European Union’s Newfound Pragmatism Focuses on Emission Rules: Will It Appease Doha and Washington

Commentary by Leslie Palti-Guzman

Published October 23, 2025

Europe is adopting key environmental measures with extraterritorial reach-from the Carbon Border Adjustment Mechanism (CBAM) to the methane emission reduction regulation (MERR) in the energy sector and the Corporate Sustainability Due Diligence Directive (CSDDD). For the first time, these rules could directly impact the business of the world's largest gas and liquefied natural gas (LNG) producers, notably QatarEnergy and multiple U.S. companies. While Qatar is most concerned about regulatory scrutiny requiring it to identify and address human-rights risks, U.S. natural gas players are more anxious about the methane regulation, which could stymie LNG sales to Europe.

Yet, Brussels in 2025 is showing signs of pragmatism. The European Union is softening some of its most rigid sustainability requirements through its new Omnibus simplification package, meant to reduce corporate sustainability reporting burden. Also, energy ministers of the EU member states agreed at the October 20 council meeting to fully phase out Russian gas and oil imports under the REPowerEU plan and the bloc's nineteenthpackage of sanctions-an opportunity to test how this goal aligns with the timeline of the methane regulation and broader energy-transition ambitions.

The EU Softens Its Stance to Remain Competitive

War on its borders and industrial decline have brought pragmatism back. The European Union can no longer afford policies that drive up energy costs, push companies abroad, or alienate key suppliers. Europe will need non-Russian gas imports for longer to sustain its economy. EU gas imports fell by 18 percent between 2021 and 2024, but the composition has changed dramatically: Norway's share rose from 24 percent to 33 percent, and U.S. LNG from 6 percent to 17 percent, while Russia's share collapsed from 45 percent to 19 percent. Qatar's share also dropped from 6 percent to 4 percent.

The shift will become even more pronounced this year, as Russian pipeline gas via Ukraine has disappeared entirely. Also, the European Union has effectively decided to end its dependence on Russian gas by January 1, 2026, while accommodating a two-year transition period for existing contracts. A full prohibition will take effect by January 1, 2028, under which Bulgaria will terminate transit of Russian gas to Slovakia and Hungary, and imports of Russian LNG will be completely phased out. This will deprive the Kremlin of revenues funding the war in Ukraine. Russia's pipeline deliveries to the European Union are projected to plunge from 140 billion cubic meters (bcm) in 2021 to about 16 bcm in 2025-and to zero by 2028. As of 2025, only Hungary and Slovakia still import Russian gas via TurkStream, while only five EU countries continue to purchase Russian LNG (Belgium, France, the Netherlands, Portugal, and Spain per SynMax data).

To remain competitive, Europe must produce and attract affordable energy, vital not only for its industries but also for its fast-growing digital economy. Electricity demand from data centers alone is expected to surge by 70 percent by 2030. Gas prices in Europe remain roughly twice their pre-Covid-19 levels, weakening its industrial base. As noted in Mario Draghi's report, Europe's long-term path to energy independence lies in accelerating renewables, grids, and nuclear, but in the foreseeable future, it will remain one of the world's largest buyers of U.S. LNG. Europe's U.S. LNG imports have reached an all-time high this year, up 52 percent from 2024. Pragmatism means recognizing that U.S. LNG is an asset; Europe simply doesn't have many other options.

The ambitious EU methane rules adopted in June 2024 sit uneasily with the spirit of the new energy-focused U.S.-EU trade deal, under which the bloc pledges to purchase around $750 billion in U.S. energy products over the next three years. Both sides will likely show goodwill to negotiate irritants such as the regulation's scope and execution to preserve the deal's intent. The European Union has already agreed to introduce "additional flexibilities" to CBAM and address nontariff barriers that could restrict bilateral trade.

Technical realities are also tempering the implementation of methane regulations. Obstacles remain in agreeing on the scope of data collection (e.g., which parts of the gas and LNG value chain), on harmonizing standards and verifications, and on how to measure progress, while ensuring comparability across geographies.

