As of April 25, no European utility, trader, or terminal can take delivery of Russian liquefied natural gas (LNG) cargo bought on a short-term basis. This is the beginning of a hard phaseout that will fully ban Russian LNG imports in 2027.
The timing of this ban exacerbates Europe’s present energy woes. Nearly 20% of global LNG exports are prevented from entering global markets by Iran’s effective closure of the Strait of Hormuz. Additionally, Qatar, one of Europe’s other major LNG suppliers, suffered a 17% decline in its export capacity after an Iranian strike damaged the Ras Laffan export terminal.
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Europe needs to refill its gas storage before next winter, and gas prices have spiked due to trade uncertainty and a decline in global production.
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The United States has the spare export capacity to help prevent a crisis in Europe next winter. In 2025, Europe imported nearly 60% of its LNG from the U.S.. The EU publicly committed to purchasing $750 billion in American energy by 2028, as part of recent trade negotiations. However, the European Union recently enacted a regulation that makes long-term contracts untenable for American producers: the Corporate Sustainability Due Diligence Directive (CS3D).
CS3D is a power grab by Brussels that seeks to claim regulatory authority over American companies operating outside of the EU’s jurisdiction. Any non-EU firm earning more than €1.5 billion in EU revenue, or about $1.77 billion, must audit and enforce European compliance standards across its entire “chain of activities.” If these companies do not ensure the compliance of their vendors and suppliers, including those operating in the U.S., they can be fined up to 3% of their global turnover. For large American companies, this means they now risk being fined billions of dollars if they continue to operate in the EU. While exit is a potential solution, CS3D will continue to impose regulatory challenges for any firm that exports to Europe. Firms must ensure their compliance by July 2029.
LNG supply agreements can range from three to twenty-five years. Longer-term contracts help reduce costs for importers and create certainty for exporters, enabling effective investment. If an exporter now risks billions of dollars in fines for non-compliance with new, emerging EU regulations, they cannot commit to a long-term contract. ExxonMobil CEO Darren Woods has called CS3D “untenable” and warned it will “only accelerate our exit from Europe.” The uncertainty created by CS3D will make it difficult for Europe to replace its long-term Russian LNG contracts. Without long-term contracts with American LNG exporters, Europe will face higher energy prices and continued threats to its energy security.
The costs of these regulations will not only fall on large corporations or European consumers. They will harm Americans throughout our country, in particular, the 14.5 million Americans who work in agriculture, manufacturing, and mining and energy whose jobs are threatened by CS3D. My research for the Foundation for Research on Equal Opportunity identifies workers in subsectors whose firms have significant exports to the EU. Avocado farmers in California. Chemical plant workers in Indiana. Autoworkers in South Carolina. Oil and gas workers in Texas and Louisiana. CS3D will push large EU buyers to prefer large, established American suppliers who can afford to build out audit and reporting infrastructure to ensure their compliance. Smaller firms will lose contracts and shut down or sell to larger competitors. This consolidation will reduce competition and raise prices. Job losses will concentrate in rural and working-class communities that are already struggling with a rising cost of living.
Europe is a critical trade partner for the U.S. The current conflict in the Middle East highlights the importance of the flow of goods between allied nations. The EU and the U.S. should finalize terms for a trade agreement that waives CS3D compliance requirements for American firms. If Brussels refuses, Congress must act.
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Sen. Bill Hagerty (R-TN) has proposed the PROTECT USA Act, which would prohibit covered American companies from complying with CS3D. There should be a version of Hagerty’s bill that can receive bipartisan support.
There is nothing more American than affirming our sovereignty when threatened by European overreach in our domestic affairs, especially as we prepare to celebrate the 250th birthday of the United States. If American legislators are serious about our alliance with Europe, they cannot sit idly by while Brussels imposes a regulatory regime that will leave our allies fragile and freezing next winter.
Grant Dever is a Visiting Fellow at The Foundation for Research on Equal Opportunity.
