US President Donald Trump on Wednesday announced a sweeping trade agreement with the European Union, under which the bloc will increase energy imports from the US by 2.5 times, purchasing $750 billion worth of American energy products and investing $600 billion into the US economy.
The White House described the agreement as a "historic realignment" of transatlantic economic ties.
The European Union is expected to spend an average of $250 billion per year over the next three years on energy imports from the United States, up from the current $90–100 billion annually, under the deal.
The increase includes projected rises in oil, liquefied natural gas (LNG), and nuclear fuel imports, as the EU continues efforts to reduce dependence on Russian energy.
The bloc had historically relied heavily on Russian fossil fuels, particularly natural gas, to meet its energy needs.
As part of its response to the energy crisis, the EU launched the REPowerEU plan in May 2022, aiming to cut Russian gas imports by two-thirds by the end of that year and to achieve full independence from Russian energy "well before 2030."
Since then, the EU has significantly ramped up LNG imports, especially from the US, while accelerating investments in renewables and energy efficiency.
By 2023, Russian pipeline gas exports to the EU had dropped by over 80%, according to official data.
- ‘Europe has largely pivoted away from Russian energy’
Speaking to Anadolu, Mark Zandi, chief economist at Moody’s Analytics, said the war in Ukraine prompted the EU to diversify its energy sources.
"Europe has to a large extent already pivoted away from Russian energy, with Russia's share of EU gas imports falling from more than 40% before the invasion of Ukraine to below 20% now. Increased purchases from the US helped drive this shift, with the US now accounting for nearly 20% of the EU's overall gas imports and half of all LNG imports." said Zandi.
Zandi noted that increased US purchases helped drive the shift, with the US now accounting for nearly 20% of the EU’s total gas imports and half of all LNG imports.
However, he expressed skepticism about the EU’s ability to meet the new targets.
"In 2024, the EU imported only around $75 billion of energy products from the US, of which about $15 billion was LNG. It would take a huge increase to meet the new targets." he said.
Zandi also highlighted institutional limitations, saying the EU lacks the power to enforce such massive spending.
"It's also worth highlighting that the EU ultimately lacks the power to direct this kind of spending, which will instead need to come from national governments or even private companies. That's even more relevant to the suggestion that the EU will invest an additional $600bn in the US over the coming years, which we suspect will prove to be a fairly empty promise," said Zandi.
- US to become key LNG supplier for EU
John Roberts, an energy security specialist at Methinks Ltd, told Anadolu that the agreement represents a significant step forward in transatlantic energy cooperation, positioning the US as a dominant LNG supplier to Europe.
"But only if Europe is defined as the EU and if Norway is excluded from such calculations. In gas, US LNG will certainly grow in importance and will dominate European LNG imports." he said.
While US LNG is set to lead Europe’s liquefied gas market, most of Europe’s oil will still come from the Middle East and North Africa, he said.
"In 2024, Norway exported twice as much gas to the rest of Europe as US, (124.7bcm vs 60.7 bcm) while Algeria also supplied 44.9 bcm" he noted.
"European investment in the US will be shaped by Trump supporting legislation and regulation that favors fossil fuels. But in the other direction, US technology companies will be seeking outlets in European renewables projects," Roberts said.
Roberts pointed to limitations on government influence on the projected $750 billion in EU investments,
"Neither the EU, meaning the European Commission, nor EU member governments can compel their industries to make overseas investments, unless they are state-owned. So much will actually depend on what the US itself offers companies to attract investment. I remain sceptical that the surge of European investment into the US envisaged in the deal, which has still to be both detailed and ratified, will result in such a massive increase." he said.
The long-term impact of the deal will depend not only on political will but on economic conditions and regulatory environments on both sides of the Atlantic, he said.
By Humeyra Ayaz
Anadolu Agency
energ@aa.com.tr