BIMCO's New Carbon Emissions Clauses a 'Game-changer'

A series of clauses has been drafted in response to strict new environmental legislation that will seek to reduce the industry's carbon emissions and which will change the way ships are operated in the future

From January 1, 2023, the International Maritime Organization's revised initial greenhouse gas rules will start to take effect, with the aim of reducing carbon emissions from ships by 40% from 2008 levels by 2030. This will involve ships meeting increased technical measures to improve a ship's energy efficiency (EEXI), and ongoing operational measures to reduce a ship's carbon intensity in accordance with a carbon intensity indicator (CII) regime.

In addition, the EU is seeking to include shipping in the EU's existing Emissions Trading System (ETS) from 2023.

In preparation for these significant regulatory changes, BIMCO is putting together a series of what it describes as "game-changing" carbon emissions clauses for time charterparties, which seek to address the relationship between shipowners and charterers in the context of compliance with the new carbon emission regulations.

The first, BIMCO's EEXI Transition Clause 2021, was published December 7 and is now ready for insertion into time charterparties. The clause deals allocates the risk and responsibility between the parties where technical modifications are required, in particular where the power output of a ship's engine is limited.

The BIMCO sub-committee tasked with drafting the series of carbon emission clauses is made up of representatives from BIMCO, owners, charterers, P&I clubs, and technical and legal experts.

Alessio Sbraga, Partner, HFW, a a UK-based law firm on the sub-committee, said, "With trade levels and therefore shipping activity set to increase significantly over the next decade, it is vital that urgent steps are taken now to reduce the global fleet's carbon footprint by improving energy efficiency and reducing carbon emissions - including carbon intensity - wherever possible.

"For those parties who have existing charterparties or are entering into charterparties which span into 2023, BIMCO's EEXI Transition Clause 2021 is a necessary first step towards bringing much-needed commercial certainty in anticipation of the new MARPOL carbon emissions regulations due to come into force in 2023."