US and Qatar say EU climate regulations could impact LNG supplies

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(The Center Square) – The U.S. Department of Energy is urging the heads of State in the European Union (EU)  to repeal or significantly change climate regulations adopted in July 2024 that require companies to conduct due diligence to prevent adverse human rights and environmental impacts across the supply chain, DOE said Wednesday.

DOE joined Qatar in sending a letter to the European leaders.

“As two of its most trusted partners and the world's leading LNG producers, we reaffirm our deep commitment to supporting the EU's prosperity and stability,” the two governments began the letter.

“We write in this spirit, united in our views, to express our deep concern over the continued lack of action to address the universally acknowledged, serious, and legitimate concerns raised by the global business community regarding the Corporate Sustainability Due Diligence Directive (CSDDD). Particularly its unintended consequences for LNG export competitiveness and the availability of reliable, affordable energy for EU consumers,” DOE Secretary Chris Wright and Qatari Minister of State for Energy Affairs Saad Sherida Al-Kaabi wrote in the letter.

In 2024, U.S. LNG exporters supplied approximately 45% of Europe's LNG needs while Qatar supplied about 12%, according to the European Commission.

The two governments urged reconsideration of Articles 2 and 22, which mandate that companies registered outside the EU generating net turnover of more than €450 million must submit detailed plans showing how they will meet climate goals compatible with limiting global warming to 1.5°C, as required by the Paris Agreement signed in 2016.

The U.S. and Qatar governments have objected to Articles 27 and 29, which include provisions related to the financial penalties and civil liabilities of companies deemed non-compliant. As the regulations are currently written, financial penalties could potentially reach 5% of a company’s global turnover.

“We have consistently and transparently communicated how the CSDDD, as it is worded today, poses a significant risk to the affordability and reliability of critical energy supplies for households and businesses across Europe and an existential threat to the future growth, competitiveness, and resilience of the EU's industrial economy,” wrote U.S. Energy Secretary and Qatari Energy Minister.

U.S. business groups opposing the directive include the Chamber of Commerce, the American Petroleum Institute, the Business Roundtable, and the National Association of Manufacturers.

In December 2024, the business groups collectively sent a letter expressing their concerns to South Carolina U.S. Sens. Tim Scott and Linsdey Graham and to U.S. Rep. Jim Jordan, R-OH, and Patrick McHenry, R-NC, now retired. Near the same time, Qatar’s Kaabi vowed to stop selling gas to the EU if fined under due diligence regulations, MSNBC reported.

In August, the EU committed to undertake efforts to ensure that the sustainability directive includes provisions reducing administrative burdens on businesses, including small- and medium-sized enterprises, and to propose changes to the requirement for coordinated civil liability rules. To date, the EU Parliament has not reported further actions related to the directive.

The U.S. and Qataris said in the letter that a continuation of the climate regulations could disrupt trade and investments across nearly all EU economies. “Its implementation could jeopardize existing and future investments, employment, and compliance with recent trade agreements,” the letter said.

The European Parliament reported Wednesday that its members are considering changes to the climate directive and related regulations that would reduce administrative burdens on companies, with a vote on simplified sustainability and due diligence rules scheduled ahead of a plenary session in Brussels on Nov. 13, although no specifics were provided.