US-China Shipping Standoff: IMO $10B Green Levy Blocked

In October 2025, the International Maritime Organization's (IMO’s) Net-Zero Framework—designed to introduce carbon levies on high-emission fuels and raise up to $10 billion annually for developing nations—was delayed by a 57-49 vote until October 2026.

This episode examines:

• The U.S. role in blocking the measures and reported use of diplomatic leverage

• Saudi Arabia’s contrasting approach with economic incentives

• China’s $18 billion investment in alternative-fuel shipyards and its vote alongside the U.S.

• The current state of green-fuel technologies: LNG leakage risks, hydrogen supply challenges, ammonia toxicity, and early-stage nuclear options

• Indirect military dimensions: low-emission propulsion for naval stealth and endurance, e.g. the US Virginia class (SSN-774 class) nuclear submarine 

• The EU’s Carbon Border Adjustment Mechanism (CBAM) and its potential ripple effects on high-carbon supply chains

• A parallel from France’s delayed Crit’Air vehicle-emission scheme

The episode also includes clips of an an interview discussion between me and shipping expert Simon Ward, in May 2025, which somewhat predicted US IMO involvement and the result, some 6 months before it happened!

Keywords: US China trade, shipping standoff, IMO blocked, levy blocked 2025, US China shipping, IMO $10B, green levy blocked, carbon tax shipping

I’ll deliver the closing address at ENSM’s conference “When Geopolitics Intrudes on Global Maritime Trade” on 20 November in Le Havre. Join in person or online—details below.

ENSM Conference – 20 November, Le Havre

Register: https://lnkd.in/e8tueJZX

Contact: international@supmaritime.fr

Sources:

• UNCTAD – 80% of trade by sea

• IMO MEPC 82 – vote details

• Reuters – U.S. diplomatic tactics

• The New York Times – strong-arm reports

• Climate Change News – Saudi incentives

• Yale Climate Connections – cost projections

• U.S. Navy – Virginia-class

• BBC – AUKUS deal

• Global Times (20 Oct 2025) – CSSC statement

• China Briefing – retrofit investments

• Truth Social – Trump quote

• Connexion France – Crit’Air

• European Commission – CBAM

Email: globaltradedeciphered@gmail.com

X: @justinhaydenm

 #GlobalTrade #Maritime #Geopolitics #GreenShipping #ENSM

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Chapters

• 0:00 The Green Shipping Standoff
• 0:17 Inside The IMO Vote And Levy
• 2:27 Simon Ward’s analysis
• 6:26 US Leverage And Global Tactics
• 9:26 Strategy, Submarines, and Security
• 11:38 China’s Flexibility And Play
• 15:35 Policy Whiplash And Investor Risk
• 17:24 Practical Business Implications

Transcript

Justin Hayden Miller: 0:00

This episode concerns a green shipping standoff. Seemingly calm, but where US-China tensions stir well below the surface. Shipping carries 80% of world trade, yet its green future has just been frozen, at least for a full year. In October 2025, the International Maritime Organization's Net Zero Framework, complete with a $10 billion carbon levy, was delayed by a vote of 57 to 49. Today we decode the geopolitics behind it all, the broader ocean ripple effects on the shipping industry, naval strategy, and what companies need to be considering. Let's analyze. Welcome to Global Trade Deciphered. I'm your host, Justin Hayden Miller, a global trade lawyer with a leading European firm. Decoding the policies shaping global trade and emerging trends. What fewer realize is that it is the only global industry where one country can effectively influence the veto of the future of the entire fuel market. After years of negotiation, the Marine Environment Protection Committee, a subsidiary body of the International Maritime Organization, the IMO, gathered in London in October 2025 to finalise a net zero framework, a suite of measures including carbon levies on high emission fuels. Why? To tax shipping pollution in order to incentivize cleaner technologies, with revenues potentially of up to $10 billion annually, funneled to developing nations for fleet upgrades and climate adaption. Supporters saw this as a game changer because of extreme weather phenomena, to counter climate change, rising sea levels, and submerging ports. Nevertheless, the US decisively blocked the implementation. Russia was also part of a block of oil producing and developing nations, including Saudi Arabia, the UAE, Indonesia and others that opposed the framework's global pricing mechanism and fuel standards, resulting in a 57-49 decision to delay until October 2026. Why? Let's decode the arguments. Back in May 2025, I discussed shipping pollution with Simon Ward, a seasoned international shipping expert. Until today, the conversation hasn't been published, but it touches on the subject of this episode, so let me play you an extract. Listen closely. These clips highlight precisely what has happened. Simon, shipping powers global trade, but its environmental footprint is often overlooked.

