The European Union is considering backing investments in overseas fossil fuel infrastructure and shifting to long-term contracts to cut the high energy prices damaging European industries, according to a leaked proposal seen by POLITICO.
The move would mark a major change in the bloc’s energy policies, strengthening the continent’s links to the carbon-intensive liquefied natural gas it eventually wants to phase out. Currently, the EU only signs short-term LNG contracts and has worked to limit the use of public money to expand fossil fuel extraction.
Notably, the plan also raises the prospect that European government funds could help finance American LNG projects — just as Brussels officials try to hammer out a deal with United States President Donald Trump to buy more American energy and avoid a trade war.
The proposal is part of an upcoming Action Plan for Affordable Energy, due out Feb. 26. The draft shows the EU also wants new laws to fast-track power grid upgrades and will encourage lower electricity taxes and swift permits for emerging nuclear technologies. The offerings are a central part of Brussels’ response to industry complaints that soaring energy costs are leaving them trailing their U.S. and Chinese competitors.
The plan, the document says, will «lower energy bills in the short term, while fast-tracking much-needed cost-saving structural reforms and reinforcing our energy systems to mitigate future price shocks.»
Suggestions LNG projects could be in line for EU support are likely to fuel fears that efforts to rescue the continent’s sluggish economy are taking priority over its climate change fight.
The document — prepared by the European Commission, the EU’s executive in Brussels — also suggests exploring «the option of longer-term contractual engagements to make prices more stable.» That could include schemes «whereby the EU and/or Member States accompany EU importers in investing directly in export infrastructure abroad, providing preferential loans to private investors or by securing gas liquefaction rights.»
Specifically, the draft references the “Japanese model,” which involves the government directly buying stakes in overseas LNG ventures in exchange for continued access to gas at preferential prices. Through this approach, Tokyo has become the largest public investor in American LNG projects, spending tens of billions of dollars and importing record levels of U.S. gas in recent years.
The Japan-U.S. LNG relationship deepened earlier this month when Japanese Prime Minister Shigeru Ishiba flew to Washington, D.C., to meet with Trump.
“Japan will soon begin importing historic new shipments of clean American liquefied natural gas in record numbers,” the American president declared.
Trump is similarly pressing the EU to buy more American LNG, threatening to impose severe tariffs if the bloc doesn’t meet that and other demands. Brussels has dispatched envoys to Washington to negotiate and is keen to strike an LNG deal. Commission President Ursula von der Leyen has touted it as a way to finally quit Russian LNG.
However, any move to follow Japan’s lead would likely face opposition from climate activists and green groups, who have long argued public funds should not be spent on increasing fossil fuel extraction and exports.
Following Ishiba’s visit, Susanne Wong, Asia program manager for environmental NGO Oil Change International, warned that «financing U.S. LNG poses serious risks for Japanese investors and jeopardizes a liveable future for our communities.»
Still, Europe is already reliant on American LNG. After Russia cut off much of its pipeline gas supplies to the continent, EU countries turned to seaborne shipments of American LNG.
However, countries have kept their options open, with analysts repeatedly noting that importers weren’t signing long-term commitments. But the approach has exposed Europe to volatile prices.
Brussels now plans to explore a different method. The EU will «immediately engage with reliable LNG suppliers to identify additional cost-competitive imports from existing and future LNG export projects,» the proposal says. And it wants to help European buyers «secure LNG volumes under long-term contracts» in a bid to make energy more affordable.
The bloc wants to move fast on its LNG, vowing to act on them by July.