ESG Economist - Gas consumption structurally lower since energy crisis

Electrification with a clean energy mix plays an important role in Europe in achieving the climate goals. This requires a larger share of renewable energy (such as solar and wind energy) in the electricity grid. However, in the transition to this goal, sources such as gas-fired power generation will remain important for the time being. In the Netherlands, the share of renewable energy sources may be gaining ground, but the amount of gas consumed in the Netherlands is still substantial. This makes it a significant contributor to greenhouse gas emissions. In this brief analysis, we will specifically focus on gas consumption in the Netherlands. We will look at the trends in gas consumption in relation to historical trends and the developments in the most important gas-consuming sectors. Finally, we will examine the relationship between gas consumption and greenhouse gas emissions.

Gas usage by sector

Not all fossil fuels can be lumped together. The carbon footprint of oil and coal is much higher than that of gas. In that case it is more favourable to replace the combustion of oil and coal in the electricity mix with the combustion of gas, as long as the full use of renewable energy is not yet an option. It is not an ideal solution because the amount of greenhouse gas emissions is still significant. It is therefore better to continue increasing the share of renewable energy sources at a faster pace. And from an economic and strategic point of view (especially in a geopolitical context), it also makes sense to consume and import less gas.

The figure on the left above shows that gas consumption over the past two to three years (see green line) has been lower on average than in the period 2019-2021 (see yellow dotted line). Russia's invasion of Ukraine (February 2021) and the subsequent energy crisis (2022-2023) have led to a rationalisation of gas consumption. The higher gas price has been an incentive for many companies to reduce their gas consumption and to take efficiency measures in the production process. In addition, the further increase in the share of renewable energy sources has also helped to reduce gas consumption.

The peaks in total gas consumption occur alternately in December or January of each year. This is highly dependent on the weather conditions and the outside temperature. At lower temperatures, the demand for heat – and therefore gas – increases, which is particularly visible in the trend in gas consumption of households. This pattern is also partly visible in other sectors. Only in industry is the trend somewhat more stable. This is because natural gas is mainly used in production processes almost all year round, and not just for heating. In 2024, total gas consumption rose by 1%. Only in the electricity sector gas consumption was lower in 2024 on an annual basis (-8%). Gas consumption increased in all the other sectors in 2024. In industry, gas consumption rose by 9%. Only in the construction materials and food industries gas consumption decreased by an average of 6%. In all other industrial subsectors, gas consumption increased by an average of 14%. In households, gas consumption rose by 3% and in the agricultural sector, gas consumption increased by 5%, mainly due to the use of combined heat and power installations in greenhouse horticulture. All this suggests that there has been some unwinding of the measures taken in 2022-2023 in many sectors, though consumption is still structurally lower than before the energy crisis.

Gas usage and GHG-emissions

In 2024, approximately 22% of total gas consumption was used for heating and cooking purposes in homes. This means that more than three-quarters of total Dutch natural gas consumption was used for economic activities. The largest portion of this is used by industry (with a share of 37%), followed by the energy supply (with a share of more than 22%). The agricultural sector follows with an 11% share of total sectoral consumption. The three sectors together – industry, energy supply and agriculture – account for around 90% of gas consumption by Dutch companies.

In 2022, considerably less gas was consumed than in 2021, mainly due to the shock of the war in Ukraine and the subsequent energy crisis. That year, 31,000 million m3 of gas was consumed, which, according to the CBS, is the lowest level since 1972. Consumption by large industrial companies and households in particular fell sharply in order to save on costs. After 2022, gas consumption decreased slightly and then stabilised in 2023 and 2024. All-in-all, gas usage has been structurally lower. Over the period 2022-2024, gas consumption was on average 27% beneath the level of gas consumption over the period 2019-2021.

Natural gas consumption is related to greenhouse gas emissions, but the two are not one-to-one. The combustion of motor fuels also results in high greenhouse gas emissions. While total greenhouse gas emissions in 2023 still showed a decrease of 7% compared to 2022, the pace of decrease flattens out in 2024 to -2%. Total gas consumption decreased by 5% in 2023 and then increased in 2024 by 1%.

The Netherlands Environmental Assessment Agency (PBL) expects that production in industry and greenhouse horticulture will increase again in 2025. At the moment that gas prices remain relatively low, it is likely that gas consumption in these sectors may also increase, resulting in more greenhouse gas emissions. The same goes for households. Households may also start heating their homes a little more when gas prices are lower, but due to the sustainability measures taken and the rationalisation of gas consumption, the increase will be less significant. This means that the level of the gas price remains an important driver for trends in gas consumption.