What is the short-term outlook for the EU's natural gas demand? Individual differences and general trends based on monthly forecasts

Abstract

As a fossil energy with low carbon, natural gas has been regarded as an important energy for the energy green transition in the past few decades. It has long shouldered the mission of improving air quality and slowing climate warming. However, in recent years, with the acceleration of the energy transition, natural gas has become a major source of carbon emissions in Europe, but before the full coverage of renewable energy, natural gas remains the Europe's main energy in the short term. In such a complicated background, what is the short-term outlook for the European Union's (EU) natural gas demand? This paper will answer this question by forecasting the EU's natural gas consumption. A review of the literature that studies on gas consumption forecasting for the Europe has always been for one country or one region; there is no study for all EU countries, and the forecast periods are mostly for hourly, daily and annual data and no studies for monthly data. In order to fill these two research gaps, this paper forecasts the monthly natural gas consumption from 2021 to 2025 of the top seven gas-consuming countries in the EU and obtains the EU's total consumption on this basis. In addition, due to the nonlinear seasonal fluctuations in the monthly consumption data of the countries studied, a novel seasonal forecasting model is proposed to better fit this trend, named nonlinear grey Bernoulli model based on Hodrick-Prescott (HP) filter (HP-NGBM(1,1)). To demonstrate that HP-NGBM(1,1) model has better predictive ability, this paper uses other seasonal models to make comparative forecasts, and the results show that the HP-NGBM(1,1) model has the smallest error. The forecasting results can provide the reference for the EU's natural gas consumption market regulation and the formulation of short-term environmental protection strategies and climate change response plannings.

Keywords: European Union; High-pass filter; Monthly consumption; Natural gas; Nonlinear grey Bernoulli model.