EU Proposes New Gas Import Strategy to Slash Energy Costs by 2027

On February 18, 2025, the European Commission unveiled a draft document outlining a strategy to seek more cost-competitive liquefied natural gas (LNG) imports. This initiative aims to collaborate with reliable suppliers and reduce energy prices swiftly, addressing the ongoing challenges posed by high energy costs and geopolitical tensions.

The EU has a legally binding climate goal to reach net-zero emissions by 2050, which necessitates a gradual reduction in reliance on fossil fuels. However, the bloc is also grappling with surging energy prices and pressures from U.S. President Donald Trump, who warned that failing to increase imports of U.S. energy could result in trade tariffs.

The draft indicates that the EU will "immediately engage with reliable LNG suppliers" to explore additional cost-effective import options from existing and future LNG export projects. While specific countries have not been named, the U.S. remains the primary supplier of LNG to Europe, especially following the reduction of Russian pipeline gas after the invasion of Ukraine.

The EU aims to eliminate its dependence on Russia by 2027, although Moscow still ranks as the second-largest LNG supplier to the region. The document suggests that the EU will look into the "Japanese model," which funds LNG export infrastructure projects to secure long-term contracts.

Under EU law, all gas contracts must conclude by 2049 to align with the bloc's net-zero emissions target. While the EU has rapidly expanded its use of renewable energy, its electricity market remains influenced by gas prices, which recently surged to a two-year high.

As part of price control measures, the Commission plans to propose a scheme that aggregates LNG demand from European companies, aiding them in securing long-term supply agreements to buffer against short-term price fluctuations. This approach mirrors practices seen in Japan, where companies typically establish long-term contracts with major LNG producers.

The draft document, anticipated to be published on February 26, may undergo revisions before its official release. This proactive strategy is crucial for the EU as it navigates complex energy markets and strives for greater sustainability.