Simon Ward: 2:55

Shipping being a global industry and being governed by the United Nations. When it comes down to shipping itself, 75% of emissions are from road transport. And there's an equal amount emitted by aviation as there is by shipping. But because of the way that shipping is regulated, the International Maritime Organization agency based in London, if your ship is flagged within the IMO, which most flags are, they have to abide by minimum standards. And one is the Convention on Prevention of Maritime Pollution, otherwise known as Marple. There's no flag that can have an exemption unless it wants to trade by itself. Most of them burn heavy fuel oil. Once you've refined petrol, aviation fuel, gasoline, diesel, and so on, there's this horrible sludgy stuff at the bottom called fuel oil. And it's very cheap. And so ships adapted to using this. But the thing about this stuff is it carries a big energy punch.

Justin Hayden Miller: 4:16

Tesla electric powered ships one day, perhaps?

Simon Ward: 4:20

Over four or five thousand nautical miles. Where would you recharge it? There's no place at sea for a charge point for an oil tanker. So so the technology isn't there. Solar panels might have the electronics on the engine, the lighting, and maybe even the cooking, but not much more, even if you covered the ship with it.

Justin Hayden Miller: 4:38

But seriously, what's your take about more likely candidates such as LNG or even nuclear?

Simon Ward: 4:44

Now there's alternative technologies and alternative fuels that are coming through. But unfortunately, they're either a problematic like liquefied natural gas, I think when it leaks into the atmosphere is something like 90 times more harmful to the atmosphere than carbon dioxide. Liquefied natural gas is seen as a transition fuel. Ammonium and hydrogen have been talked about as being alternative fuels, but the technology is really, really difficult. The supply of these fuels is not there. The easiest way to make hydrogen and ammonia for that matter is to use liquefying natural gas, which doesn't really solve the problem. There is talk of mini nuclear reactors being used on ships, but for security and safety reasons, this is a very early thing. The industry is very much focused on this because it's been given targets and it's globally enforced. I think the only way it is enforced, by the way, is that the United States isn't a big player in the International Maritime Organization. Otherwise it would be causing the same problems as it's done with the World Health Organization and the United Nations itself.

