Bimco’s FuelEU clause is ‘balanced’ but has gaps, says OceanScore

The FuelEU Maritime regulations, due to enter force on January 1 and applying to ships of more than 5,000gt trading within, to or from the waters of the European Economic Area, is significantly more complicated than the EU Emissions Trading System (ETS), already in place since January this year.

There are some similarities, but also key differences, including the parties who are responsible. In FuelEU, the party responsible for monitoring, reporting and verifying emissions data and adhering to the regulations is the Document of Compliance (DOC) holder, usually the ship manager. Under the ETS, it is the vessel owner or bareboat charterer. There are other key differences too, as outlined in Seatrade Maritime’s Regulatory update podcast released today.

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OceanScore commented that in reviewing and discussing the Bimco clause with customers since its release on Monday, it is clear there are still some gaps to be filled before reaching total cohesion. “Creating charterparty clauses which satisfy the wide range of needs of owners and charterers in shipping generally is a daunting undertaking,” the consultancy commented.

“We saw this with the EU ETS clauses, which were only partially adopted by the industry and with hesitation. With its additional layers of complexity, drafting clauses for FuelEU Maritime presents an even greater challenge.”  

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OceanScore’s comments, which will doubtless be examined meticulously by the many teams of maritime lawyers preparing for yet another major revenue stream, address a range of issues. They include the fact that clauses within the timecharter party must align closely with those in the ship management agreement because the DOC holder is the responsible party.

There are various timing issues including the clause that proposes providing compliance balances for the previous two years. But this will not be possible until 2027, OceanScore points out, because FuelEU only comes into force in January. Meanwhile, Proof of Sustainability – a key metric in gauging FuelEU compliance or not – are not available until four to six weeks after the bunker stem is taken on board. Therefore the proposed 15-day reporting deadline for ‘verified’ compliance is not realistic.

The Hamburg experts note other issues that require more attention. They include a framework for pooling compliance where deficits and surpluses can be shared or ‘pooled’ within a fleet of ships, or across a cooperative of different fleets; a practical solution for handling compliance surpluses; and a sound approach to pricing compliance balances.

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In a statement yesterday, OceanScore said: “We applaud Bimco for taking this admittedly difficult first step. The result is balanced, which is appreciated, but quite a few gaps remain that individual charterparty clause discussions will have to close. It will be critical to mirror these into the Shipmans, with the DOC holders eventually being responsible.”