Natural gas consumption in the EU fell almost 18 per cent in the eight months to March, exceeding the bloc’s target and easing fears of energy shortages caused by massive cuts to Russian imports.

The large drop in gas usage by European households and businesses was aided by a milder winter. But it also reflected energy conservation efforts, the shutdown of some energy-intensive industrial activity and a switch to alternative fuel and power sources following the sharp rise in prices that followed Russia’s full-blown invasion of Ukraine last year.

Compared with the average over the previous five years, gas consumption in the EU fell 17.7 per cent between August and March, according to figures published on Wednesday by Eurostat, the EU statistics agency. It means the EU has outstripped its target to cut gas consumption by 15 per cent over the same period, which was set as part of efforts to deal with the big fall in Russian supplies that had sparked fears of energy rationing and an industrial exodus.

“This was not just about the weather,” said Holger Schmieding, chief economist at German investment bank Berenberg. “Energy-intensive companies reduced production, households saved energy and there has been a switch to other fuel sources.”

He said data from Germany’s Federal Network Agency showed that since the start of this year households and small businesses had cut their gas consumption compared with the previous five years by 17.2 per cent, while industry had reduced usage by 18.8 per cent.

Henning Gloystein at Eurasia Group, a consultancy, said the largest driver of the drop had been the switch to other fuels, which he estimated accounted for about 60 per cent of the fall over the winter months, with the rest split between household conservation and relatively mild weather.

Gloystein said a lot of demand reduction would likely stick as they had been achieved through “improved efficiency measures”, but some of the “behavioural changes companies made might not last”. He estimated that EU gas demand would continue to decline, albeit at a slower pace, potentially falling by 3-5 per cent in 2023 as further efficiency gains are made and renewable power projects come on stream.

The EU has reduced the proportion of its gas imports from Russia to 16 per cent at the end of last year, down from 37 per cent in March 2022, according to the EU-US taskforce on energy security. Encouraging a further shift away from gas, the German government this week approved a bill banning new oil and gas heating systems from 2024 by requiring new ones to be at least 65 per cent based on renewable energy.

The larger-than-expected fall in EU gas consumption has driven a recent drop in prices, and helped boost storage levels. The TTF European gas benchmark has fallen from about €75 per megawatt hour at the end of December to near €40/MWh. Prices had peaked at a record €343/MWh in August — a level equivalent in oil terms to more than $500 a barrel.

While prices remain elevated by historical standards — in 2019 they averaged near €15/MWh — the sharp decline has helped temper inflation in eurozone economies, which has fallen from a record high of 10.6 per cent in October to 6.9 per cent in March.

EU gas consumption stabilised recently, with the monthly reduction from the previous five-year average shrinking from a peak of 25 per cent in November to 12.3 per cent in December. However, in March it rebounded to 17.1 per cent.

Fears of energy shortages next winter receded after the EU’s gas storage reached 55.7 per cent of capacity at the start of the month, 20 percentage points above the average for the past five years, according to industry body Gas Infrastructure Europe.