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A Solidarity Mechanism to Allocate Stored Natural Gas in Crisis

Author

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  • Dávid Csercsik
  • Anne Neumann

Abstract

The interruption of natural gas flows via pipeline to Europe in 2022 has demonstrated that supply crises pose a threat. Although member states have demonstrated unity and solidarity, they could be better prepared to respond to such challenges. Currently, member states fill their natural gas storages independently. Cooperation and solidarity could deliver better outcomes by allowing the accumulated reserves of one or more members to be potentially redistributed to help others in need. In this paper we propose some possible guidelines for a potential solidarity framework based on voluntary participation. We argue that the proposed framework can mitigate the risk of supply-disruption of participants and formalize a game-theoretic model in order to capture the basic features of the problem. We demonstrate the operation of the approach using a simple example with risk-averse participants. JEL Classification: C51, C63, C72, L95, Q40

Suggested Citation

  • Dávid Csercsik & Anne Neumann, 2024. "A Solidarity Mechanism to Allocate Stored Natural Gas in Crisis," The Energy Journal, , vol. 45(5), pages 91-103, September.
    • Handle: RePEc:sae:enejou:v:45:y:2024:i:5:p:91-103
    DOI: 10.1177/01956574241253982
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    More about this item

    Keywords

    gas supply security; EU; solidarity mechanism; reserve sharing; computational modeling;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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