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HFW assists BIMCO to draft ‘game changing’ shipping industry carbon emission clauses

The first, BIMCO’s EEXI Transition Clause 2021, was published on Tuesday (7 December) and is now ready for insertion into time charter parties.

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Cameron Venti 1

International law firm HFW on Tuesday (7 December) said it has assisted shipping association BIMCO to draft a series of clauses in response to strict new environmental legislation seeking to reduce shipping industry’s carbon emissions and future operations.

From 1 January 2023, the International Maritime Organisation’s (IMO) revised initial greenhouse gas (GHG) rules will start to take effect, with its aim of reducing carbon emissions from ships by 40% from 2008 levels by 2030. 

The revision will involve ships meeting increased technical measures to improve a ship’s energy efficiency (EEXI), and ongoing operational measures to reduce a ship’s carbon intensity in accordance with a carbon intensity indicator (CII) regime.

In addition, the EU is seeking to include shipping in the EU’s existing Emissions Trading System (ETS) from 2023.

In preparation for the significant regulatory changes, BIMCO is putting together a series of what it describes as “game-changing” carbon emissions clauses for time charterparties seeking to address the relationship between shipowners and charterers in the context of compliance with the new carbon emission regulations.

The first, BIMCO’s EEXI Transition Clause 2021, was published on Tuesday (7 December) and is now ready for insertion into time charter parties. The clause deals to allocate the risk and responsibility between the parties where technical modifications are required, in particular where the power output of a ship’s engine is limited.

The BIMCO sub-committee tasked with drafting the series of carbon emission clauses is made up of representatives from BIMCO, owners, charterers, P&I clubs, and technical and legal experts. HFW is the only UK-based law firm on the sub-committee, and is represented by Alessio Sbraga.

HFW is also assisting BIMCO draft a new EU ETS clause and a time charter clause dealing with the CII regime, which will both be published in the coming months.

HFW has helped BIMCO draft several standard contract and clauses, including the industry’s first standard contract for autonomous shipping, its first cyber security clause, the industry’s first standard offshore decommissioning contact, and two clauses relating to the International Maritime Organization’s 2020 sulphur emission rules (one of the first steps towards reducing harmful GHG emissions from shipping).

“We are proud to continue to support BIMCO and the wider shipping community on these vital carbon emissions clauses. The shipping industry is responsible for around 90% of all global trade, and around 3% of all global GHG emissions,” says Alessio Sbraga, Partner, HFW.

“With trade levels and therefore shipping activity set to increase significantly over the next decade, it is vital that urgent steps are taken now to reduce the global fleet’s carbon footprint by improving energy efficiency and reducing carbon emissions – including carbon intensity – wherever possible.

“For those parties who have existing charterparties or are entering into charterparties which span into 2023, BIMCO’s EEXI Transition Clause 2021 is a necessary first step towards bringing much-needed commercial certainty in anticipation of the new MARPOL carbon emissions regulations due to come into force in 2023.”

Note: To find out more, visit: https://www.bimco.org/contracts-and-clauses/bimco-clauses/current/2021_eexi_transition_clause

 

Photo credit: Cameron Venti from Unsplash
Published: 8 December, 2021

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Research

Yamna identifies five potential global ammonia bunkering hubs

Unlike methanol, ammonia is not constrained by biogenic CO2 availability, and its production process is relatively simple.

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Yanma projected ammonia bunkering hubs

Specialised green hydrogen and derivatives platform Yamna in early December identified several potential ammonia bunkering hubs around the world.

The hubs are Port of Rotterdam, Port of Algeciras, Suez Canal, Jurong Port, and Port of Salalah.

“The shipping industry faces an ambitious challenge: reducing emissions by 20% by 2030 (compared to 2008 levels) and achieving net-zero emissions by 2050, in alignment with IMO targets,” it stated.

“Achieving these goals in the medium to long term depends on the adoption of alternative low-emission fuels like green ammonia and methanol.

“Among these, ammonia is attracting growing interest as a viable option. Unlike methanol, it is not constrained by biogenic CO2 availability, and its production process is relatively simple.”

However, the firm noted kickstarting ammonia bunkering on a large scale required four enablers to align:

  • Ammonia fuel supply
  • Application technology
  • Bunkering infrastructure
  • Safety guidelines and standards

It believed ammonia bunkering hubs will first emerge where affordable and scalable ammonia supply is available.

