ETS – Emission Scheme Freight Clause for COAs 2024
Overview
This clause is one from a suite of three clauses developed by the subcommittee for Contracts of Affreightment (COAs). The objective was to provide industry stakeholders with the flexibility to choose a procedure suitable for their specific trade and business. You should consider whether this ETS – Emission Scheme Freight Clause for COAs 2024 is the one best suited to your specific circumstances or whether the ETS - Emission Scheme Surcharge or Transfer of Allowances Clause for COAs 2024 or ETS - Emission Scheme Transfer of Actual Allowances Clause for COAs 2024 would be more appropriate.
As the title suggests, this ETS – Emission Scheme Freight Clause for COAs 2024 deals with all costs arising from the surrender of emission allowances for voyage(s) performed under a COA by including them into the freight rate. The basis of the clause is that the charterer will be the one effectively paying the owner for the emission allowances required for the voyage(s) performed under the COA. The owners then remain responsible for surrendering the appropriate number of emission allowances in accordance with the applicable Emission Scheme.
Copyright in the ETS – Emission Scheme Freight Clause for COAs 2024 is held by BIMCO.
ETS – Emission Scheme Freight Clause for COAs 2024
BIMCO ETS – Emission Scheme Freight Clause for COAs 2024
The Parties agree that the BIMCO ETS – Emission Scheme Freight Clause for Voyage Charter Parties 2023 shall be deemed incorporated in this Contract and in every Charter Party issued pursuant to it.
Background
Background
Emission Schemes are “cap and trade” schemes that cap the total amount of greenhouse gases to be emitted by certain vessels covered by the system. Over time, this cap is reduced as an incentive to reduce greenhouse gas emissions through increased efficiency and the use of alternative fuels.
In the context of the world’s largest Emission Scheme – the European Union Emissions Trading System (EU ETS) – the cap is expressed in emission allowances, where one emission allowance gives the right to emit one tonne of carbon dioxide (CO2) equivalent. For each year, shipping companies must surrender enough emission allowances to fully account for their emissions. In the absence of a uniform global Emission Scheme, other countries and/or groups of countries may develop their own unique Emission Schemes in the future, and this clause is designed to be broad enough to cater for not only the EU ETS but for any other similar Emission Schemes that are imposed.
Drafting Team
The BIMCO ETS – Emission Scheme Freight Clause for COAs 2024 is the result of a collaborative and consensual process between owners, charterers, a P&I Club and legal experts. BIMCO is grateful to the drafting team for their considerable time, effort and commitment in producing the ETS – Emission Scheme Freight Clause for COAs 2024:
- Nicola Ioannou, Oceanfleet (Chairperson)
- Daniel Carr, Stolt-Nielsen
- Henning Babiel, ADM
- Kelly Vouvoussiras, Rio Tinto
- Claire Weustenraed, Pacific Basin
- Lisa-Marie Perrella, Fednav
- Annie Choquette, CSL Group
- Rachel Hoyland, Stephenson Harwood
- Helen Barden, North Standard
BIMCO Secretariat:
- Stinne Taiger Ivø
- Natalie Wong
- Carl Lindahl
As part of the development work, the subcommittee consulted a group of stakeholders engaged in COAs. BIMCO would like to thank them all for their support and valuable input to the process.
Explanatory Notes
These explanatory notes are intended to provide an insight into the thinking behind the ETS – Emission Scheme Freight Clause for COAs 2024. They also explain how the clause is intended to operate and the allocation of responsibilities and costs between the parties. If you have any questions about the clause, please contact us at contracts@bimco.org and we will be happy to assist.
Key Features of the Clause
This clause is drafted for use in a COA, and effectively incorporates the provisions contained in the BIMCO ETS – Emission Scheme Freight Clause for Voyage Charter Parties 2023. The entirety of the ETS – Emission Scheme Freight Clause for Voyage Charter Parties 2023 will be deemed incorporated into to each Charter Party issued under the COA.
View the complete clause and its explanatory notes: ETS – Emission Scheme Freight Clause for Voyage Charter Parties 2023.
Copyright and Availability
Copyright in the ETS – Emission Scheme Freight Clause for COAs 2024 is held by BIMCO.
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