What will the EU-US LNG trade look like with the new EU Commission and Trump’s US presidency in 2025?
Executive Summary
The European Union is the current global importer of Liquified Natural Gas, and in 2023, the United States imported almost half of the EU LNG imports.
The new Trump administration wants to sell more LNG and establish energy dominance.
The United States is a likely partner for the EU in LNG trade, but diversifying supply is one of the European Union's main priorities.
Energy lies at the heart of a nation’s progress, powering everything from the warmth of our homes to the engines of industrial manufacturing. Natural gas, a cornerstone of modern energy supply, reaches consumers through two primary channels. Liquified Natural Gas (LNG) is cooled into a liquid form, which can then be shipped in tankers by sea or over land by road or rail.
The European Union is not a significant gas producer and relies on other countries for its supply. In the first quarter of 2022, Russia was the leading EU gas supplier before the war in Ukraine, with a share of around 38.8% via pipeline. 18.1% of the EU's LNG supply was sourced from Russia, while 48.6% came from the US. However, in 2022, Russia’s share fell considerably due to the invasion of Ukraine and the sanctions levied against it.
One of the EU’s priorities was to end dependency on Russian gas by 2030 through the REPowerEU Plan, which entered into force in 2023. One of the first steps to reduce dependency on Russia is to find other suppliers. The United States is a suitable energy source as it was the largest LNG supplier in 2023. With that being said, 2025 will be crucial for the EU-US LNG trade as a new EU Commission begins focusing on renewable and affordable energy for EU citizens and with the Trump administration pledging to establish “energy dominance”.
In addition to energy security, the EU's gas priorities include phasing out fossil fuels and increasing renewable energy, which will reduce greenhouse gas emissions.
Consequences of the Russian invasion of Ukraine and green ambitions
Since the Russian invasion of Ukraine in 2022, the EU has adopted new measures to stop the weaponisation of gas supply. Due to the high gas prices, the EU started to reduce its gas supply and improve its gas storage. In 2023, to maintain dependence on Russia and improve sustainability, the EU started reducing its gas demand and Russian gas supply.
Nowadays, the European Union is the top global importer of LNG. In 2023, 134 bcm of LNG was imported to the EU, while China imported 99 bcm and Japan 90 bcm. In 2023, the EU imported 17.8 bcm of LNG from Russia, making up 13,28% of the total EU LNG imports in that year. Moreover, in the same year, the United States was the largest exporter of LNG, accounting for almost half (47%) of the total EU LNG imports. The reduction of Russian LNG imports is partly explained by EU sustainability initiatives and the impact of Russia’s invasion of Ukraine. Nevertheless, the EU has had to find alternatives for the remaining supply gap.
As shown in this graph from ACER’s analyses of the European LNG market developments, 2024 Market Monitoring Report, LNG demand in the EU increased in previous years until 2024 as a strategy to diversify supply and replace pipeline imports from Russia.
Nevertheless, since the EU LNG demand is expected to decrease as part of the EU objectives, LNG demand is also likely to decline, as explained in the forecast of Acer’s Market Monitoring Report.
The priorities of the new EU Commission
The new European Commission started in December 2024, focusing on reducing energy emissions. The latest portfolios have a considerable interest in sustainability and competition while still following the objectives of the Green Deal. Regarding energy, the EU is committed to its Clean Industrial Deal to make the industry competitive while aiming at the 90% emission reduction target by 2040 as part of the European Climate Law. These competition priorities still consider the EU's climate target and present the idea that competitiveness and sustainability can go hand in hand.
In addition to the new priorities, the 14th package of sanctions against Russia will come into force in March 2025, as a step towards strategic autonomy and energy independence. The ban on Russian LNG shipments to the EU will significantly reduce Russian gas imports to the EU. This will help regain strategic independence and avoid the weaponisation of the gas supply. Despite lowered demand, the decrease in Russian LNG imports will likely leave a gap in the market that the US could fill shortly.
These initiatives will likely impact the LNG market. There will be an apparent reduction of Russian LNG due to the sanctions and the objective of becoming energy independent from Russia. In addition, the overall amount of gas is expected to reduce due to the Clean Industrial Deal and Green Deal initiatives. Despite the slight decrease in LNG demand, as mentioned in the ACER report, LNG imports will still need to maintain the supply, storage and replace the Russian LNG supply.
