International shipping association BIMCO on Monday (13 July) highlighted its Biofuel Clause for Time Charter Parties 2026 and outlined the clause’s key provisions and what they mean for shipowners and charterers:

As the shipping industry continues its search for viable pathways towards decarbonisation, biofuels have emerged as one of the more immediately available transitional options. They can, in many cases, be used with little or no modification to existing engines and fuel systems, and they offer a practical means of addressing regulatory frameworks.

Recognising this, BIMCO has developed the Biofuel Clause for Time Charter Parties 2026, giving owners and charterers a dedicated contractual framework for the supply and consumption of biofuel during a time charter. 

The clause was developed through BIMCO’s established drafting process, bringing together representatives from owners, charterers, a fuel expert and a P&I Club representative, supported by broad industry consultation. The result is a clause that sets out, in detail, how responsibilities and costs relating to biofuel should be allocated between the parties. 

Why a dedicated clause is needed 

Time charter parties are typically built around the use of conventional fuels, and their speed, consumption and quality provisions are drafted with that assumption in mind. Biofuels differ from conventional fuels in several respects that matter contractually. They can vary considerably in specification and blend, they generally have a lower energy content, and their storage stability over time is generally more limited. Without specific wording addressing these characteristics, a charter party may leave important questions unanswered, including which biofuel specifications are acceptable, how fuel quality is to be verified, how speed and consumption warranties should be adjusted, and what happens if biofuel is not used within a reasonable time. 

The Biofuel Clause for Time Charter Parties 2026 addresses each of these points directly, giving both parties a clear and predictable basis for incorporating biofuel into their operations. 

What the clause covers 

At its core, the clause allows charterers to supply biofuel that meets specifications set out in the clause itself, based on the ISO 8217 fuel standard together with recognised biofuel component standards such as EN 14214, ASTM D6751 and EN 15940. Where charterers wish to supply a biofuel outside these agreed specifications, they may do so only with the owners’ prior written consent, and owners retain the right to require independent quality testing before giving that consent. 

The clause also sets out obligations around notice, fuel quality and segregation. Charterers must give owners reasonable advance notice of an intended biofuel supply, including its specification, blend and quantity, together with written instructions on the intended timing of consumption. Owners, for their part, warrant that the vessel and crew are properly equipped and trained to handle the biofuel safely, and that any tank cleaning required to accommodate the biofuel is carried out at the charterers’ expense where reasonably necessary. The clause further ensures that standard charter party provisions on sampling and quality testing apply equally to biofuel, avoiding the need for a separate regime 

Perhaps the most technically significant element of the clause is subclause (j), which addresses the adjustment of speed and consumption warranties. Because biofuels generally have a different lower calorific value than the conventional fuels on which such warranties are normally based, the clause provides two mechanisms for adjustment: either an agreed percentage adjustment, or a calculation based on the relative calorific values of the reference fuel and the biofuel supplied. Where the parties do not specify a percentage, the calorific value method applies by default. 

The clause further deals with the practicalities of biofuel’s shorter storage life, requiring that any biofuel supplied be consumed within an agreed period, defaulting to ninety days, with a further testing and consumption process if that period is exceeded. Provision is also made for any biofuel remaining on board at redelivery. 

Key points for the parties to consider 

While the clause is designed to be workable as a standard text, several matters call for particular attention before it is incorporated into a charter party. 

The maximum blend ratio inserted in subclause (a) deserves careful thought on both sides. Owners will want assurance that the vessel and its engines can safely accommodate the proposed blend, while charterers will want a ratio that gives them commercial flexibility. The clause includes a prominent reminder to this effect, and parties should not treat the blend percentage as a routine detail to be filled in without discussion. 

Closely related is the effect of biofuel consumption on speed and performance warranties. Because biofuels can behave differently from conventional fuels in terms of energy content, parties should consider in advance which adjustment mechanism under subclause (j) is most appropriate for their charter, and should be satisfied that they understand how any calculation will operate in practice. Owners in particular should be prepared to provide supporting documentation promptly if a speed adjustment becomes necessary. 

Parties should also give thought to the vessel’s technical readiness. The owners’ warranty regarding equipment and crew competence is an important safeguard, but it depends on the necessary preparations genuinely having been completed before biofuel is supplied. Equally, the allocation of tank cleaning costs under the clause rewards early planning, since unresolved questions about tank condition can lead to disputes over cost allocation later. 

Finally, the storage and consumption timeframes in subclause (k) merit attention given the more limited shelf life of many biofuels compared with conventional fuels. Parties operating on trades with longer voyage patterns, or with less predictable bunkering opportunities, may wish to consider whether the default periods are suitable or whether alternative timeframes should be agreed. 

A collaborative response to an evolving market 

The Biofuel Clause for Time Charter Parties 2026 is the result of a collaborative and consensual process, and BIMCO is grateful to the drafting team for their considerable time, effort and commitment in producing the clause. The team comprised Lars Mathiasen of Torm, Jenny Bazakas of Norden, Michael Rasmussen of Hafnia, Mathias Drost of CMA CGM, Kelly Vouvoussiras of Rio Tinto, Gunnar Kjeldsen of Bunker Holding Group, and Joanne Sharma of Steamship Mutual P&I. 

The clause reflects BIMCO’s broader approach to contractual development, identifying an emerging operational need, bringing together the relevant commercial and technical expertise, and producing a clause that has been tested against a wide range of industry views before publication. As biofuel use continues to grow across the fleet, the clause offers owners and charterers a considered and balanced starting point for managing its use under a time charter party.

Photo credit: BIMCO
Published: 17 July, 2026