KfW development bank (KfW)
2023
Gas had been given the role of bridging the transition on the way to climate neutrality. Russia’s war of aggression against Ukraine and the subsequent gas crisis has meant rethinking this strategy. On behalf of the KfW development bank (KfW), our energy team investigated the question of how the role of gas has changed in the face of the new geopolitical context.
The answer: it is possible to fill the gap created by gas declines by further accelerating the expansion of renewable energies and other greener technologies such as heat pumps.
The bridge analogy refers to natural gas in its role as a transitional solution in the move from fossil fuels to renewable energy sources. This transitional solution is a necessary one, particularly given that the deadline for withdrawal from nuclear power and coal-fired power generation has already been set and is set to happen in the medium term.
The gas crisis has made it clear how imperative it is to assure a stronger diversification of gas supply sources and the need to make the switch to renewable energy sources as soon as possible.
This adapted pathway will require a particularly ambitious expansion of green technologies, specifically in terms of using renewable energies for electricity production and heat pumps in the buildings sector. The Federal Government has agreed various additional laws and measures to accelerate the energy transition with a focus on the 2030 greenhouse gas reduction goals.
Even simpler approval procedures, an adapted financing of green technologies, the availability of raw materials and production capacities, as well as addressing the skilled labour shortage, will all be required to accelerate the energy transition and keep it moving forward.
In 2022, an increase in GHG emissions was avoided and the climate goals for 2030 remain within reach. On the other hand, total worldwide GHG emissions rose. Investments in green technologies worldwide, did however, see large increases. Longer term, the gas crisis seems to have acted as a catalyst for global decarbonisation as there has been an increase in the urgency for diversification.
The first part of the study compares climate neutrality scenarios developed before the gas crisis with scenarios developed afterwards.
Furthermore, calculations were conducted for the German and European gas supply based on historical gas flow data from ENTSOG. Using our gas balance tools the historical developments of gas flows is extrapolated into the future. The planned LNG import terminals in Germany were included in these calculations. Moreover, corresponding assumptions were made where changes were necessary due to anticipated events (e. g., from 2030 onwards, the gas supply from Norway is expected to fall). This results in the future offer situation for Germany and Europe up to 2050. The gas supply is compared to the range of gas demand resulting from climate neutrality scenarios (including the Big Five). From this, it is then possible to derive what the future supply situation in Germany and Europe will look like and whether there might potentially be more capacity available than is needed.
Gas price scenarios are based on the evaluation of fundamental data from the LNG provision (liquefaction, transport, regasification) as well as scenario-based calculations of global gas demand.
The Prognos energy market model was used to determine the GHG balance and how achievable these climate goals are. This process also took into account the changed energy production due to changing regulatory framework conditions for the extension of renewable energies in 2022.
To the study (PDF, in German)
Further information on the KfW website
Project team: Moritz Bornemann, Jens Hobohm, Sebastian Lübbers, Ravi Srikandam, Aurel Wünsch
Last update: 24.11.2023
Project Manager
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