EU Plans to Purchase 1,000 Trillion Won Over Three Years
US Think Tank Calls It "Unrealistic"
The European Union (EU) has reached a tariff agreement with the United States that is considered nearly impossible to implement, and if enacted, would lead to an excessive dependence on the US, according to recent analysis.
According to a report released on the 30th (local time) by the US think tank Institute for Energy Economics and Financial Analysis (IEEFA), US-origin oil, coal, and liquefied natural gas (LNG) accounted for 65 billion euros (approximately 104 trillion won), or about 21%, of the EU's total energy imports of 315 billion euros (about 504 trillion won) last year.
On July 27, the EU agreed to purchase 250 billion dollars (215 billion euros) worth of US goods annually, totaling 750 billion dollars (645 billion euros, approximately 1,036 trillion won), in exchange for securing a 15% tariff rate on EU products exported to the US.
Compared to last year's figures, for this agreement to be realized, the EU would need to increase its imports of US-origin energy from 65 billion euros to 215 billion euros?a 3.3-fold increase. As a result, the share of US-origin energy in the EU's total energy imports would soar from 21% to about 70%.
The report pointed out that this is an "unachievable agreement," considering that overall gas demand in Europe is declining due to the expansion of renewable energy, and the market's ability to absorb excess supply is limited.
The EU, which once suffered a severe energy crisis after the outbreak of the war in Ukraine due to excessive dependence on Russian natural gas, has since worked to diversify its supply chains. Now, drastically increasing imports from the US runs counter to this strategy.
IEEFA also titled its report, "EU's Deja Vu Risk of Overdependence on a Single Supplier." Furthermore, the European Commission, which is the executive body of the EU and the main party to the agreement, neither directly manages energy purchases nor holds the authority to do so. Therefore, unless European private energy companies take action, a significant increase in US energy imports is essentially unfeasible.
The Commission argues that the agreed amount is achievable, considering the plan to completely halt imports of Russian fossil fuels by the end of 2027 and the willingness of private companies to invest in US energy infrastructure.
However, the European Environmental Bureau (EEB), a coalition of environmental NGOs in Europe, estimated that Russian LNG currently accounts for about 17% of total EU imports, and replacing this would cost only 9 billion euros (about 12 trillion won) per year.
An EEB representative told EUobserver, "Tripling imports from the US in just three years is not only physically impossible, but it would also undermine the EU's medium-term decarbonization targets."
IEEFA also noted that if the 750 billion dollars were invested in renewable energy instead of US fossil fuel imports, the EU's total solar and wind power generation capacity could increase by nearly 90% compared to current levels.
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