The United States Pulls Back on Federal Methane Policies, but LNG Companies Press Ahead

While the Trump administration wants to delay until 2034 the U.S. Environmental Protection Agency's Greenhouse Gas Reporting Program, most U.S. gas producers and LNG exporters will likely continue with voluntary methane-reduction initiatives and data reporting to ensure that their gas remains trusted by consumers overseas. This approach will resonate beyond EU climate goals, as shown by the Coalition for LNG Emission Abatement towards Net-zero, a public-private partnership supported by key LNG trading countries, including Japan and South Korea. U.S. companies recognize that their infrastructure and trade cycles are much longer than the political election cycle. Their LNG projects will last for more than two decades, and they cannot afford to lose markets because their gas was not deemed green enough from the absence of data reporting. However, a voluntary program could open the door to cheating or selective self-reporting.

Several companies at home will continue to invest efforts, capital, and technology to ensure that their projects have emission reductions, or even elimination, at the core of their marketing strategies. For instance, NextDecade's Rio Grande LNG pledges to use net-zero power and responsibly sourced gas, while Venture Global's Plaquemines LNG and Calcasieu Pass 2 LNG projects are developing carbon capture and storage (CCS) at their Louisiana facilities. Projects that deploy CCS will be able to qualify for a federal tax incentive known as Section 45Q and one day could get credits for "abated carbon." Meanwhile, Cheniere Energy targets its two U.S. Gulf Coast liquefaction plants to start maintaining by 2027 the methane emission intensity level that is consistent with the Gold Standard under the United Nations Oil and Gas Methane Partnership 2.0

There is still a lack of harmonized standards and third-party verification in the United States and abroad, but we have already seen a flurry of innovations in this space. MiQ, a nonprofit in methane emission certification, has already established tracking tools for lower-methane-intensity natural gas. Some companies are experimenting with the "book and claim" system, allowing buyers to claim the environmental attributes of cleaner fuels. There are also companies developing a blockchain-based "trace-and-claim" approach to enhance transparency and take the global differentiated gas market to the next level. Advanced measurement-based practices -including sensors, satellites, drones, and optical imaging-will also strengthen monitoring, measurement, reporting, and verification (MMRV) and leak detection and repair.

U.S. gas companies remain adamant that EU methane rules should not disadvantage U.S. gas relative to Russian, Norwegian, Algerian, Qatari, or other supplies and that common-sense solutions must be found. The U.S. shale-to-LNG model is unique: There is no single state-owned company overseeing the entire value chain, but rather multiple private actors at the production, processing, transportation, and liquefaction stages. Moreover, methane intensity varies across basins, pipeline distances, and even waterborne shipping routes, which adds complexity to uniform standards and compliance with EU requirements.

Expected Relaxation of Key EU Emission Regulations

Transatlantic Relations Will Take Priority Over Methane Rules

MERR establishes a ramp-up period with defined reduction targets for gas importers, set to take full effect by 2027. However, the European Commission recognizes that it must clarify these targets to ensure the rule's implementation and enforcement are realistic. There are no global MMRV standards, and Brussels has yet to define before January 1, 2027, how to set any country- or producer-level equivalences to EU rules.

The Transatlantic dialogue on methane will be important to watch, as the rule was not designed with an understanding of the complex structure of the U.S. natural gas market. U.S. Secretary of Energy Chris Wright has pressured Brussels last month to delay its implementation and make the rule more U.S.-friendly. Interestingly, Qatar has not publicly objected to this particular EU rule-though Doha has threatened the European Union over other environmental regulations (see below). That may be because QatarEnergy, as a fully integrated gas company, has complete visibility across its value chain, sourcing feedgas from a single origin-the North Field-which makes methane monitoring and quantification far simpler than in the fragmented U.S. model.

EU member states are now responsible for monitoring the reporting and enforcing compliance, meaning the rule's impact will vary depending on the quality of the national implementation. At least nine countries are already behind schedule in establishing competent authorities and received formal notices from the Commission in July for "failing to appoint and notify a competent authority."

