BIMCO develops “game-changing” shipping carbon emissions clauses

Written by Nick Blenkey
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In the wake of COP26, the pressure is on for the International Maritime Organization to up its greenhouse gas reduction ambitions even further.

Meantime, from January 1, 2023, IMO’s current revised initial greenhouse gas rules will start to take effect. They aim to reduce 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 charter parties, 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 today (December 7) and is now ready for insertion into time charter parties. 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.

BIMCO Subcommittee

The BIMCO subcommittee 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.

London-headquartered law firm HFW is on the sub-committee, and is represented by HFW partner Alessio Sbraga. HFW is also helping BIMCO draft a new EU ETS clause and a time charter clause dealing with the CII regime, which will both be published in the coming months.

HFW has previously helped BIMCO draft several standard contract and clauses, including the industry’s first standard contract for autonomous shipping, its first cybersecurity clause, the industry’s first standard offshore decommissioning contact, and two clauses relating to IMO’s 2020 sulfur emission rules (one of the first steps towards reducing harmful GHG emissions from shipping).

Carbon Intensity

“We are proud to continue to support BIMCO and the wider shipping community on these vital carbon emissions clauses,” says Sbraga. “The shipping industry is responsible for around 90% of all global trade, and around 3% of all global GHG emissions. 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 charter parties or are entering into charter parties 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.”

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