Gas prices showed their erratic side again last week. At the beginning of last week, prices rose equally sharply after uncertainty about the supply of Russian gas. On Monday, January 31, it became clear that supplies from Russia appear to have recovered. What is the state of the gas market and why is there a commotion in Brussen about whether or not natural gas is green?
The conflict surrounding Ukraine and the tensions that this entails between the European Union and the United States on the one hand and Russia on the other, continues to run like a thread through the gas market. The listing on the TTF seemed to have found a stable level at around €75 per MWh in mid-January, but rising tensions - possibly resulting in the shutting down of the Russian grass taps to the European Union - brought uncertainty to the Dutch futures market. This results in price increases of over €93,50 per MWh.
Corrie expresses need for gas
At the beginning of this week, the price plunged sharply again, to well below € 80 per MWh. This has everything to do with reports about higher stocks and the weather forecasts that assume relatively high temperatures for the winter period of the year. Also the high yields from wind energy in countries such as Germany and the Netherlands, literally fueled by storm Corrie, depressed the need for gas at power plants. As a result, the price on the TTF fell by more than 17% in two days to €76,17 per MWh on Tuesday.
Data from grid operator Eustream showed that the gas supply from Russia via Ukraine to Slovakia has increased. The highest level of this year was reached, up to a normal volume. In addition, the supplies of LNG from the United States are continuing well, which means that stocks are even being built up in the United Kingdom and on the European mainland. Expectations for heating gas demand were subsequently revised downwards as a result of the mild weather for this time of year. All ingredients for pressure on the gas price, which could change if the conflict over Ukraine threatens to escalate again.
Relations in Brussels on edge due to green gas label
On Wednesday 2 February, the European Commission sharpened the relations in Brussels (with regard to the energy transition) by sticking to a proposal to give natural gas and nuclear energy a sustainable and green label. Several Member States, including the Netherlands, have previously indicated that they do not see any point in labeling natural gas as green and sustainable. Part of the European Parliament, and in particular the left-wing and green groups, do not like this either. The European Commission is also not unanimous, because the proposal had to be voted on. This resulted in a large majority in favor of the proposal, according to a statement.
Labeling energy sources is part of a so-called 'taxonomy', or a system of definitions for green investments. In the Commission's view, this should help attract billions of euros in extra private money for sustainable investments. According to the Commission, natural gas is an important link in the transition from coal and oil to clean energy sources such as sun and wind. This function is also attributed to nuclear energy. The proposal was already infamous when it was published, because committee chair Ursula van der Leyen sent it to member states just before midnight on New Year's Eve.
Opponents are already sharpening their knives, which means that the frenzy surrounding the alleged green gas will continue in the coming months. The left-wing groups hope to gain a majority in the European Parliament in order to be able to fire the proposal. Member States such as Austria and Luxembourg are shielding themselves from going to the European courts to get the proposal off the table. They fear that labeling natural gas green will never succeed in keeping global warming below 1,5 degrees.