BIMCO has released its FuelEU Maritime clause for incorporation into time charterparties when the carbon standard comes into force on January 1.

The regulation sets ratcheting targets to reduce the greenhouse gas intensity of ship fuels for ships calling in Europe, starting with a 2% reduction in 2025 and progressing to 80% reduction by 2050.

Shipowners or operators had to prepare monitoring plans by August 31 and must start collecting data from January 1, then report it annually.

BIMCO said its documentary committee adopted the clause on November 25 to help companies align their contracts ahead of time.

It is meant to help shipowners, charterers and others work out who must pay penalties, since charterers often control how the ship is run, and therefore how much it pollutes.

“The FuelEU Maritime regulation will significantly impact the shipping industry, even more so than the EU Emissions Trading System,” said BIMCO documentary committee chair Nicholas Fell.

BIMCO said the clause was the result of collaboration between owners, charters, P&I and legal experts and others. It ran several industry consultations during drafting to make sure the clause worked in practice.

Reed Smith partner Antonia Panayides served on the BIMCO drafting committee. She said the new clause has charterers pay a surcharge to owners if the vessel incurs a compliance deficit during the charter period, with the parties to agree when the payment should be made.

If the charterer redelivers the ship with a compliance surplus, the parties can agree for the owner to pay the charterer for it, where that surplus remains with the ship and has value.

Charterers may also instruct owners on pooling, borrowing and banking, subject to the duration of the charter period.

Panayides said the clause could be adapted to suit parties’ commercial arrangements, such as taking into account charter duration and whether owners have already committed to pools.

“Everyone affected by the regulation feels strongly about its impact, and the clause has been structured to help achieve compliance,” Panayides said.

“By offering guidelines and accommodating flexibility, the clause aims to provide a foundation for parties to collaborate and meet the regulation’s requirements.”

Panayides said owners should take FuelEU Maritime into account on contracts of affreightment, shipmanagement agreements, bunker supply agreements and sale-and-purchase contracts, not just time charterparties.

The company responsible for compliance with FuelEU Maritime is the shipowner, but in practice it may be the third-party shipmanager who has agreed to take over all duties and responsibilities under the ISM Code.

BIMCO said it was therefore working on another clause for SHIPMAN, its shipmanagement agreement.

Download the Lloyd’s List App — the essential tool for staying ahead in the maritime industry, anytime, anywhere! Available now on the App Store and Google Play. More information here