BIMCO Calls for Assigning CII Responsibilities to Charterer
One of the contentious issues in the shipping industry has centered on how to manage the potential impact of a ship’s operations on the carbon intensity indicator (CII) rating. After months of consultation with members and deliberation, the trade group BIMCO adopted a CII Operations Clause for Time Charter Parties siding with owners in assigning the responsibility to time charters as the industry prepares for implementation of the new requirements from the International Maritime Organization (IMO).
New regulations on the carbon intensity of international shipping began on November 1 and will come into force on January 1, 2023. The IMO’s long awaited amendments to MARPOL require all ships to calculate their attained Energy Efficiency Existing Ship Index (EEXI) to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational carbon intensity indicator (CII) and CII rating. Initial CII ratings will be given in 2024 based on 2023 operating data.
“The complex CII regulations are expected to significantly impact the future operation of ships,” wrote BIMCO’s Documentary Committee in adopting its recommendations. “Shipowners and charterers must embrace new ways to co-operate, and new clauses for charter parties will be needed to help owners and charterers succeed.”
The starting point for BIMCO’s new CII clause is that a time charterer should take responsibility for a ship’s emissions because the charterer makes the relevant decisions on the operation of the ship. When entering into the charter party, or incorporating the clause into an existing charter party, BIMCO recommends that the owner and charter agree on a specific CII to be achieved each year.
“The subcommittee comprised ship owners, charterers and legal and insurance experts. After more than eight months of deliberation and consultation, we have arrived at a clause which serves as an excellent starting point for negotiations for owners and charterers and which is workable in practice. The new clause will be reviewed as the underpinning regulatory regime develops,” says Nicholas Fell, Chairperson of BIMCO’s Documentary Committee.
As the industry faces more regulations from the IMO and the EU aimed at reducing shipping’s CO2 emissions, the need for new contracts and clauses increases. In December 2021, BIMCO published an EEXI Transition Clause and at the end of May 2022, BIMCO released a new Emissions Trading System Allowances (ETSA) Clause for Time Charter Parties in response to the European Union’s intention to include shipping emissions in the EU's emissions trading system, the ETS.
“The CII clause is the latest addition to BIMCO’s suite of carbon clauses for time charter parties. The subcommittee will now continue its work to develop further clauses (such as a CII clause for voyage charter parties) to assist charterers and owners responding to new regulatory requirements, regardless of whether they come from the IMO, EU, or elsewhere,” said Stinne Taiger Ivø, Director, Contracts & Support at BIMCO.