There has been a warning that the energy purchase conditions agreed upon by the European Union (EU) in its trade agreement with the United States are unfeasible and could put energy security at risk by making the EU excessively dependent on the US.
On the 30th (local time), the US think tank Institute for Energy Economics and Financial Analysis (IEEFA) made this statement in a report titled "Deja Vu of the EU’s Overreliance on a Single Supplier."
On the 27th, the EU agreed to purchase $250 billion (approximately 215 billion euros) worth of energy annually from the US, totaling $750 billion, in exchange for securing a 15% tariff rate on EU-made goods.
According to the report, last year the EU imported 65 billion euros (about 21%) worth of oil, coal, and liquefied natural gas (LNG) from the US out of a total import volume of 315 billion euros.
To fulfill the agreement, the EU would need to increase imports from the US from 65 billion euros to 215 billion euros, which is about a 3.3-fold increase. As a result, the EU’s dependence on US energy would surge from 21% to approximately 70% of last year’s total import value.
The report pointed out that the agreement is "unachievable," considering that gas demand is decreasing across Europe due to the expansion of renewable energy, as well as the market’s limited capacity to absorb excess supply.
In addition to its lack of feasibility, the agreement also contradicts the EU’s policy direction. The EU previously suffered a severe energy crisis after becoming overly dependent on Russian natural gas, particularly following the outbreak of the war in Ukraine. Since then, the EU has worked to diversify its supply chains, but now it is suddenly required to increase imports from the US.
The European Commission, which is the party to the trade agreement, does not have authority over energy purchases. Unless European private energy companies step in, it will be impossible to increase imports of US energy.
A representative of the European Environmental Bureau (EEB), a coalition of environmental NGOs in Europe, told EU Observer, "The plan to triple US imports in three years is not only physically impossible, but it will also hinder the EU’s medium-term decarbonization goals."
The IEEFA also pointed out that if the $750 billion were invested in renewable energy instead of importing US fossil fuels, the EU’s total solar and wind power generation capacity could increase by nearly 90% compared to the current level.
In response to such criticism, the EU issued a press release in the afternoon, clarifying that the tariff agreement with the US does not weaken the EU’s commitment to decarbonization.
The EU also argued that although the agreement will lead to an increase in US energy imports over the next three years, it is fully aligned with the EU’s medium- to long-term policy of diversifying energy sources and phasing out imports from Russia as quickly as possible.
The EU also provided the basis for the promised annual $250 billion figure to the US. It explained that, in addition to LNG and oil imports, the current annual import volume from the US already reaches $90 billion to $100 billion when including nuclear fuel and related service costs. The EU plans to replace imports of Russian fossil fuels and nuclear fuel, worth about $26 billion, with US sources. However, even when combined, this still falls far short of the annual $250 billion target.
The Commission did not present specific figures but mentioned energy technology investments, including traditional US nuclear power plants and small modular reactors (SMRs with a capacity of 300,000 kW), stating, "There are already clear signs that US companies are engaging with Europe." However, it added, "These factors will ultimately be determined by (private sector) commercial transactions."
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