Europe gas demand long-term outlook H1 2019

Despite a mild start to the year, gas demand demand in Europe has rebounded through the first half of 2019. Demand growth will accelerate through the next year as low gas prices and high carbon prices incentivise coal-to-gas switching. This pricing dynamic means 2019 will be the first year that Europe's gas-fired generators produce more power than coal. Long-term, coal phase-out policies will extend gas' advantage but gas generators will face growing pressure from renewables and Europe's ambitions to decarbonise. Compounding the challenges for gas, governments are increasingly focusing on reducing emissions in the non-power sector. Bold policy decisions and falling costs will be required to materially reduce gas demand in this space but the threat to long-term gas demand continues to build.