BIMCO: ETSA Clause for Time Charter Parties 2022

Ship emissions

On 22 June 2022, the European Parliament adopted a revised proposal for the EU Emissions Trading System (EU ETS). Shipping was added to this system as part of the EU's Fit for 55 package. Under the scheme, Owners are obliged to follow mandatory reporting obligations such as the EU MRV to establish the ship's emissions. BIMCO has now issued its Emission Trading Scheme Allowances (ETSA) Clause for Time Charter Parties 2022 which provides for the allocation of responsibilities and costs between Owners and Charterers under Emissions Trading Schemes (ETS), including the EU ETS.

The ETSA clause follows the principle that the party providing and paying for the fuel should also provide the emissions allowances to cover the greenhouse gases emitted by that fuel. It establishes Charterers' responsibility to "provide and pay for" allowances corresponding to the ship's emissions during the time charter period. Under the EU ETS, each allowance entitles the holder to emit one tonne of CO2. Charterers must receive from Owners the data they need to calculate the allowances required to cover their emissions. Co-operation between Owners and Charterers is therefore essential to ensure the timely sharing of data and information for compliance with the above mandatory obligations. The ETSA clause works on the principle of transferring allowances as opposed to reimbursing owners for the cost of allowances. This is to avoid complications with price fluctuations. 

BIMCO's ETSA Clause for Time Charter Parties 2022 is now available to download on BIMCO's website

Jacqueline Tan

Legal Services Manager