation based on Eurostat 2022, Industry Energy balances, 2022 ; and JRC 2017, IDEES database.
The food sector presents the greatest relative potential of gas reduction. Indeed, food processing relies mostly on low-temperature steam demand that can be provided by heat pumps. Medium-temperature heat demand can be met with industrial heat pumps paired with steam recovery via mechanical vapour recompression, or electric boiler. Direct heat demand (oven) and cooling processes are already mainly electric; thus, the remaining gas use could be electrified. Substantial actions towards this level of electrification along with improvements in energy efficiency and management, and waste reduction could lead to a 70% decrease of gas use in the food industry, which represents a 10% decrease of gas use in the whole EU industry.
Gas use in the chemicals sector is harder to abate, but it is by far the largest consumer with 40% of industrial gas use. Hence, some limited measures can have a large impact. Natural gas is mainly used for energy purposes (industrial processing) and feedstock needs (petrochemicals and fertilizers).
Energy savings are possible through larger energy integration in industrial zonings and electrification of low and mid-temperature heat demand. The latter can be partially met with conventional, industrial, and chemical heat pumps. High-temperature heat is harder to electrify but pilot projects can be further supported to demonstrate large scale electric boilers and furnaces. Finally, cooling processes still have room for electrification.
As for feedstocks, the first potential is to reduce the demand for virgin materials(e.g. by increasing the reuse of bottles, decreasing single-use plastic and increasing recycling). Today, less than 30% of plastic waste is collected for recycling in Europe. For the remaining virgin feedstock production, synthetic fuels (from biomass or green hydrogen) are the most credible solution.
By widely implementing these solutions across Europe, in an ambitious scenario the chemical industry could decrease its natural gas use by 25% in the short-term. This adds up to another 10% decrease of the total industry use of gas.
The glass & ceramics industries are somewhat similar as they require high-temperature kilns. Small electric kilns already exist, while large-scale ones are under demonstration, representing high cost and high risks investments. Glass recycling is already reaching high levels (above 70% for containers) but can be increased (glass recycling in construction and automotive can be significantly improved). Glass reuse also shows a great potential but, as for recycling, it requires systemic changes. In ceramics, microwave assistance technology is already available and could play a significant role in short-term gas savings. Energy efficiencies and energy management (mainly in ceramics) along with slow electrification could bring 20% of gas savings in that sector, completing the 25% reduction potential in gas use in total industry.
Figure 3 Ambitious and short-term natural gas reduction potential [TWh] in EU27 industry, focusing on largest gas consumers.
Let’s insist again that the cheapest gas savings are reaped when we avoid its use altogether. Reducing the amount of materials required for the same end-use is the basis of circular economy. It can be declined in various ways : material efficiency (e.g. lighter bricks or bottle, less packaging, more efficient fertilizers), waste reduction/recovery (e.g. less food losses, increased recycling rate, prior easy-to-recycle product design), product reuse/reparation (e.g. bottle reuse, plastic product reparation, long-lasting products), material switch (e.g. wood instead of bricks). These options must be at the centre of a coherent sustainable strategy. However, it requires systemic changes and take time to be implemented. It is why, although they contribute to it, they do not represent the main options to save gas in the EU industry in the short-term.
The cost of such actions has not been included in this study. However, drastic changes such as electric glass furnace require high investments and are at high risks as they are not yet demonstrated at large and commercial scale. In this example, fully electrified furnaces cost around 5M € (on-site) per MW installed (which can produce about 10kt of glass/year). Compared to 36 Mtons of current European production, by a straightforward estimation (that does not consider all technical regards) it would at least ask for 18 bn€ for a fully electrified glass industry.
The geopolitical and sustainability imperatives demand a bold and coherent response to reduce the EU dependence to fossil fuels, and natural gas imports. This study highlights a clear potential for the industry to reduce its natural gas use by 25%. This is ambitious, but the alternative can lead Europe to extreme spikes in fossil prices, further increase uncertainties and accrued energy dependence. While the economics of this scenario have not been addressed in detail, it is clear that investment requirements are a key element of the equation. Furthermore, with high electricity prices, not only investments costs but also operation costs can represent an additional cost compared to the existing gas-based assets.
On the other hand, the dependence to natural gas also presents significant costs given the current tension on gas markets, the evolution of carbon pricing and the potential risks on the security of supply in the context of the war in Ukraine.
Hence, adequate policies and measures need to be put in place in order to support EU industry shifting from natural gas. Europe can also benefit from this shift to become a leader of the low-carbon industry while also meeting the climate targets stated in the Green Deal.
The authors want to thank Tomas Wyns, Researcher at Institute for European Studies, VUB, for his valuable input to this study
 EU action to tackle the issue of plastic waste, European court of auditors, 2020
 I. Papadogeorgos and K.M. Schure (2019), Decarbonisation options for the Dutch container and tableware glass industry. PBL Netherlands Environmental Assessment Agency and ECN part of TNO, The Hague. https://www.pbl.nl/sites/default/files/downloads/pbl-2019-decarbonisation-options-for-the-dutch-container_and_tableware_glass_industry_3720.pdfShare