US, Qatar warn EU that new climate rules threaten trade and energy security

The US and Qatar have warned the EU that trade, investment, and energy supplies will be harmed if the bloc does not back down from its new climate and human rights rules.

Washington and Doha argued that Brussels’ Corporate Sustainability Due Diligence Directive (CSDDD) poses an “existential threat” to the growth, competitiveness, and resilience of the European economy and will jeopardize energy security.

The two countries said the rules, which will be opened for discussion by EU legislative bodies on Friday, will harm exports of liquefied natural gas (LNG), which has become a lifeline for the bloc after the war in Ukraine.

A joint letter to EU leaders, signed by the US and Qatari energy ministers and seen by the Financial Times (FT), stated, “This comes at a critical time when our countries and companies are striving not only to maintain but significantly increase LNG supplies to the EU.”

The letter noted that the EU rules could also harm the recent trade agreement signed in July between the bloc and President Donald Trump, in which EU countries committed to purchasing $750 billion of US energy by the end of 2028.

The letter warns: “Beyond the direct energy security risks, the CSDDD also threatens to disrupt trade and investment in nearly all of the EU’s partner economies. Its implementation could jeopardize existing and future investments, employment, and compliance with recent trade agreements.”

This intervention marks a significant rift between two of the world’s largest fossil fuel producers and consumers and the EU, which is trying to accelerate the transition to cleaner energy.

The EU sources approximately 16% of its gas needs from the US and 4% from Qatar.

On Monday, European energy ministers decided to phase out the remaining 19% of gas purchased from Russia by the end of 2027, leaving the bloc in need of alternatives.

The due diligence law will be phased in from 2027, and EU members will be able to fine companies whose supply chains harm the environment or human rights up to 5% of their global turnover.

EU countries and the European Parliament plan to begin negotiations this week on possible revisions to the law.

The law, in its current form, will apply to non-EU companies with a net turnover of more than €450 million within the bloc.

The negotiations have triggered a wave of lobbying by industry and governments. The US argues that the law’s extraterritorial scope could expose its companies to lawsuits. Trump has threatened to impose tariffs on countries his administration accuses of creating “non-tariff trade barriers.”

US Secretary of Energy Chris Wright told the FT last month that EU climate rules could disrupt US-EU trade relations. Last week, Qatari Energy Minister Saad al-Kaabi also told Reuters that QatarEnergy, the LNG giant he heads, would be unable to do business in Europe without further changes to the bloc’s sustainability rules.

Some European heads of state, including German Chancellor Friedrich Merz and French President Emmanuel Macron, have also called for the due diligence rules to be scrapped.

US oil and gas companies have opposed the directive, which requires businesses to submit plans outlining how they will reduce greenhouse gas emissions in line with the Paris climate agreement.

The joint letter from Wright and Kaabi stated that the EU and its member states must act quickly to address “legitimate concerns” about the directive, including its extraterritorial impact, penalties, legal liabilities, and energy transition plans.

The letter states, “We urge EU leaders to take immediate and decisive action by re-engaging in a meaningful dialogue with your global partners, including the US and Qatar, to address these critical provisions in the CSDDD.”