As markets reeled from the drastic reduction in Russian pipeline gas supply to Europe and as global trade and demand patterns shifted, governments did not remain idle. Faced with the spectre of supply shortages, worsening current accounts, and inflation pressure linked to energy imports and rising energy prices for citizens and businesses alike, governments across the main LNG-importing regions rapidly implemented policy and market measures in response to the crisis.

The European Union and its member states adopted a number of measures to enhance security of supply and market resilience ahead of the 2022/23 heating season. However, the European Union’s preparation in handling gas market shocks dates back to well before the emergence of the 2022-2023 crisis.

Over more than a decade, the European Union rolled out successive regulatory packages that introduced the fundamental principles of unbundling of energy infrastructure from production and supply activities and of third-party access to importing and transmission infrastructure. Under these rules, cross-border trade in natural gas flourished with the standardisation of capacity bookings and the deepening of liquidity at trading hubs across the continent. Additionally, EU policy and regulation emphasised the importance of adequate infrastructure and its efficient use. These measures supported continued investment in interconnections with financial support and accelerated permitting for key cross-border infrastructure projects through Projects of Common Interest and Projects of Mutual Interest. The measures also introduced bidirectional flow obligations at cross-border pipeline interconnection points between member states.

The European Union’s gas market design – the product of a long-term and concerted regulatory effort – acted as the foundation for the continent’s resilience in managing the 2022-2023 gas supply shock, providing predictability in market functioning, as well as a structure on which to implement further policy tools. Furthermore, the EU regulation setting up a system of crisis management and information exchange around security of gas supply as early as 2017 meant that dedicated communication channels were largely operational by the start of the 2022-2023 crisis.

Most crisis-driven intervention, regulation and policies reinforced foundational strengths of the EU gas market, protecting ease of market access, barrier-free trading and gas-on-gas competition through diversification of supply sources. However, while many of these policies at the EU and member state level have contributed to solutions to pressing concerns that emerged throughout the crisis, security of supply remains a key concern for Europe, and there remain opportunities to adjust or enhance some interventions.

REPowerEU

In March 2022, a month after Russia’s full-scale invasion of Ukraine, EU leaders agreed in the European Council to phase out Europe’s dependency on Russian energy imports as soon as possible. The REPowerEU plan, unveiled in May 2022, provided the overarching framework guiding the European Union’s medium-term response to the energy crisis.

A central objective of REPowerEU was to phase out Russian fossil fuel imports – including pipeline gas and LNG imports – well before 2030, which was later specified to mean a 2027 target. To achieve this target, the plan has promoted the diversification of gas supply sources, notably through increased LNG imports and enhanced pipeline deliveries from trusted partners like Algeria, Azerbaijan and Norway. REPowerEU also supported investment in new LNG infrastructure – including floating storage and regasification units – to address immediate regasification bottlenecks, particularly in northwest Europe.

On the demand side, REPowerEU supported the pooling of gas demand and emphasised energy savings and fuel switching, including demand reduction measures and support for alternative fuels like biomethane and renewable hydrogen. It also laid the groundwork for accelerated permitting of renewables to drive efficiency improvements and reductions in energy (including gas) demand.

Following the initial co-ordinated European response to Russia’s invasion of Ukraine, the European Commission published in June 2025 its roadmap to completely halt EU imports of oil, gas and nuclear energy from Russia.

Minimum gas storage obligations

The European Union adopted a new storage regulation at end of June 2022, according to which a member state’s aggregate storage capacity had to be filled to at least 80% before the winter of 2022/23 and to 90% ahead of all following winter periods.1 EU member states were free to implement these targets in the manner they saw fit, but the European Union reached its 80% target by September 2022 and has since successfully reached its 90% target ahead of the subsequent winters.

In June 2025, the European Commission and the European Council reached a provisional political agreement to extend the storage regulation while introducing flexibility in reaching the EU-wide gas storage target. Under the amendment – which was later adopted in July 2025 – the 90% fill target before winter remains in place but can be reached at any point from 1 October to 1 December (instead of by 1 November). Furthermore, the amendment introduces greater flexibility in reaching the filling target, particularly in situations of unfavourable market conditions.

