Sustainability and green taxes

Local Contact

17 Nov 2025
Subject Tax updates
Categories Tax

Overview:

Postponement of the UN International Maritime Organizations shipping taxation

On Friday 17 October, the United Nations' International Maritime Organization (IMO) postponed the adoption of draft amendments to MARPOL Annex VI that would introduce the IMO Net-Zero Framework, for a global carbon tax on international shipping. This came following a rejection of the proposal by the United States, stating the tax would impose unfair costs on American consumers and businesses.

The meeting will reconvene in 2026, likely resulting in a delay to the expected implementation of the taxation that was expected in 2027.

What does this mean for trade
  •  The potential of a global shipping tax will lead to potential increases in shipping costs that might be passed on to consumers and businesses worldwide. 

European Parliament delegation prepares position for Conference of Parties (COP30)

In early October, the Committee on the Environment, Climate and Food Safety (ENVI) published a paper in preparation for the European Parliament delegation to the COP 30 climate summit.

Discussions are anticipated to address the implementation of the Paris Agreement, focusing on current gaps in emissions reduction, adaptation approaches, and financial support for developing nations. The paper also refers to updates to Nationally Determined Contributions (NDCs), new indicators for measuring adaptation progress, and expectations on the EU’s new climate commitment being adopted prior to COP30.

What does this mean for trade
  • Ambitious emissions reduction targets and updates to NDCs may lead to new regulations.
  • Increased financial support for developing nations and new adaptation measures could drive investment flows and create opportunities for green transition. 

CBAM trends report 

Earlier in the year, the World Bank released its Prosperity Notes Series, providing an analysis of the EU’s Carbon Border Adjustment Mechanism (CBAM) and its effects on global trade and business.

The findings show that the EU CBAM not only affects trade patterns but also encourages wider adoption of domestic carbon pricing and regulatory alignment globally, which was one of the objectives of the EU CBAM. The report introduces also new CBAM exposure indices, highlighting how increased carbon costs will make high-emission imports to the EU more expensive. Developing economies, such as Mozambique (aluminum) and Egypt (fertilizer), face significant barriers to market entry due to higher exposure. Conversely, countries with lower emissions, like Ghana and Morocco, may gain a competitive advantage. 

What does this mean for trade 
  • Several jurisdictions are considering or already implementing Border Carbon Adjustment measures like EU CBAM, such as the UK, Turkey, Norway etc. Furthermore, as we are approaching COP30, it is expected that new carbon pricing measures could be announced by government striving to meet their Net Zero ambitions
  • Both trends may have impact, directly or indirectly, on the costs of goods and their trade routes due to their competitiveness in the destination markets. New measures will also bring new compliance requirements.

European Commission announces proposal for greater stability for the upcoming EU Emission Trading System 2 (EU ETS2)

On 21 October, Commissioner Hoekstra announced a forthcoming proposal to reinforce safeguards and provide greater predictability to future carbon-price levels through the regulatory framework for the new EU ETS 2 due to become operation in 2027. The EU ETS2 aims to target emissions from fuels for road transport and buildings as well as local provisions for certain upstream entities that place fuel on the market.

Key aspects announced within the proposal include amendments to the Auctioning Regulation, collaboration with the European Investment Bank and targeted adjustments to the Market Stability Reserve. 

 What does this mean for trade 
  • The proposal will likely aim to enable more reliable planning and investment decisions, in particular for companies placing fuels in the EU market, including the type, volume and origin of fuels The latter is linked to the wider EU policy decisions on the EU’s renewable energy target under the REPowerEU Plan.
  • The amendments will aim to foster a more stable and predictable trading environment for affected sectors.

Revised Waste Framework Directive Textile’s Extended Producer Responsibility (EPR) enters into force

On Thursday 16 October, the Waste Framework Directive entered into force. This follows the adoption of updates to the Directive earlier in the year. 

The updates introduced a common rule for the Extended Producer Responsibility (EPR) for textiles for Member States. All Member States are required to establish their own EPR scheme for textiles and footwear by 2028. Under such schemes, companies placing textile and footwear products on the market, regardless of whether they are established in a Member State or sell directly to end users, will pay a fee. EPR fees will be adjusted based on sustainability criteria, including the ones developed as part of the Ecodesign for Sustainable Products Regulation (ESPR).

What does this mean for trade 
  • The new costs and administrative requirements due to the EPR fees could impact cross-border trade and market access strategies.
  • EPR fees will encourage sustainability, which may require trade partners and supply chains to adjust product design, sourcing, and production methods to comply with EU standards.

China export restrictions and controls 

On Thursday, 9 October 2025, China announced new and broader export restrictions on rare earth metals, further tightening the global supply of these critical raw materials essential for manufacturing semiconductors and advanced technologies. This move builds on previous controls and is part of Beijing’s ongoing strategy to lead across sectors such as computer chips, electric vehicle batteries, and artificial intelligence hardware. As a part of the announcement, from 8 November, China would restrict exports of key equipment for electric car battery production. Furthermore, from 1 December, China would block exports not only of rare earth metals and magnets but also of related manufacturing equipment and information.

During the summit in the week of 27 October, between Presidents Trump and Xi Jingping, they agreed to suspend recently announced export controls for one year as well as new levies on shipping. The US, meanwhile, tariffs on certain Chinese goods.

In the background there are discussions on the China’s official five-year plan which is expected to be approved in March 2026. The plan is anticipated to aim at strengthening its existing manufacturing dominance and to address remaining vulnerabilities where it is still reliant on foreign technology. 

What does this mean for trade 
  • On-going volatility in the global supply chains, affecting businesses reliant on critical raw materials including the automotive, technology and other supply chains. 
  • Different measures, export controls versus the five-year plan, will have a different impact on the supply chains in short and medium term, calling for on-going review supply chains to address resilience and materials availability. 

Members of the European Parliament vote against the current proposed Omnibus I simplified sustainability and due diligence rules

On 22nd October, the European Parliament voted by secret ballot to confirm their position on the Omnibus I simplification of the EU sustainability and due diligence regulations. This simplification is part of the Commission’s wider push, launched in February under the Omnibus I to simplify regulations and reduce administrative burdens on businesses. 

The results concluded with Parliament voting against the Legal Affairs Committee’s proposed simplified rules by 9 votes. 

  • Amendments under consideration include: 

a. Corporate Sustainability Reporting Directive (CSRD) threshold increases for businesses with over 1,000 employees and annual turnover exceeding €450 million.

b. Corporate Sustainability Due Diligence Directive (CSDDD) to only apply for businesses with more than 5,000 staff and €1.5 billion turnover.

What does this mean for trade 
  • MEPs will now consider amendments at the plenary session in Brussels on 13 November. 
  • By limiting regulatory scope to only larger companies, international trade partners may view EU markets as more accessible.

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