In the wake of the war in Ukraine, the European Union rapidly increased its imports of liquefied natural gas (LNG) from the United States, partly filling the gap left by reduced Russian supplies. The shift has not been costless. Washington is actively seeking to expand its LNG exports to Europe, positioning itself as a long-term supplier and, in the process, deepening the continent’s reliance on imported fossil fuels.

Prolonging dependence on an energy source that is neither abundant nor sustainable within the bloc carries significant risks. The danger became clear once again during the current conflict involving Iran, when European gas prices temporarily doubled. The prospects for greater energy autonomy, however, remain encumbered: the transition to an environmentally friendly and more self-sufficient supply of electricity and hydrogen continues to face significant obstacles. This article sets out the challenges of reducing dependence on imported fossil fuels such as LNG, and offers a set of recommendations.

On New Partners, Old Problems and a Plan Still Struggling

In 2022, the EU’s natural gas demand stood at approximately 4,400 terawatt hours. Although demand has steadily declined to 3,500 terawatt hours in 2025, it remains high. Limited domestic reserves mean the share of imports in total consumption is extremely high, accounting for nearly 90 per cent in 2025. The structure of that dependency has shifted dramatically in recent years. Before the invasion of Ukraine in 2022, nearly 50 per cent of the EU’s natural gas imports came from Russia; by 2025, that share had plummeted to about 15 per cent. The US share, by contrast, surged from 7 per cent in 2021 to roughly 30 per cent in 2025.

Under the REPowerEU plan, Europe aims to phase out Russian gas supplies entirely. Yet the continent now risks substituting one dependence for another. The United States has become one of Europe’s largest LNG providers, and the Trump administration is actively working to deepen that reliance. The 2025 EU-US trade deal commits the bloc to importing 250 billion dollars of LNG annually for the next three years. Exploiting today’s high energy prices, the US government is also pushing for the expansion of LNG infrastructure and pipelines in Central and Eastern Europe to facilitate those flows.

The United States is attempting to engineer a lock-in. Natural gas has become a vital component of Europe’s energy system, fuelling electricity generation, heating in households and non-residential buildings, and industrial production. Given the volatile prices of fossil fuels and Europe’s limited reserves, the EU should — in the interest of both combating climate change and strengthening energy security — press ahead with the phase-out of fossil fuels rather than entrench its dependence on imports from outside Europe. The bloc needs to transform its energy landscape by expanding the supply of green energy and increasing its own production.

A key strategy for reducing dependence on natural gas is to encourage households and industrial firms to switch to electricity-based solutions and, in some cases, to low-carbon hydrogen. Electricity-based technologies often deliver higher energy efficiency, making them the more sustainable choice for many applications. Hydrogen, while still emerging, offers potential for sectors where electrification is less practical, such as heavy industry. That is easier said than done.

The EU’s RePowerEU plan sets a target of 69 per cent renewable electricity in the power mix by 2030. As of 2024, 48 per cent of the EU’s electricity already comes from renewable sources, but meeting the 2030 goal will require accelerating annual growth from the current 2 percentage points to 3.5 percentage points — an ambitious leap. The challenge is compounded by regional disparities. Western, South-Western and Northern European countries have made significant progress in adopting renewable energy, while Eastern and South-Eastern member states lag behind, producing an uneven transition across the continent.

Hydrogen is another critical element of the EU’s energy strategy. Under the RePowerEU plan, the bloc aims to produce 10 million tonnes of renewable hydrogen domestically by 2030 and to import a further 10 million tonnes. Yet current progress falls far short of that ambition, according to figures from the International Energy Agency. As of 2025, the EU’s installed low-carbon hydrogen production capacity stands at 0.22 million tonnes annually, with two-thirds derived from blue hydrogen (fossil fuels with carbon capture) and one-third from green hydrogen (electrolysis). Projects currently under construction, or for which final investment decisions have been made, are expected to contribute another 0.9 million tonnes by 2030 — 0.6 million tonnes green and 0.3 million tonnes blue hydrogen. Most are concentrated in wealthier states such as Sweden, Germany, France and the Netherlands. Even if every one of these projects materialises, total annual production would reach only 1.1 million tonnes, a fraction of the 10 million-tonne target.

Further projects remain currently at the feasibility-study or conceptual stage and aim to commence production by 2030. But implementation of hydrogen projects is highly uncertain, even where final investment decisions have been taken. Many projects are fraught with significant risks, including uncertainties over customers and persistent funding gaps. The European Hydrogen Bank, a flagship initiative for financing hydrogen projects, has issued numerous rejections despite the financial incentives on offer. Potential trading partners, meanwhile, have scaled back their production plans — especially for green hydrogen — raising doubts about whether the EU can secure the imports it needs. Without a reliable hydrogen supply, the bloc’s goals for industrial decarbonisation and clean-energy security could be compromised. Compounding the challenge, China — an EU rival in manufacturing — has already surpassed the EU in green hydrogen production, with an installed capacity of around 0.26 million tonnes and still more ambitious plans for low-carbon hydrogen by 2030.

It will be difficult, therefore, to reduce Europe’s dependence on fossil-fuel imports from the United States and other states unless decisive action is taken.

Suggestions for Greater Energy Autonomy

Policy measures should boost both the demand for, and the supply of, electricity and hydrogen. To achieve that, European governments need to shape the economic transition directly. There are plenty of potential instruments; only a few can be sketched here.

On the demand side, the use of Carbon Contracts for Difference should be extended across European states. Carbon Contracts for Difference are a funding instrument introduced by the German Federal Ministry for Economic Affairs to support energy-intensive industries as they shift to climate-friendly production. They offset the additional capital and operating costs incurred over several years when firms switch to environmentally friendly technologies compared with conventional manufacturing methods.

On supply, European governments can continueto de-risk private green electricity generation by using two-sided market premiums. European governments can apply a similar approach to hydrogen production through fixed feed-in tariffs. By doing so, governments guarantee a minimum prices — an instrument Europe has wielded effectively in the past. A less expensive route is for governments to build up green-energy generation themselves, alongside the necessary infrastructure — grids in particular — for both electricity and hydrogen. Public balance sheets can exploit their lower financing costs to construct generation and infrastructure directly. That also means member states should be permitted to increase public debt during the transition phase — a period that will run far beyond 2030.

This article is part of a joint project with the Macroeconomic Policy Institute of the Hans-Boeckler-Stiftung examining Germany’s and Europe’s economic repsonses to the challenges of the second Trump administration.

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