The European Union is currently embroiled in a contentious debate over new sustainability rules for liquefied natural gas (LNG), with the U.S. and Qatar urging the EU to reconsider, citing concerns about energy supply impacts.

The EU's proposed regulations, including the Climate and Sustainability Due Diligence Directive (CSDDD), aim to enforce human rights and environmental standards on companies in their supply chains, but face opposition from major European countries and business groups.

Major European nations like Germany, France, and Spain are divided, with some advocating for scrapping or delaying the law due to fears it could harm competitiveness, investments, and energy security.

The legislative process involves internal negotiations in November and trilogue talks with the European Council, with a final decision expected before the end of 2025, and recent votes indicating ongoing controversy.

Despite attempts to amend the law, the European Parliament rejected proposed changes, highlighting internal disagreements and the risk of broad impacts on businesses and energy markets.

Efforts to narrow the law's scope by raising company size thresholds are underway, but critics argue these measures do not go far enough to address concerns from industry and environmental groups.

The outcome of upcoming votes will determine whether the law's scope expands or contracts, affecting the number of companies subject to its requirements and the timeline for implementation.

Negotiations include proposals to focus on direct suppliers and increase thresholds, but critics believe these steps are insufficient to mitigate economic and environmental risks.

The EU is also considering amendments to reduce administrative burdens, especially for small and medium-sized enterprises, with a vote scheduled in November.

There is significant internal EU disagreement, with leaders like Macron and Merz calling for a delay or suspension of the rules amid pressure from environmental groups and some factions.

Business groups, including ExxonMobil and the U.S. Chamber of Commerce, oppose the law, warning it could harm competitiveness and lead to market exits, while supporters emphasize the importance of due diligence.

Meanwhile, the U.S. is actively expanding its LNG exports, with projects like the CP2 terminal in Louisiana expected to be operational by 2027, supporting energy dominance but raising environmental concerns.