February 03, 2026 [Supply Chain Digital]- A surge in global LNG supply could save European industry US$189bn by 2032, narrowing the cost gap with US rivals and offering a lifeline to manufacturers

Europe’s supply-chain-dependent industries could see significant cost relief by 2032.

Research and consulting firm Wood Mackenzie forecasts that a surge in global liquefied natural gas (LNG) supplies could deliver cumulative savings of US$189bn to European industry through 2032.

Annual energy costs across European industrial sectors could fall by US$41bn by 2032, according to Wood Mackenzie’s analysis. This represents approximately 1% of the EU’s current GDP and could provide crucial relief to manufacturers whose supply chains have been strained by volatile energy prices since 2021.

The wave of incoming LNG capacity, driven primarily by major investments in the US and Qatar, could help reverse what Wood Mackenzie describes as “a decade of industrial decline” across the continent.

Europe’s declining industrial demand

Since 2021, demand for natural gas across Europe’s industrial sectors has fallen by 21%, according to Wood Mackenzie. Record prices during that period triggered substantial investments in LNG capacity globally.

Wood Mackenzie expects European traded gas prices to almost halve by 2030 compared with 2025 levels, as global LNG supply grows faster than demand. Even after prices recover somewhat, they could still average around US$8 per million British thermal units in the 2030-2035 period.

“Market dynamics from global LNG supply are creating a window for European industrial recovery that policy intervention has struggled to deliver,” says Massimo Di Odoardo, Wood Mackenzie’s VP for Gas and LNG Research.

Wood Mackenzie suggests that growth in LNG supplies and expansion of the American data centre sector could boost US domestic gas demand by almost 40% over the next decade. That could lift gas prices to an average of US$4.9 per million British thermal units in 2030-2035, nearly 50% higher than 2025 levels.

European industrial users could see their competitive disadvantage against American rivals narrow considerably. The gap with China, where prices are expected to remain relatively flat, could also shrink.

For supply chain professionals evaluating sourcing strategies and manufacturing footprints, these shifting cost dynamics could influence location decisions and supplier selection.

Sectoral winners emerge

Not all European industries stand to benefit equally. Industries including iron and steel production, along with chemicals, could simply hold their ground rather than recovering lost ground.

Wood Mackenzie believes that the pharmaceuticals and food processing sectors could be better positioned to increase production and capture greater international market shares. Lower energy costs could also help expedite investment in data centres, where Europe trails both the US and China.

However, Wood Mackenzie cautions that cheaper gas alone will not restore European industrial competitiveness. Massimo warns that the EU’s decarbonisation agenda remains the single most important obstacle to industrial revival.

Carbon prices in the EU Emissions Trading Scheme already exceed US$84 per tonne and continue rising. Energy-intensive sectors face mounting pressure to invest in hydrogen, biomethane or carbon capture as free carbon allowances phase out.

Policy challenges remain

Wood Mackenzie’s analysis suggests that lower energy prices alone will not revive European manufacturing. Heavy regulation, high labour costs and the pace of decarbonisation efforts remain formidable obstacles.

Pro-industry policies, deregulation and more sympathetic taxation could be necessary if energy-intensive industries are to navigate the transition successfully. The window of opportunity created by lower LNG prices may be limited.

European policymakers face a delicate balancing act between maintaining decarbonisation commitments and preserving industrial competitiveness. The coming years will test whether cheaper energy can provide sufficient breathing room for strategic industrial policy reforms.

Without complementary policy changes, the competitive advantages offered by lower gas prices risk being offset by regulatory and fiscal burdens that continue to weigh on European manufacturers.

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