CSDDD Will Be Reduced in Scope and Obligations

The European Union is pursuing a simplification drive, known as Omnibus, across the Corporate Sustainability Reporting Directive (CSRD), CSDDD, the EU taxonomy, CBAM, and investment rules, to refocus on competitiveness and respond to international pressures. If passed, the measure would confine companies' reporting obligations to tier 1 suppliers, easing scrutiny of complex global supply chains and lowering the risk of financial penalties. It would also push back the first reporting year to July 2028. The European Union has sought to reassure Washington and international companies with a conciliatory message, pledging not to impose "undue restrictions" on transatlantic trade. However, environmental advocates argue that the Commission is now going too far toward deregulation, narrowing the scope of its rules and weakening core obligations.

One of the latest draft proposals would limit the CSDDD's reach to companies with at least 5,000 employees and €1.50 billion ($1.75 billion) in turnover. U.S. LNG exporters such as Cheniere would still fall under the directive because of their turnover, even though it employs only around 1,700 people, and would therefore be required to identify and mitigate social and environmental risks across every stage of its supply chain.

QatarEnergy, meanwhile, is particularly uneasy about this heightened scrutiny, as it faces growing pressure to address human-rights risks alongside environmental ones. Forced labor and abuse of foreign workers in Qatar are well-documented and drew even more scrutiny after the 2022 FIFA World Cup. In response, Doha has threatened to curtail LNG supplies to the European Union if it faces financial penalties for noncompliance. But these threats may well be a bluff. Qatar's attention is firmly fixed on Asia, which remains the prize market, and Doha may gladly cede some European market share to U.S. exporters to avoid direct economic confrontation. Yet, by the end of the decade, Qatar could find itself in a more vulnerable position, facing a global LNG glut that may push it to flood the European market with surplus volumes.

CBAM Won't Be Expanded to LNG Anytime Soon

The EU CBAM, designed to shield European industry from "carbon leakage," could also become a powerful tool to decarbonize globally, but it might be ahead of its time. The mechanism is scheduled to take full effect in January 2026, imposing financial obligations on imports of cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. These sectors will face a charge equivalent to the EU carbon price (which ranged between €70-€90 per ton of carbon dioxide in 2024-2025), minus any carbon taxes paid in the country of origin.

Such pricing could squeeze profit margins for steelmakers in Turkey, India, Russia, and China, as well as aluminum exporters in the Gulf. While Qatar's steel exports will be directly impacted by this levy, Doha is pursuing a dual approach, threatening cuts while also exploring decarbonization measures to stay competitive.

Before the end of the year, the European Commission will assess the potential expansion of CBAM to other sectors, including downstream goods such as plastics, chemicals, and refined metals. It will also examine transition support for exporters of these products, with a legislative proposal expected in early 2026.

If CBAM were to include LNG in the coming years, the United States, Qatar, and other gas suppliers to the European Union would need to explore new compliance strategies, such as participation in carbon markets. However, given Europe's structural dependence on LNG imports, the sector is unlikely to be included in the near term. The commission acknowledges that the mechanism will evolve, adapting to both economic realities and the international context.

Conclusion

Even if many of the European Union's emission and sustainability rules are watered down, the preparation work and learning curve invested in designing these policies won't be lost. The current geoeconomic context demands pragmatism and prioritizes energy security, but the wheel will turn again. Countries and companies that maintain their methane-reduction initiatives, invest in carbon-removal technologies, and promote responsibly sourced gas will be best positioned for the next cycle of investment and exports that will reward low-carbon attributes.

The European Union will likely prioritize its bilateral relations with key LNG partners-Qatar and the United States-over regulatory rigidity. Once the rules are implemented and enforced, the level of ambition can always be raised later; it does not need to start at full strength from the outset. What matters now for the European Union is laying solid foundations, while placating its indispensable suppliers.

Leslie Palti-Guzman is a senior associate (non-resident) with the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.

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