The United States' role in energy
Biden’s administration legacy on the US energy policy
The 2025 energy priorities of the United States stand in stark contrast with those of the former Biden administration (2021-2024). The United States rejoined the Paris Agreement in 2021 and set a Long-Term Strategy that established the trajectory to reach net-zero greenhouse gas emissions by 2050. A strategy that aligns with the European Union's priorities is net-zero by 2050.
These measures, taken during the Biden administration, differ significantly from those taken now under the Trump administration. Despite the differences between Biden’s and Trump’s first administrations, US LNG exports to Europe increased in both presidential terms. The US Energy Information Administration graph shows that US LNG imports to the EU increased dramatically between 2020 and 2022.
The new Trump Administration’s stance on energy
With the new Trump administration, the United States' stance on energy is predicted to change. The latest objective is to create a National Energy Council to establish “energy dominance.” This Council will also encourage oil and gas drilling, which sets different priorities from the Democrats' focus on climate change and energy transition. The new energy priorities in 2025 are to find allies to negotiate energy trade agreements on oil and gas, with Europe likely to be one of these key partners and drive investment into the sector.
Moreover, the US's new energy priorities significantly differ from those of the European Union. The latest US energy strategy includes revitalising the fossil fuel industry and increasing drilling projects. It is also predicted that renewable energy developers could face cuts. The new energy strategy will focus on investment, trade agreements, and tariffs. In contrast, renewable energy and the clean transition will fall behind as priorities to achieve “energy dominance,” as Donald Trump has stated.
Nevertheless, future LNG agreements with the EU are still on the table since the new administration is focused on encouraging energy trade. Moreover, Trump’s energy policy strategy encourages LNG exports and more LNG sales to other countries. He has also urged the EU to buy more LNG to avoid tariffs on other imports, which could encourage the EU to buy more LNG from the US. Trump’s administration has also expressed willingness to negotiate long-term LNG contracts with the EU. Nevertheless, the EU usually buys LNG on the spot to avoid dependence on third parties.
Alternative sources of LNG for the EU
As mentioned before, the EU is looking to become independent and avoid the energy dependency created with Russia. Diversification of energy sources is the main solution for this. This would prevent the weaponisation of the energy supply and allow the EU to find more affordable LNG options.
Norway, Azerbaijan, and the Gulf states, such as Qatar, are some of the leading LNG exporting countries, with some of these countries having already imported LNG into the EU. Nevertheless, the EU could start importing more LNG from Azerbaijan, the Gulf States, or Norway, taking into account the diversification strategy to maintain supply security. This could also be used as a bargaining tactic to negotiate LNG prices with the US. At the same time, the EU will likely look for several LNG partners, other than the US, to meet the diversification objectives and ensure the security of the energy supply.
What might happen after 2025
Ultimately, the European Union must find ways to end its energy dependency on Russia. To this end, it will look for partners to import LNG to Europe. Diversification of energy sources is a key priority for the EU to avoid weaponising supply. Other alternatives to the US include Azerbaijan and the Gulf States. These countries will likely be the EU's LNG sources to maintain energy security.
With the new sanctions on Russian LNG starting in 2025 and the prioritisation of strategic autonomy, there is a realistic possibility that the US and the EU are likely to negotiate new LNG trade agreements. Although the Commission expects LNG demand to decline, LNG imports will increase in 2025. Despite the US and Europe entering 2025 with diverse energy strategies, LNG agreements may start being negotiated so that the EU can import LNG to diversify its energy sources while working towards a clean transition.
Nevertheless, long-term LNG contracts between the US and the EU are unlikely. The EU energy security and supply stability make long-term contracts not a priority, but LNG imports can still occur. LNG contracts are more likely to occur if trade relations between both powers are stable, despite their recent differences. The EU might look for other partners if the US applies new tariffs. However, it could also be an opportunity for the EU to buy LNG from the US and bargain to avoid US tariffs. Furthermore, the US can negotiate trade agreements and export the LNG production while boosting private investment and focusing on national energy production.
About the Author
Alma Puente Moreno, Programme Analyst - Europe
Alma has joined London Politica as a Programme Analyst for the Europe Desk. Currently working as the Coordination and EU Affairs Officer at Marcogaz, a technical association of the European gas industry. Alma monitors developments in EU gas and energy policies while providing reports of meetings related to the EU energy strategy. Through this role, she has gained experience and knowledge in policy analysis, the legislative process of the EU, and the different priorities on gas and energy for the EU and other stakeholders. Alma completed her bachelor’s degree in international relations and modern languages at the University of Essex and graduated with her master’s in international political economy at King’s College London.