Discussions on increased flexibility in reaching the fill target stemmed from market unease around the potential counter-effect of storage obligations on market pricing. The introduction of the initial storage regulation in 2022 and the subsequent rush to fill underground gas storage from below-average levels at the end of winter 2021/22 coincided with the worst of the gas price spike during the crisis.

Early 2025 presented another scenario for the market, whereby forward gas prices for summer were as high as forward prices for the following winter. This partially reflected the market’s anticipation that EU member states’ obligation to reach the 90% fill target by 1 November – particularly given low storage fill in spring 2025 – would require storage capacity holders to buy gas to replenish stocks at any cost.

Although multiple market forces and factors were at play in determining outturn and forward prices in both instances, the European Union acted quickly, aiming to increase flexibility in its storage regulation and reduce the potential for the storage target to lead to unwanted counter-effects in the market.

Additional LNG regasification capacity

LNG played a crucial role in offsetting the shortfall in Russian gas supplies to Europe in 2022 and 2023. With the rise in LNG imports, utilisation rates at European regasification terminals increased markedly, reaching close to 90% of nameplate capacity in northwest European markets in Q4 2022. Prior to the crisis, EU regasification plants had significant spare capacity.

However, the expansion of existing regasification terminals (already planned) and the leasing of floating storage and regasification units (a direct response to the crisis, with many facilities connected at record speed) allowed the European Union to expand its regasification capacity by 15% (or about 25 bcm/yr) during winter 2022/23.2

Although these new floating regasification facilities did not guarantee LNG volumes and their overall utilisation rates remained relatively low, much of the value in the new infrastructure was in its redundancy role. Europe had already felt the effects of losing access to its most critical import pipeline infrastructure, and floating storage and regasification units increased options for buyers in cases of unexpected disruptions along the continent’s remaining key pipeline supply routes (Norway and North Africa).

Gas-saving measures

In July 2022, the European Union adopted a regulation on co-ordinated natural gas demand reduction measures, targeting a 15% voluntary reduction in demand compared with the 5-year average between 1 August 2022 and 31 March 2023. In an instance of substantial risk of a severe gas supply shortage and/or exceptionally high gas demand, a “Union alert” could be declared by the European Council in response to a proposal by the European Commission. The declaration of a Union alert would transform the voluntary reductions into a mandatory measure.

Once again, EU member states were responsible for implementing the voluntary reduction, and some member states were granted derogations. Ultimately, the voluntary measure was extended by 1 year in 2023, coming to an end on 31 March 2024.

Although the high gas price environment remained the key driver of cutbacks in gas demand across Europe, the EU gas-saving measures provided a framework and target in case of worsening fundamentals. Additionally, the measures provided a reference and co-ordinated backing to the public awareness campaigns that member states set up in an effort to encourage a collective effort in reducing overall energy consumption.

Cross-border solidarity arrangements

The 2022-2023 energy crisis exposed the vulnerability of individual EU member states to supply shocks – particularly in landlocked and historically import-dependent regions – and underlined the criticality of the European internal market. In recognition of the interdependent nature of the internal gas market, the European Union strengthened its legislative framework around cross-border solidarity. The principle was originally established in the European Union’s 2017 security of gas supply regulation (2017/1938), obliging member states (where bilateral agreements had been reached) to provide gas to neighbouring countries in the event of a severe supply crisis, prioritising households and essential social services.

During the 2022-2023 crisis, the European Commission bolstered this regulatory framework, encouraging the finalisation of bilateral solidarity agreements between neighbouring member states and introducing standard rules for countries without such bilateral solidarity agreements. Although progress remained slow – only a handful of formal agreements were concluded by mid-2023 – the political commitment to mutual assistance in case of emergency was reinforced. The European Union also introduced measures to enhance transparency and co-ordination, including obligations to notify and consult with neighbouring states on planned emergency interventions. The solidarity framework thus served both as a legal backstop and as a deterrent against uncoordinated national actions that could have exacerbated regional gas shortages.

Market correction mechanism

In late 2022, as European gas prices reached unprecedented highs, the European Union adopted a market correction mechanism intended to curb excessive price spikes at the Title Transfer Facility, the region’s most influential gas trading hub. The mechanism was designed as a temporary and exceptional tool, triggered only under strict conditions – specifically, when front-month Title Transfer Facility prices exceeded a set threshold for several consecutive days and diverged significantly from global LNG reference prices.

