BIMCO releases the Emissions Trading Scheme Allowances (ETSA) Clause for Time Charter Parties 2022

BIMCO has published the Emission Trading Scheme Allowances (ETSA) Clause for Time Charter Parties 2022.

The clause is designed to assist the parties entering into a charter party to allocate obligations and responsibilities in terms of obtaining, transferring, and surrendering allowances for greenhouse gas emissions from ships operating under an emissions scheme, such as the EU ETS. The clause addresses not only CO2 emissions but in general all greenhouse gas emissions, such as methane and nitrous oxides.

BIMCO drafted the clause on the basis of the 'polluter-pays' principle thus the party operating the ship and providing and paying for the fuel under the time charter (a charterer) is the party responsible for providing and paying for emissions trading allowances.

The shipowner has to monitor the ship’s emissions and provide the relevant emissions data and calculations to the charterer. The charterer considers the information available and transfers the appropriate allowances to the owner every month. The clause provides for adjustment of allowances due to off-hire events; i.e. a right for charterers to offset against Emission Allowances due or a requirement for owners to return a quantity of Emission Allowances equivalent to what charterers would otherwise have been responsible for, had the ship remained on hire.

If the charterers fail to transfer any of the Emission Allowances the owners have the right to suspend the performance of their obligations under the charter party whilst the ship will remain on hire for as long as such delay takes place.

The BIMCO clause and the guidance notes can be read via the link below. If you have any queries please contact the author of this news item or your usual club contact.

Categories: Pollution, Sustainability