The shipping industry is facing an increase in new regulations from the International Maritime Organization (IMO) and the European Union (EU). To support the industry, shipping organisation BIMCO has developed a portfolio of new emission trading scheme (ETS) clauses.
BIMCO’s documentary committee adopted a new emission trading scheme allowances clause for BIMCO’s ship management agreement, SHIPMAN, and three ETS clauses for voyage charter parties. The clauses aim to facilitate collaboration and provide clarity and certainty between parties as new regulations come into force, changing the way the industry operates to achieve compliance and cut emissions.
“In less than one month, our industry will be included in the EU ETS, and in the future, we can expect similar emission schemes. The new ETS clauses have been developed to help parties meet the requirements of the EU ETS as well as any applicable emission scheme we may face in the future,” said Nicholas Fell, chair of BIMCO’s documentary committee.
On January 1 2024, the EU ETS will be extended to cover CO2 emissions from ships of 5,000 gt and above calling EU ports, regardless of flag. Ships engaged in voyages between two EU ports, and voyages between the EU and a third country, will be covered by the EU ETS.
BIMCO’s new ETS clauses have been developed for use with any applicable emission scheme, including, but not limited to, the EU ETS. This is done to ensure that the clause can be used with other schemes that may come into force in the future.
“The purpose of the ETS clause for SHIPMAN is to allocate costs and responsibilities between owners and managers, thereby facilitating compliance with emission trading schemes. This includes the reporting of emission data, as well as the transfer and surrender of emission allowances for ships operating under an emission scheme,” said Stinne Taiger Ivø, director, contracts and support at BIMCO.
The clause has been developed for inclusion in the upcoming revision of SHIPMAN and as a freestanding clause for use with SHIPMAN 2009.
BIMCO’s documentary committee also adopted three ETS clauses for voyage charter parties which are an ETS – emission scheme freight clause for voyage charter parties 2023, an ETS – emission scheme surcharge clause for voyage charter parties 2023 and an ETS – emission scheme transfer of allowances clause for voyage charter parties 2023.
The EU ETS introduces a challenging dynamic within the shipping industry, and has given rise to tensions between shipowners and charterers.
“As the industry gears up for January 2024, a key area of focus is negotiating the language in charter agreements. The goal is to establish a fair allocation of costs and legal risks, but this process is not without its hurdles,” Nick Austin, transportation partner at global law firm Reed Smith, told Splash.
Disagreements can arise concerning the sharing of vessel emissions data, determining the emissions that charterers should be responsible for, and navigating the intricacies of compliance with the scheme, Austin explained.