Justin Hayden Miller: 5:48

Two things struck me listening back to that discussion from May. Firstly, Simon Ward indicated that the only way the emissions targets would be enforced would be if the US continued not to be a big active player at the International Maritime Organization. The US did decide to get involved in the IMO after the summer, and as a consequence, the important emission mechanisms were stopped. My discussion with Simon Ward was extremely prescient. And that's why this podcast exists, to spot future major world events before they happen. Before we get into the heart of this episode, a quick note to say that I've been invited to deliver the closing address for an important conference hosted by France's École Nationale Supérieure Maritime. That's the National French Maritime College. The conference is titled When Geopolitics Intrudes on Global Maritime Trade and will be held this month on November 20th in Le Havre, the home of France's largest container port. It features a lineup of top-tier experts, Deputy Director of the WTO, as well as senior naval commands, strategic foresight groups, and international maritime associations. But if you're attending, let's connect. It will be an opportunity to chat about the subjects over coffee with you. The issue isn't purely environmental either. It's deeply geopolitical. The US's role in blocking the IMO measures illustrates an evolving use of economic threats, I say leverage, to achieve foreign policy objectives. Because reports by Reuters, for example, indicate US officials threatening tariffs and penalties against countries and even visa revocations for individuals supporting the pricing mechanism. The New York Times described this as strong-arm tactics. According to the UK newspaper The Guardian, this approach contrasts with Saudi Arabia reportedly offering conciliatory incentives, such as promises of future deals or economic opportunities to nations voting against the plan. Some see this as a carrot and stick dynamic, increasingly common in international diplomacy. But you might be concluding by what I'm saying that I don't agree with the US's position to oppose the measures, which is not the case at all. Because as Simon Ward said in the clip, the technology just isn't quite there yet to implement all these green ideas. In shipping, therefore, my view is that a hasty switch to clean fuel targets risks stranding fleets built for fuel oil, potentially making them obsolete with no proper alternative being in place in time, echoing even Germany's experience which rushed the country from nuclear and coal, leaving it dependent on Russian gas, and screwed by the Ukraine crisis as a consequence. Cheap, energy-dense fuel isn't easily replaced, and green alternatives face steep climbs in tech, supply and safety. Viable alternatives simply aren't scaled yet. Hydrogen production still very much relies on an element of fossil fuels. Ammonia poses toxicity risks, and infrastructure for green fuels lags in ports worldwide. Imposing costs now could inflate shipping fees by 16 to 50% by 2050. So say industry estimates and Yale Climate Connections. I said that shipping pollution targets aren't purely environmental, they're deeply geopolitical, and I say that it could even have indirect military and security implications. By preserving the status quo, it may safeguard short-term military autonomy but introduce long-term vulnerabilities. Low emission technologies aren't just about sustainability. They offer strategic advantages such as enhanced stealth in naval vessels. Modern nuclear-powered submarines like the US Virginia class SSN 774 exemplify this with reduced detectability aiding operations in contested waters and evading detection in hot zones like the South China Sea. Australia's cancellation of a $50 billion deal for French diesel electric submarines with Naval Group in favor of nuclear options under AUKUS underscores these considerations. Emissions and stealth weren't the sole factors, but could have helped tip the decision. China, meanwhile, sees green technology as advantageous for its military. The official newspaper The People's Daily is reported as having stated in March 2025 in an editorial that green energy innovations in ship propulsion, such as advanced batteries and biofuels, are not merely environmental measures but enablers of superior endurance in contested seas and lower emissions for strategic discretion. Only a couple of days ago, the Financial Times published an article highlighting China's rapid scaling of green energy, accelerating green adoption by flooding markets with low-priced solar panels, wind farms, and electric vehicles. And this dominance is seen as posing a risk to the West. But China nevertheless voted against the IMO green reforms alongside with the US. Why? Perhaps or even likely to maintain diplomatic stability because of the recent Trump Qi meeting, and in a bid for an apparent deescalation of tensions. The Chinese are a nation of Mayong players, a game that requires a blend of technical skill, psychological agility, and personal discipline. But the most striking of the qualities of a master Mayong player is strategic flexibility. And that is what I believe we are seeing being played out by China on this issue. The reality is that China spent $18 billion retrofitting shipyards for methanol, ammonia, and battery hybrids, expecting the levy to price out old fleets. So I believe that China, by voting with the US on this issue, doesn't illustrate genuine alignment, but rather Mayong strategic flexibility. Trump labelled the measures as a global green new scam tax on Truth Social. But the cancellation of China's green investment returns because of the US may themselves appear as a scam from Beijing's perspective. There's a lot of money riding on this. I was at a trade conference in Rouen, France, in June this year. I met someone who I know who works at the port. He was furious. Let me explain. French measures required French cities to ban older petrol and diesel cars from January 2025 to reduce pollution. The scheme was called Critter. But before the measures were effective, the French government delayed, exempted certain cities before dumping the scheme completely in May 2025, except for Paris. He had a diesel car which he was really quite attached to, but he just bought a brand new car in place of his diesel one to be compliant with the new rules. And then the French government promptly cancelled the scheme. I won't tell you how much he lost. But it's a parallel example, isn't it? On a micro level in Rouen, of how the Chinese might just be feeling on a macro level on a global scale. Spend a load of money to be compliant for an upcoming scheme that's delayed or not implemented at all. The next time the French government wishes people to prepare for anticipated climate regulations, well they might just wait to see if it happens. And in the same way, the next time the IMO seeks countries to anticipate future changes, well, countries might just do the same thing. So what are my conclusions? I say that delaying or even blocking the IMO pollution cuts and measures wasn't inherently wrong. If the technology isn't and won't be ready in the allotted time. But the manner in which it was achieved could be damaging and might ultimately backfire. A clear and stable regulatory environment is often associated with reduced market volatility and more stable pricing. What happened in October at the IMO will undoubtedly result in reduced confidence in regulatory changes, which will create major uncertainty in the shipping industry. Companies, you need to start considering stress testing your operations, factoring in potential significant fuel cost spikes, say of up to say of 30%. Also factor in potential tariffs, case of Chinese countermeasures. But having listened to my previous episodes, you've already started doing this. Think safeguarding yourselves for crises and note that just because the IMO has postponed the measures, political pollution issues haven't necessarily gone away at all. Because there is the EU's carbon border adjustment mechanism, CBAM, potentially to contend with. This aims at imposing tariffs on high emission imports, but not on the ships themselves. But since President Trump has spoken of his dislike of global green new scam taxes, this measure too could escalate tensions. Shipbuilders, shipowners, and transporters are now confronted with the question of which way to jump. What fuel should their ships run on in order to stay ahead of the game? And what types of ships need to be built to meet future demand and future regulatory requirements. All things being equal, China being the world's shipbuilder is likely affected most directly by this, which incidentally I am sure has not gone unnoticed by the US. Sustained stalling, allowing the US to play catch up in the maritime industry, could well invite countermeasures from the Chinese. But do you know what? The US's maneuver, or at least delaying the IMO measures, bears striking parallels to defensive tactics in Mayong, where a player often prioritizes blocking an opponent rather than taking a directly aggressive approach. This tactic isn't about outright destruction, but more about stalling progress to erode momentum. In order to take the initiative later, without committing the US's own Mayong tiles, meaning its resources, prematurely. So my ultimate take on all this is that Trump and the US may well be seeking to beat the Chinese at their own game. To be continued. If you're listening to this, then thank you for having listened to the podcast from beginning to end. The content of this podcast is intended only to provide an information resource of interest and does not constitute legal, tax, business, or financial advice of any kind. Should you require advice, then you should engage an appropriately qualified person to provide you specific advisory services in the field. The views, thoughts, and opinions expressed in this podcast are my own and do not necessarily represent the views, thoughts, or opinions of any law firm, nor that of any third party, other person, company, or organization. Stay tuned for the next episode.