A new Policy Brief from the Complexity Science Hub shows Austria could survive a complete outage of Russia’s gas supply. However, this would require coordinated EU action. Without cooperation, the damage to Austria's economy would be much greater.
In their calculations, the CSH team assumed no more gas would flow into the European Union after June 1st. Austria would lose around 80 percent of its gas capacity if this were to happen. Additional purchases, storage extraction, fuel switching, and energy savings could offset a large part of a sudden gas supply disruption. According to the document, the key factor is cooperation among EU member states.
In order to examine the immediate consequences of the gas supply shock, the scientists adapted a dynamic production network model that was successfully used to forecast the economic effects of the Covid-19 pandemic ahead of time. The model was originally designed to understand the indirect effects of demand and supply shocks, but has been further developed by explicitly considering industrial gas usage in production.
Two scenarios
As specific examples, the researchers consider two scenarios: one in which the European Union draws a joint action to coordinate gas supply policies and another in which Austria tries to secure additional gas independently.
As a result of Austria having to purchase its own gas, the local industry would have to reduce its gas consumption by 53.3 percent, which could result in the economy shrinking by as much as 9.1 percent. Nevertheless, if the EU draws up a joint action to coordinate gas supply policies and improve the bloc's energy security, the effects on the economy will be more manageable. The industry would only have to reduce its gas consumption by 10.4 percent in this scenario. Overall, the economic decline would be 1.9 percent.
Additional imports and storage management
According to the CSH team, the results indicate that ensuring alternative sources of gas supply, as well as intelligent storage management, are crucial for counteracting a sudden embargo on Russian gas. If coordinated, the EU could secure an additional 55 billion cubic meters of imports, consisting of an additional 10 billion cubic meters via existing pipelines from Norway, Azerbaijan and Algeria and 45 billion cubic meters of liquefied natural gas from the United States or the Gulf States.
Austria's expected economic losses will depend strongly on how these additional gas imports are distributed among the member states. For highly exposed countries, reducing gas consumption in all EU countries is needed in order to mitigate the negative consequences of a Russian gas import halt.
“Our research shows that small reductions in gas supply have limited effects on the economy,” says Anton Pichler, one of the authors of the Policy Brief. “At a certain threshold, however, we find that a small additional reduction in total gas supply is disproportionally passed on to the industry, resulting in substantial negative economic impacts.”
"The results suggest that small reductions in gas consumption can help avoid negative consequences for the economy, underscoring the importance of fuel switching of gas power plants from gas to oil, and also the participation by the population in saving gas. Simple measures can be taken to help, such as reducing the room temperature by 1 or 2 C during the winter months or reducing electricity consumption,” adds Stefan Thurner, president of the CSH and co-author of the study.
The Policy Brief “Austria without Russian natural gas? Expected economic impacts of a drastic gas supply shock and mitigation strategies” was written by Anton Pichler, Jan Hurt, Tobias Reisch, Johannes Stangl, and Stefan Thurner.
The CSH has produced other analyses about the impact of the war in Ukraine. You can find them here.
About the CSH
The Complexity Science Hub Vienna was founded with the aim of using Big Data for the benefit of society. Among other things, the CSH systematically and strategically prepares large data sets so that they can be used in agent-based models. These simulations allow the effects of decisions in complex situations to be tested in advance and systematically assessed. Thus, the CSH provides fact-based foundations for evidence-based governance.
CSH Policy Briefs present socially relevant statements that can be derived from CSH research results.