Although the market correction mechanism was controversial from the outset, its primary aim was to prevent speculative pricing disconnects that could undermine both consumer confidence and industrial viability. Critics warned that interfering with market price signals could distort trade flows and hinder Europe’s ability to attract scarce LNG cargoes in tight global markets. In practice, the market correction mechanism was never triggered, and while its market impact is difficult to demonstrate, its presence may have helped calm market behaviour during winter 2022/23. However, recognising the mechanism’s limited utility and the improving market fundamentals, the European Union allowed the mechanism to expire on 31 January 2025 without extension.

AggregateEU

Launched as part of the European Union’s longer-term response to the energy crisis, the AggregateEU initiative aimed to pool gas demand from European buyers and co-ordinate joint purchasing on a voluntary basis. The mechanism was designed primarily as an additional tool for diversification of supply under the phase-out of Russian gas. It was aimed particularly at supporting smaller member states and companies with limited market leverage, enabling them to access a broader pool of suppliers and to negotiate more competitively. Inspired in part by the successful Covid-19 vaccine procurement strategy, AggregateEU sought to introduce more coherence and transparency into gas procurement while avoiding internal bidding wars.

Through seven rounds of demand aggregation and matching of supplier bids between 2023 and 2025, the platform matched close to 100 bcm of gas on behalf of 190 participating companies. There is no publicly available evidence that the mechanism led to the signing of substantial new gas contracts or to better prices for participants (notably because of sensitivity of data and confidentiality constraints). However, its role was to provide options and to be primarily facilitative rather than contractual, helping co-ordinate interest rather than centralising procurement, in line with the European Commission’s objective not to interfere in contract negotiations.

There is also no evidence that AggregateEU has been successful in attracting new LNG volumes to the European market, where buyers have continued to transact through existing bilateral channels. Nevertheless, the initiative did not interfere with market functioning and laid the groundwork for further demand co-ordination in the future.3

Measures to shield consumers from high prices at the national level

As wholesale gas prices surged in 2022 and early 2023, European governments introduced a wide array of national-level measures aimed at cushioning the blow for households and businesses. These responses included both direct subsidies and broader price containment mechanisms, reflecting the urgent political and social need to protect consumers from unaffordable energy costs.

The bulk of these interventions took the form of regulated retail tariffs, VAT reductions, lump-sum payments and compensation schemes for energy suppliers. Several countries introduced price caps or froze retail gas tariffs, while others opted for targeted income support to vulnerable households. Some governments provided financial incentives to switch from gas to alternative heating sources or invested in building renovations and insulation measures to reduce end-use gas demand. For industry (and businesses in general), temporary support packages were made available to preserve production viability and safeguard employment in energy-intensive sectors, though such measures varied widely across member states.

While these policies helped avoid widespread fuel poverty and social unrest, they also had fiscal and economic downsides. The total cost of energy support measures across the European Union was significant. The European Commission estimated the total cost of energy subsidies at EUR 390 billion in 2022 alone. Another source put the total at EUR 540 billion for the period between September 2021 and June 2023. Much of this state support was not targeted strictly at the most vulnerable consumers, instead being provided to all consumers, irrespective of their ability to bear certain costs. Moreover, artificially low retail prices in some cases weakened the pass-through of market signals to end users, potentially diluting efforts to incentivise energy efficiency and reduce demand.

Despite this, industrial gas consumption across the European Union fell markedly – by more than 20% in some countries – driven primarily by high prices and weaker economic activity rather than by government-imposed rationing. While some of this demand destruction proved temporary, structural changes remain evident in energy-intensive industries such as fertilisers, chemicals and glass production. In this sense, government interventions succeeded in avoiding the most acute socio-economic impacts of the crisis, highlighting that balancing supply and demand purely through market price signals during crisis periods is not politically acceptable. Nevertheless, these measures could not fully insulate European industry from the consequences of sustained high gas prices.

In Asia, government intervention as a result of the gas supply shock was a combination of capitalising on market strengths – namely, LNG buyers’ favourable legacy positioning in mature gas markets like Japan and Korea – and putting forward last-ditch emergency response measures, mostly in smaller, more vulnerable gas markets.

The variety in size, maturity and structure of gas markets across Asia meant that countries had very different levels of preparation for the gas supply shock. Furthermore, varied economic and fiscal conditions across these countries constrained certain governments in the policy tools they could feasibly implement.