Yanma Why use ammonia for bunkering fuel

 

Photo credit: Yanma
Published: 31 December 2024

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Research

Port of Long Beach releases Clean Marine Fuels White Paper

Document intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

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Clean Marine Fuels Port of Long Beach (December 2024)

The Port of Long Beach (PLB) in late December released the Clean Marine Fuels White Paper as part of efforts to identify solutions capable of reducing emissions from ships.

“To understand the opportunities and challenges related to the adoption of clean marine fuels, the Port of Long Beach hired ICF Consulting to develop this white paper as an educational resource and guidance document,” stated PLB

“This document is also intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

“The white paper provides high level information on the array of currently available low carbon marine fuels, along with an exploration of the potential infrastructure needs for their deployment.”

The document covers the use of different types of clean bunker fuels such as green hydrogen, green methanol, green ammonia, renewable LNG and biofuels for shipping.

“The shift to clean marine fuels is no longer optional but a necessity for the sustainability of the maritime industry,” stated PLB in its closing remarks.

“This transition, while presenting challenges such as high costs, limited fuel availability, and the need for extensive infrastructure development, is advancing due to evolving policy frameworks and growing industry commitment.

“Addressing these obstacles will require targeted initiatives and robust collaboration between public and private sectors. Continued policy support, government funding, and sustained industry commitment will be essential to driving this progress and ensuring the long-term sustainability of maritime operations.”

Editor’s note: The 123-page Clean Marine Fuels White Paper may be downloaded from the hyperlink here.

 

Photo credit: Clean Marine Fuels White Paper
Published: 26 December 2024

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Port & Regulatory

Clyde & Co: FuelEU Maritime Series – Part 6: Legal issues

Bunker purchasers should consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

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CHUTTERSNAP MT

Global law firm Clyde & Co on Thursday (19 December) released the final instalment of its six-part series uncovering the FuelEU Maritime Regulation.

In it, the firm looked at the legal issues that could potentially arise between various parties, such as owners, charterers, ship managers, bunker suppliers, and ship builders, as a result of the compliance requirements imposed by the Regulation.

The following is an excerpt from the original article available here:

Bunker supply contracts – legal issues

Both vessel owners and bunker purchasers will want to ensure that they are able to take advantage of the preferential treatment provided under the FuelEU Regulation for consuming renewable fuels, including biofuels and renewable fuels of non-biological origin (RFNBOs) (such as methanol and ammonia).

Article 10 of the FuelEU Regulation states that such fuels must be certified in accordance with the Renewable Energy Directive (RED) 2018/2001. If the fuel consumed by the vessel does not meet the applicable standards or have the appropriate certification, then it “shall be considered to have the same emissions factors as the least favourable fossil fuel pathway for that type of fuel[1].

In order to confirm that the fuel complies with greenhouse gas (GHG) intensity and sustainability requirements, the vessel owner and bunker purchaser will want to ensure that the bunker supplier provides the appropriate certification required under the FuelEU Regulation. The EU has required certification of such fuels, with the aim of guaranteeing “the environmental integrity of the renewable and low-carbon fuels that are expected to be deployed in the maritime sector.”[2]

The FuelEU Regulation provides that the GHG intensity of fuel is to be assessed on a “well-to-wake” basis, with emissions calculated for the entire lifespan of the fuel, from raw material extraction to storage, bunkering and then use on board the vessel.

Vessel owners and bunker purchasers will, therefore, need to be mindful of the importance of establishing how “green” the fuel actually is, and of the risk of bunker suppliers providing alternative fuels that will not allow for preferential treatment under the FuelEU Regulation.

It would, therefore, be advisable for bunker purchasers to consider whether the wording of their bunkering supply contracts is sufficient to ensure that the fuel is properly certified under the FuelEU Regulation. This could include contractual provisions that require the supplier (i) to provide a bunker delivery note (BDN), setting out the relevant information regarding the supply (such as the well-to-wake emission factor), and (ii) to provide the necessary certification under a scheme recognised by the EU.

Bunker purchasers should also be mindful that bunkering supply contracts often contain short claims notification time bars and provisions restricting claims for consequential loss. Issues could therefore arise where a purchaser tries to advance a claim against the supplier for consequential loss due to a lack of certification, but the bunker supplier argues that such losses are excluded under the terms of the bunker supply contract.

Bunker purchasers should therefore consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

 

Photo credit: CHUTTERSNAP from Unsplash
Published: 26 December 2024

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