89 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Introduction Croatia’s first liquefied natural gas (LNG) terminal in Omišalj, Krk, opened in 2021 in furtherance of energy hub status, after decades of planning, failed investments, anti-LNG environmental activism, and accusations of governmental corruption. The €233.6M project was funded by the EU Connecting Europe Facility and the national government and was designated a Project of Common Interest (PCI) for Eastern European energy interconnection. It represents a flagship investment in regional energy security, eliminating all Russian gas imports within five years of operation. By 2024, Croatia had become a net energy exporter for the first time in two decades, positioning itself as a future regional energy hub for Central and Eastern Europe (CEE). Nevertheless, the project remains highly contentious, recently inflamed by a 2025 expansion that doubled storage capacity to more than twice domestic demand. Although the terminal is praised for its security benefits and economic potential, Croatia’s investments in LNG are not easily reconciled with current European environmental policy. Methane emissions data challenge both Croatia’s energy strategy and LNG’s reputation as a low carbon transition fuel. Despite Croatia’s leading status in renewable electricity generation and high potential for renewable expansion, the National Energy and Climate Plan (NECP) is unambitious and ambiguous in its climate goals compared to similar member states, meeting minimum EU standards but not establishing unique targets. Further, increased gas availability has not driven reductions in coal or oil consumption, signaling that infrastructural investments prioritize exportation. Croatia’s energy strategy is becoming further misaligned with Europe’s increasingly stringent climate acquis. In 2022, the government announced a €180M plan to expand the floating storage and regasification unit (FSRU) and to build the Zlobin–Bosiljevo pipeline, both of which were completed in 2025. The latest NECP draft budgets more than €500M for international pipeline infrastructure development. As Croatia accelerates LNG spending, the question is whether this intensity of investment is merited. The security impacts are clear and economic implications well discussed. However, climate and sustainability implications have been considered only for local environmental disturbance, not fully addressed regarding long-term LNG investment. Overinvestment in LNG diverts resources from renewable energy innovation and exposes Croatia to legal and financial risks under Europe’s binding 2030 and 2050 climate legislation. This framework, known in energy policy as the energy trilemma, balances the tradeoffs between the security, affordability, and climate vertices. Croatia’s LNG policy optimizes heavily for the first at the expense of the other two; although the Krk terminal has delivered real security gains, Croatia’s singular investment focus in LNG, reinforced by sunk costs, a 99-year land concession, and import dependence on the US, creates a path dependency risk that threatens EU climate compliance and the nation’s long-term energy hub ambitions. Background LNG is natural gas cooled until it is liquid for shipping and storage, the alternative for natural gas transmission where pipelines do not exist. The US is the world’s leading natural gas exporter, primarThe trilemma in Croatia’s natural gas sector Gideon Sobek Croatia’s new liquefied natural gas terminal has delivered security gains since 2021: eliminating Russian gas dependence, establishing Croatia as a regional energy exporter, and moderating electricity prices. However, accelerating gas investment and growing US dependency reveal conflict with binding EU climate commitments, and fugitive methane costs threaten welfare gains. Croatia’s singular focus on gas risks forfeiting its competitive edge as Europe decarbonizes. Early renewable investment and terminal conversion planning are essential to preserving long-term energy hub ambitions. doi:10.18275/pbe-v044-012
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