Wood Mackenzie estimates that energy costs across all European industrial sectors could fall by €39 billion by 2032

New LNG supply wave projected to nearly halve European gas prices by 2030, delivering €180 billion energy windfall through 2032

LONDON/HOUSTON/SINGAPORE, Jan. 15, 2026 (GLOBE NEWSWIRE) -- – A wave of new liquefied natural gas (LNG) supply could reverse a decade of European industrial decline, cutting annual energy costs by €39 billion by 2032 and delivering cumulative savings of €180 billion, equivalent to 1% of EU’s current GDP according to Wood Mackenzie's latest Horizons report.

European industrial natural gas and power demand declined by 21% and 4%, respectively, since 2021. But Europe’s sluggish economy could get a material lift from lower energy costs. Based on Wood Mackenzie's industrial price forecasts and assuming government taxes remain broadly similar, projected cumulative savings are equivalent to 19% of today's total gas and electricity expenditure. Savings would provide relief to energy-intensive industries battered by record energy prices, supply-chain disruptions and ambitious decarbonization targets.

Rather than political intervention, which has had mixed success, it is the end of high energy prices that may ultimately provide the greatest relief for Europe’s industrial sectors. High prices spurred massive investment in US and Qatar LNG capacity. This supply wave offers an opportunity to reverse what many view as the inevitable decline of European industrial competitiveness.

“Market dynamics from global LNG supply are creating a window for European industrial recovery that policy intervention has struggled to deliver," said Massimo Di Odoardo, Vice President, Gas and LNG Research. “For sectors like petrochemicals and metals that have operated under severe cost pressure, this price reversal window could determine whether they manage decline or achieve recovery. But the outcome will depend on whether the EU can find a better balance between its goals to reduce carbon emissions and the imperative to boost European industrial competitiveness.”

A reversal of fortune

Wood Mackenzie forecasts European traded gas prices will almost halve by 2030, compared to 2025 levels, as global LNG supply grows faster than demand, and despite prices will recover thereafter, they will still trade at an average of €24/MWh (US$8/mmbtu) in the 2030- 2035 period. Prices could fall further still should a meaningful return of Russian gas to Europe materialise.

Growth in LNG supply and data centres in the US will boost local gas demand by almost 40% in the next 10 years, lifting domestic Henry Hub prices to an average US$4.9/mmbtu (€15/MWh) in the 2030-2035 period, an almost 50% increase from 2025 levels. Effectively, US LNG supply growth will come at a cost to US consumers and benefit those in Europe.

Taxes, infrastructure costs and renewable energy subsidies will offset part of the wholesale price reductions. Even so, the scale of wholesale gas and electricity price reduction is substantial. European industrial users will see gas costs reduce sharply, narrowing the competitive gap to the US and moving closer to China, where prices are expected to remain relatively flat.

Can lower energy costs come to Europe's rescue?

The report, titled “The LNG lifeline​: Will cheaper global gas resuscitate European industry?​” reveals that the prize for the European economy could be substantial. Energy cost savings equivalent to 1% of EU gross domestic product in 2025 could provide material support to the bloc's sluggish economy. European iron and steel production – on the defensive for years, along with chemicals – could be thrown a lifeline, with cheaper energy enabling them to hold their ground in European markets. Pharmaceuticals and the food industry, meanwhile, would be in a position to regain ground, or even accelerate, production and capture a greater share of international markets.

Falling costs could also accelerate data centre investment—a strategic priority where Europe trails the US and China. The EU aims to triple data centre capacity by 2035, though current development pipelines deliver only a fraction of what is needed.

Lower energy prices alone may not be enough

However, boosting European industrial competitiveness are set against the backdrop of the EU's unswerving commitment to driving down emissions. Making the single most important obstacle to increasing European industrial competitiveness going forward, is its ambitious decarbonisation agenda. Brussels needs to navigate through a delicate balancing act: if emissions reduction remains the EU's guiding principle, reviving industrial growth becomes more difficult.

Carbon prices in the EU Emissions Trading Scheme exceed €80/tonne and continue to rise. Energy-intensive sectors face mounting pressure to invest in low-carbon alternatives such as hydrogen, biomethane, or carbon capture technologies as free carbon allowances phase out. Even as natural gas prices fall, these industries could face higher overall energy bills.

The Carbon Border Adjustment Mechanism takes effect in 2026, imposing matching carbon costs on imports. While aimed at protecting European producers, it is unlikely to fully shield domestic industries from higher costs and will do little to support international competitiveness absent a global carbon price.

Far-reaching implications

Lower LNG prices will slow demand decline in Europe and accelerate growth in Asia, potentially encouraging long-term gas commitments. US industrial competitiveness, supported by low energy costs for over a decade, could face pressure as the price gap narrows.

Wood Mackenzie's analysis indicates lower energy prices alone will not revive European industrial competitiveness. Heavy regulation, high labour costs, and the pace of decarbonization efforts remain obstacles. Pro-industry policies, greater deregulation, and sympathetic taxation will be necessary as energy-intensive industries navigate the transition to lower-carbon production.

Mark Thomton Wood Mackenzie +1 (0) 6308816885 mark.thomton@woodmac.com Chris Boba Wood Mackenzie +44 (0) 7408 841129 chris.boba@woodmac.com Hla Myat Mon Wood Mackenzie +65 (0)8533 8860