Trump goes to bat for big oil on climate rules in EU trade talks

American oil chieftains and their lobbyists have urged Trump and his cabinet members to use ongoing trade talks with the European Union to push for a rollback of two major climate laws in the European Green Deal. Trump officials have pressed their EU counterparts to scale back those laws in recent negotiations, according to people familiar with the matter.

The administration’s willingness to give priority to the interests of the oil executives—alongside those of several other industries—in a dispute with a vital trading partner shows how influential they have become in Trump’s second term. Oil donors sent millions of dollars to Trump’s third presidential campaign last year, and the administration in turn has tried to shore up demand for their products and rescinded U.S. environmental rules.

Trump last month threatened to impose 50% tariffs on most goods from the EU unless they reach a trade deal by July 9. Many fossil-fuel producers quietly oppose Trump’s plans to place tariffs on countries that buy their fuels. But they have pounced on the U.S. trade dispute with the EU, which for years has tried to transition the bloc’s economy away from fossil fuels and curb emissions that contribute to climate change.

One of the EU laws that U.S. companies are railing against is called the Corporate Sustainability Due Diligence Directive, or CSDDD, which the EU adopted last year. It aims to push companies with more than 450 million euros, equivalent to about $522 million, in revenue across the bloc to pinpoint and curb human-rights violations and the climate impact of their operations and global supply chains.

International oil producers and other companies are balking now at its requirement to report the greenhouse-gas emissions of thousands of suppliers around the world. The law directs them to cut their emissions to levels they say are impossibly low with today’s technology. They also argue that penalties for failing to comply—up to 5% of a company’s net annual turnover, or revenue after deducting rebates and some taxes—are too hefty.

Exxon Mobil Chief Executive Darren Woods has become prominent among oil executives who oppose the legislation. His company already cut investments in Europe by some 70% in recent years following increases in taxes and other regulations. It has sold or shut down 11 chemical and refining facilities and sold eight businesses in its upstream unit across the bloc.

During a January meeting at Mar-a-Lago, Woods explained to Trump why he believed CSDDD would bog down American companies in Europe. Woods and other executives raised the issue again in March at a meeting with Trump at the White House. And at a forum in Brussels this month, Woods warned that the implementation of CSDDD could accelerate the industry’s exodus from Europe.

“This is probably one of the most irresponsible pieces of legislation I’ve seen come across in any country," Woods said in a recent Fox News interview. “The business I do in Texas or Australia or China all have to basically comply with EU regulations."

In subsequent conversations with the White House, the Treasury Department, the Energy Department and the Environmental Protection Agency, senior Trump officials indicated to oil executives that they plan to include the issue in trade talks with the EU. Trump’s negotiators haven’t fully developed all of their negotiating points yet, but have had preliminary discussions about CSDDD, according to people familiar with the matter.

A White House official declined to comment on the specifics of ongoing negotiations but said Trump’s trade and economics team is focused on “unfair regulatory burdens placed on American companies and exports by our trading partners."

Other oil chieftains running companies with global operations have voiced their opposition to the EU’s supply-chain law. Qatar Energy Minister Saad Sherida al-Kaabi has said his country isn’t going to supply Europe with natural gas if its global revenue is subject to fines by the EU.

In March, Republican Sen. Bill Hagerty of Tennessee introduced a bill that would allow U.S. companies to not comply with the law.

Policymakers in France and Germany have also called for scrapping the legislation. The EU made changes to the law in April as part of a broader initiative to simplify its rules and make the bloc more competitive, leading to some delays in its implementation. But oil executives said European lawmakers haven’t gone far enough yet. Other changes are currently in limbo.

The other EU climate standards that U.S. oil companies are asking Trump to target are methane regulations that would require companies shipping liquefied natural gas and other fuels to Europe to begin measuring and reporting methane intensity in 2028. By 2030, the EU plans to require companies to cap the methane intensity of fuel imported to Europe.

When the EU approved the methane rules last year, officials said it would allow the bloc to tackle the second-highest contributor to climate change and air pollution after carbon dioxide.

Oil executives have criticized the EU’s methane regulations in part because they would require American frackers to prove which natural-gas facilities produced which molecules of methane. The path from the wellhead to LNG facilities in the U.S. is far too complex for that, they say.

The Wall Street Journal reported last week that U.S. trade officials circulated a draft text indicating that U.S. energy exports to Europe could be exempt from EU methane rules as part of a trade deal with the bloc.

European Commission President Ursula von der Leyen, who leads the EU’s executive body, appeared to push back on that idea during a Monday press conference. Asked if the bloc might agree to a trade deal with the U.S. that includes changes to existing rules, she said the sovereignty of the EU’s decision-making process is “absolutely untouchable."

Write to Collin Eaton at collin.eaton@wsj.com