Japan

Japan entered the 2022-2023 energy crisis with considerable contractual coverage and a diversified, resilient procurement portfolio, allowing it to navigate a tight global LNG market more smoothly than many emerging importers. Japan’s long-standing strategy of ample long-term contracting of LNG provided a natural buffer against spot market volatility, but the government introduced several measures to further bolster energy security and shield consumers from rising costs.

Japan’s Strategic Buffer LNG scheme, introduced under the Economic Security Act in 2023, aims to strengthen emergency LNG preparedness. Under the scheme, JERA, the designated operator, must procure at least one additional LNG cargo per month during the winter (December to February), with delivery guaranteed within 18 days in emergencies. The recipient is decided through co-ordination between public and private stakeholders. To offset financial risk, the Japan Organization for Metals and Energy Security manages a public fund to cover potential resale losses if the cargo goes unused. While not yet triggered, the scheme addresses the procurement delays and market co-ordination challenges exposed during earlier crises.

To mitigate the impact of high energy prices on end users, the government also provided subsidies to utilities, enabling them to offer discounted electricity and gas tariffs to households and businesses. In parallel, Japan advanced longer-term measures, including announcements reiterating its ambition to restart idle nuclear reactors (although this process stems from long-term planning more than crisis response measures). Other efforts included intensified regular monitoring of LNG inventories by the Ministry of Economy, Trade and Industry and the establishment of national and regional co-ordination schemes among LNG buyers. While some of these initiatives had limited short-term impact, they formed part of a broader strategy to reduce reliance on spot LNG volumes and enhance resilience against future supply shocks.

Japan also actively expanded its international co-operation networks in response to the crisis, signing several memoranda of co-operation in the field of LNG (particularly in the region but also beyond), including with Singapore and Thailand, as early as 2022. Japan’s JERA and Korea’s KOGAS, the countries’ largest LNG buyers, also signed a memorandum of understanding in April 2023 on co-operation in the LNG market. The agreement outlined opportunities for collaboration at an operational and strategic level, recognising the potential for leveraging the scale and impact of large market actors in co-ordinating responses to market shocks.

Korea

Korea adopted a pragmatic mix of market and administrative measures to manage the gas supply and price crisis in 2022. On the demand side, the government enacted short-term fuel-switching measures, including suspending seasonal coal power generation limits during the peak summer months to reduce LNG burn in the power sector. It also moved forward the commissioning of new coal and nuclear capacity to ease pressure on LNG-fired generation. Korea’s authorities allowed significant increases in regulated electricity and gas tariffs – tariffs rose multiple times in 2022 and early 2023 – to reflect the steep rise in import costs and to temper demand growth. While politically sensitive, these increases were key to transmitting price signals to consumers and curbing consumption. Korea also undertook voluntary demand restraint in certain industrial segments and advanced the use of demand-side management tools. Although no structural shifts in energy mix occurred in the immediate term, Korea’s response demonstrated the importance of flexibility in dispatch, realistic pricing policies and a diversified fuel portfolio in managing crisis-induced shocks.

Pakistan

Pakistan was among the hardest hit LNG importers during the 2022-2023 energy crisis, facing an acute inability to secure spot cargoes as prices surged beyond affordability. The country’s LNG contracts provided only partial coverage, a situation worsened by cancellations of contracted cargoes by the country’s LNG suppliers. Repeated attempts to procure additional volumes through tenders failed due to uncompetitive bids or a lack of interest from sellers. As a result, the government implemented drastic energy conservation measures to manage limited fuel availability.

In June 2022, Pakistan introduced electricity demand curbs, such as limiting commercial operating hours, imposing early closures on shops and factories, and shifting to a five-day (from six-day) work week for public sector employees. Industrial output in energy-intensive sectors declined significantly, and rolling blackouts became more frequent.

The crisis exposed the vulnerabilities of overreliance on imported LNG without sufficient contractual cover, as well as the risks associated with relatively lenient penalties for cargo cancellations in term contracts in exchange for more favourable pricing. The country’s experience underscored the outsized impact of LNG price volatility on emerging markets with constrained fiscal and procurement capacities. In response to this, however, Pakistan showed renewed interest in domestic resource development and the role of renewable power generation, which accelerated greatly since 2022 as a result of record solar PV capacity installations (notably off-grid).