US, Qatar Warn EU Sustainability Law Threatens Continued LNG Supply

U.S. Secretary of Energy Chris Wright joined Qatar Energy Affairs Minister Saad Sherida Al-Kaabi in a joint letter to leaders of the European Union on Wednesday expressing “deep concern” about the impacts from a draft corporate sustainability law before the European Parliament (EP). The letter coincided with a decision by the EP to reject proposed amendments to the law, known as the Corporate Sustainability Due Diligence Directive (CS3D), despite strong pushback from some of the continent’s largest corporate and political leaders.

Those amendments had earlier been approved by the European Commission (EC) amid incoming objections from business leaders in Europe and around the world. Some companies have urged the EC to amend the proposed law to soften its regulatory blow. Others, including ExxonMobil, have urged EU policymakers to rescind it entirely. Noting his company has already been gradually reducing its business in Europe due to heavy-handed regulations, Exxon CEO Darren Woods told Reuters in a September interview that CS3D “is another piece of legislation that would accelerate that incentive, or warrant businesses to reduce their activity in Europe.”

Secretary Wright and Minister Al-Kaabi express similar concerns in their letter, warning that moving ahead with the law could threaten future LNG exports destined for Europe. “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,” they write. They later note that “none of these issues have been properly addressed in the alternative texts that have been formally adopted” by either the EP or the EC.

Wright and Al-Kaabi go onto pointedly add that the EU’s actions come at a time when the U.S. and Qatar “are striving not only to sustain but to significantly increase the reliable supply of LNG to the EU in line with European strategic aspirations, noting the near-certain likelihood that ”natural gas and LNG will remain a critical energy source and a key part of the EU’s energy mix for many decades to come.”

The message seems clear, and points to a stark choice now facing the continent’s leaders: They can have their natural gas, but not under these proposed conditions. The world’s two largest exporters of LNG have invested billions of dollars since the start of Russia’s war on Ukraine and remain committed to investing billions more to help meet Europe’s needs. But that commitment would be severely damaged if the EP insists upon approving a new law which would damage the very companies that are risking those billions.

The decision by the EP sets up a confrontation with both the EC and national leaders of some EU member nations who have recently been pushing to roll back some of the law’s requirements in response to business community concerns. It also illustrates the ongoing conflicts within the EP itself and among the centrist majority coalition which almost splintered over the issue in recent weeks.

“Today’s vote showed that for a huge section of the Parliament, this compromise simply did not go far enough, and for some sections, it went too far,” said European Parliament President Roberta Metsola.

The continuing controversy and difficulty in reaching a compromise satisfying to all parties also threatens to hamstring the second-term agenda of EC President Ursula Von Der Leyen focused on cutting red tape as a means of making Europe’s flagging industrial sector more competitive in the global marketplace.

Earlier this year, leaders in Germany and France also called upon the EU to scrap the law entirely. French Prime Minister Emmanuel Macron and German Chancellor Friedrich Merz both argued in May that moving ahead with the requirements would harm Europe’s ability to compete with the U.S. and China. “Clearly we are very aligned now with Chancellor Merz and some other colleagues to go much faster, and (the supply chain law) and some other regulations have not just to be postponed for one year, but put out of the table,” Macron told business executives at a conference in Versailles.

Members of the EP will have another chance to vote on the matter when they next meet for their mid-November plenary session. At the moment, which way the EU will choose to jump on this crucial matter is anyone’s guess.