In recent days, Qatar and the United States have jointly called on the European Union to revise its soon-to-be-enforced sustainability legislation, arguing that the provisions threaten LNG trade and energy security in Europe.
Since Russia’s invasion of Ukraine in 2022, Europe has shifted away from Russian gas and turned increasingly to LNG suppliers such as Qatar and the U.S. for reliable energy imports. However, Brussels is now introducing sweeping corporate-sustainability legislation — the Corporate Sustainability Due Diligence Directive (CSDDD) — which may complicate LNG supply contracts and impose substantial compliance costs.
Qatar’s top energy official and U.S. trade and energy ministers warn the rules could jeopardize Europe’s gas supplies just as winter approaches, and undercut the competitiveness of non-EU exporters. They say the directive’s extraterritorial reach could make supplying the EU unviable.
The Core Dispute
The directive adopted by the European Parliament in June 2024 requires large companies operating in the EU to identify and address environmental and human-rights risks across their value chains. Non-compliance may result in fines of up to 5% of global turnover.
Qatar, one of the world’s largest LNG exporters and supplying between 12-14% of Europe’s LNG imports, has said the rules, in their current form, could force it to stop serving the EU market.
On 16 October 2025, Qatar’s Energy Minister, Saad Sherida Al‑Kaabi, told Reuters that unless changes are made, “QatarEnergy will not be able to justify doing business in the EU … including supplying LNG.”
Meanwhile, the U.S. joined Qatar in warning EU leaders that unless the directive is revised to accommodate LNG exporters, the bloc could face supply disruptions and a decline in investment. They described the directive as posing an “existential threat” to growth and energy security in Europe.
Why It Matters
Energy security: Europe’s pivot away from Russia left a major gap in gas supply that Qatar and the U.S. helped fill. But now, if Qatar curtails exports or re-directs LNG to Asia, European buyers could face shortages or higher prices — especially during cold months.
Trade and investment flows: The rules aim to make supply chains more sustainable, but critics argue they may raise compliance burdens for non-EU suppliers and deter foreign investment into EU energy or infrastructure sectors. Qatar has explicitly warned that its sovereign wealth fund and other investors may reassess European investments under the directive.
Climate policy vs. practicality: The EU’s ambition to align corporate behaviour with climate and human-rights goals is commendable. Yet, the legislation may clash with the need for stable fossil-fuel imports during the transition to renewables. Some European officials say the directive risks undermining competitiveness and energy affordability.
Geopolitical dimensions: The push-back from Qatar and the U.S. reflects broader tensions between climate policy, trade rules and energy diplomacy. The issue elevates beyond contract law — it touches on power, sovereignty and alliances.
What Qatar and the U.S. Are Asking
In a joint letter to EU leaders, Qatar and the U.S. urged Brussels to:
- Reassess the penalty-structure so that fines apply only to revenue generated within the EU rather than global turnover. (This was a key Qatari demand.)
- Delay or phase-in the directive in a manner that allows energy-exporting nations to adjust rather than flock to ‘friendly’ markets.
- Clarify how LNG contracts and supply-chains will be assessed under the due-diligence rules, and assure exporters that they will not face unfair liability risks.
- Recognise the strategic value of energy imports and make exceptions or safeguards for long-term energy-supply agreements.
Qatar’s Al-Kaabi warned: “If the case is that I lose 5% of my generated revenue by going to Europe, I will not go to Europe. I’m not bluffing.”
At the same time, the U.S. signalled it could use trade and diplomatic mechanisms to press for changes. The concerted message underscores how energy and climate policy now intersect with international trade relations.
How the EU is Responding
The European Commission says the directive is necessary to align business practices with climate goals and human-rights norms. It argues the rules only require “risk-based” measures and “proportionate” actions from companies.
However, Brussels also faces internal pressure: some member states and business groups warn of economic damage if the rules discourage imports or investment. Germany and France have called for clarifications and more flexibility. Meanwhile, the European Parliament’s legal committee has proposed watering down some provisions in response to corporate backlash.
Hence, the EU now finds itself balancing green ambition with energy security and trade diplomacy.
Risks and Possible Scenarios
Scenario 1: Qatar scales back LNG to Europe.
If Doha diverts some shipments to Asia or halts new contracts with Europe, European spot markets could tighten. LNG prices may spike, especially in winter, and some EU states may struggle to meet demand or energy-transition targets.
Scenario 2: EU acquiesces partially.
Brussels might amend the directive: e.g., limit penalties to turnover from EU-related operations, or allow transition plans specific to high-emission sectors like LNG. Such changes could preserve trade relations and assuage exporters.
Scenario 3: Standoff persists and investment declines.
Qatar and other exporters reconsider European investments, shifting to Asia or elsewhere. Europe might lose access to long-term supply contracts, affecting energy diversification and infrastructure planning.
Scenario 4: New trade disputes.
Exporters could challenge the directive’s extraterritorial reach under the World Trade Organization (WTO) or bilateral investment treaties. This could provoke trade tensions or energy diplomacy conflicts between the U.S., Qatar and the EU.
Who’s Affected?
- European consumers and industries: higher gas prices or supply shortfalls can disrupt manufacturing, households and winter heating budgets.
- European government policy-makers: must reconcile climate goals with energy reliability and supplier relationships.
- Qatar and U.S. exporters: face legal risk, compliance costs and potential contract renegotiations if forced to work under heavy liability.
- Global investors: watching whether Europe remains an attractive destination for energy and infrastructure investment amid regulatory risk.
- Climate and human-rights advocates: monitoring whether trade policy & regulation successfully internalize social and environmental costs — or lose ground to strategic interests.
Why Timing Matters
The dispute unfolds at a pivotal time:
- Europe is still transitioning away from Russian gas and building alternative supply chains.
- LNG export infrastructure in Qatar and the U.S. is expanding rapidly to meet global demand.
- The EU is advancing its Green Deal and corporate-sustainability agenda — hoping to embed standards into trade and investment.
- Energy markets are volatile; any disruption or regulatory uncertainty may have immediate effects.
Therefore, this moment embodies the conflict between immediate energy needs and long-term sustainability ambitions.
Conclusion
Qatar and the United States are effectively telling the European Union: proceed with your sustainability rules, but recognise that altering the rules may not only affect corporate behaviour — it could undermine Europe’s energy security and global competitiveness.
Brussels must now decide: stand firm on its ambitious due-diligence regulation, or adapt it to preserve strategic energy partnerships. Either path carries risk: adaptation may weaken its climate agenda; standing firm may jeopardise LNG supplies and lead to trade tensions.
As the world shifts toward net-zero, the intersection of fossil-fuel trade, regulation and diplomacy is no longer peripheral — it is central. How the EU handles this tension between green regulation and energy realism could influence not just European policy, but global trade and climate trajectories for decades.
