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Natural gas continuous to play a key role on the energy market

18.08.2021

Figures of the initiative Zukunft Gas reveal: natural gas will remain one of the most important sources of energy in the sustainable energy mix of tomorrow.

Natural gas plays an important key role in the energy transition in enabling the shift from a purely fossil energy supply to a largely regenerative one. But just exactly how did the energy market in general and the natural gas market in particular develop during the past year? This is the question to which we are devoting ourselves in this blog. To this end we will be analysing the figures contained in the report “Natural gas in Germany. Facts and figures for the year 2020” of the initiative “Zukunft Gas”.

 

The endeavours of the energy transition bore their first fruits in the year 2020 – that at least is the conclusion suggested by the report compiled by “Zukunft Gas”. Thus it is the case, that Germany evidently requires less and less energy and is thus also able to significantly reduce its CO2-emissions. In the past five years alone, primary energy consumption sank by no less than 12 percent, and, indeed by 22 percent compared with the reference year 1990. In this way, in 2020, the climate goal of the Federal Government of a 40 percent reduction was able to be not merely achieved but exceeded.

This success is also to be attributed to the Corona pandemic, the restrictions of which significantly reduced mobility and, as a result, accelerated the existing trend. Thus it was so, that in the period from 2019 to 2020 alone primary energy consumption sank by the record amount of nine percent. But other influential factors beyond the reduction in consumption also played a part. The very shift within the energy mix away from intensely emitting energy sources such as lignite and hard coal towards climate-friendly natural gas and renewable sources saw to it that Germany was able to come one step closer to its announced target of climate neutrality.

Natural gas has an important role to play in the sustainable energy mix of tomorrow. Thus it is so that, in 2020, the share of natural gas in German primary energy consumption increased once more and now amounts to a good 27 percent. In absolute terms, natural gas consumption, in the wake of the Corona pandemic, fell by three percent. The consumption of other sources of energy decreased in part considerably still more significantly, in the case of crude oil by 12 percent or by 18 percent in the case of lignite, for example, whereas natural gas was able to maintain its position as the second most important source of energy on the market.

This success is to be attributed to the manifold application possibilities of natural gas in various sectors. Use of natural gas in industry has indeed fallen slightly. On the other hand, in both the electricity sector and on the heating market, an increase in the use of natural gas in the year 2020 could be recorded. In the case of heat supply, sales increased by 9 percent and in electricity generation by 19 percent. Industry nonetheless remains the major natural gas purchaser in Germany. Next in line are the households, in which this source of energy is most particularly used in the production of heat. Even in the field of traffic, in which sales have been relatively low until now, the role played by gas-based fuels is constantly increasing, particularly in heavy goods traffic and in shipping.

One decisive advantage of natural gas for both households and industrial enterprises alike is to be found in its reliably favourable prices: the Corona pandemic has indeed ensured turbulences on both the oil and gas markets. In the year 2020, however, the gas price for purchasers, in contrast to the price for oil, nonetheless remained at a constant low level. Electricity prices also continued to increase. Thus it is that an increase of ca. 25 percent over the course of the past ten years is to be recorded – a trend that is set to continue as Germany, despite the current cap on the EEG (Renewable Energies Act) reallocation charge, continues to have the highest electricity prices in the world.

But natural gas will not only be of importance for climate protection and the level of prices on the German energy market. The future security of supply for the country will also depend significantly upon the use of this versatile source of energy. Thus it is so that the continuing phasing out of the use of nuclear energy and coal and the constant extension of renewable sources of energy go increasingly hand-in-hand with a strongly fluctuating feed-in. And also in scenarios in which sufficient capacities of renewable energy exist, it will be necessary for adjustable, climate-friendly gas power plants to act as a back-up to secure the supply of electricity. Gas power plants already fulfil an important bridging function in this function today. Gas power plants had been responsible for a total of 16 percent of the electricity supply in 2020 already. Thanks to the low gas price, gas power plants are becoming increasingly profitable in comparison with coal plants. This effects a market-conditioned fuel switch. And it is precisely from that that climate protection benefits as, thanks to the high degree of efficiency of gas power plants, the CO2-emissions connected with electricity generation are reduced by as much as 70 percent.

 

The figures of the report reveal: natural gas, in the phase of economic recovery and growth to be expected after the Corona pandemic, will retain its importance as a source of energy and make its contribution to a socially acceptable transition in energy policy.