In response to the European Union’s upcoming inclusion of the shipping industry in its Emission Trading Scheme provisions, the Baltic and International Maritime Council (BIMCO) has developed a portfolio of new emission trading scheme (ETS) clauses for contracts covering chartering and ship management. The EU ETS is a cornerstone of the EU’s policy to combat climate change. The European Commission says it is the world’s first major carbon market, and remains the biggest one.
Carbon markets are trading systems by which companies or individuals can compensate for their greenhouse gas emissions by purchasing carbon credits from entities that remove or reduce greenhouse gas emissions. The ETS is one of a number of measures announced in July 2023 by the International Maritime Organisation (IMO) in order to reduce shipping’s GHG emissions.
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 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, published on December 8. BIMCO says the clauses aim to facilitate collaboration, and provide clarity and certainty between parties as new regulations come into force. A BIMCO subcommittee is currently working on the development of an ETS clause for Contracts of Affreightment (for freight taking up less than a whole ship).
BIMCO says its new ETS clauses have been developed for use with any applicable emission scheme, including, but not limited to, the EU ETS. This has been done to ensure that the clause can be used with other programs that may come into force in the future.
