A Square Regulatory Peg in a Round Industry Hole: Europe’s Gas Industry Problems

Wed Jan 11 16:25:02 EST 2017
By Dr. Jeff D. Makholm

In a recent white paper, NERA Managing Director Dr. Jeff Makholm explores problems in Europe’s gas industry. In a world of growing gas use that is helping to decarbonize other economies, Europe’s gas industry is in decline—it is overly costly for Europe’s consumers, and EU policy continually shifts between the goals of competition, security of supply (in the face of increasing Russian dominance), and a rejection of fossil fuels in all forms (evidenced by the widespread prohibition of domestic EU unconventional gas production). Dr. Makholm posits that contributing to the decline are the EU’s counterproductive industry regulations (the 2009 “Third Energy Package” and the Gas Target Model (GTM)). He concludes that as the European Commission reassesses the future of its gas regulations, it should analyze how a possible “Fourth Energy Package” and revised GTM may help make the industry more competitive as Europe works toward those long-term goals.