Natural Gas: Sticky European demand challenges ambitious climate targets – Rabobank

Rabobank’s RaboResearch team argues that Europe’s natural gas demand will decline only gradually across heating, industry and power. Structural constraints, slow renewable deployment and affordability issues keep gas central to the energy mix, even as EU and UK climate laws require steep cuts in gas use by 2030 and 2040.

Gas stays central despite climate push

"The European Council on 5 November 2025 agreed to amending the European Climate Law (ECL), introducing a binding 90% greenhouse gas (GHG) emissions reduction target by 2040 compared to 1990 levels, as part of the broader goal of climate neutrality by 2050. Achieving this would require gas demand in the EU to fall to 256 bcm/year by 2030 and 117 bcm/year by 2040 – a 66% drop from 2023 levels, according to research group Zero Carbon Analytics."

"Yet, despite mounting pressure to decarbonize, gas remains central to Europe’s energy mix—especially in power generation, industry, and residential heating. The speed of demand reduction depends on the scalability and affordability of alternatives such as green hydrogen, biomethane, and electrification."

"Europe’s energy transition is being reshaped by geopolitical shocks and ambitious climate and energy independence aspirations, with natural gas remaining a critical yet increasingly complex and sensible part of the mix. Europe’s pathway to reducing natural gas demand faces structural challenges across heating, industry, and power generation."

"Industrial gas demand in Europe is also expected to decline only gradually through 2030, as the lack of readily available low-carbon alternatives (such as biomethane and renewable hydrogen) slows the pace of fuel switching."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)