Shipping group BIMCO prepares new charter party clauses for carbon compliance
3rd June 2021 09:41 GMT

The Baltic and International Maritime Council, or BIMCO, is preparing charter party clauses to help stakeholders adjust to new carbon regulations, according to a press statement.

The move comes after a study assisted by BIMCO to understand the consequences of the International Maritime Organization’s low carbon regulations brought to the surface several challenges, including both commercial and contractual, in adopting these measures.

The charter party clauses are getting priority as negotiations are underway for charter parties that extend beyond 2023. BIMCO’s documentary committee will discuss the draft clauses in the next few months with possible adoption in September.

The amendments to IMO’s pollution prevention treaty include a number of measures calling for increased energy efficiency of ships. The Energy Efficiency Design Index was made a priority for new ships along with the Energy Efficiency Existing Ship Index for ships already in operation. There are also new Carbon Intensity Index, or CII, and certification requirements. The new regulatory framework could also mean reduction of engine power, speed and reduced cargo intake.

“The CII is not a static requirement; it requires continuing improvements. The owners do not have the contractual right to slow down or shut out cargo because that would infringe the charterers’ contractual rights. But charterers may also have carbon reduction targets that they need to meet, so a commercial solution needs to be found,” said Grant Hunter, head of contracts and clauses, BIMCO.

One of the main factors to be taken into consideration is the cost of compliance. A reasonable allocation of costs will be the focus of BIMCO clauses. Carbon clauses will also require owners and charterers to work together on technical and operational activities and find mutually agreeable solutions to cost allocation.

“At the moment there are no sanctions for non-compliance, so it is difficult to see what the real consequences of the new carbon regulations are for the shipping industry. There is no point reducing carbon emissions on one ship by reducing speed and shutting out cargo if it means that an additional ship may be required to fulfil charterers’ transportation requirements. The market will need to find a sensible balance in dealing with these regulations,” Hunter added.

Platts ,
3rd June 2021 09:41 GMT