BIMCO has adopted a Biofuel Clause for Time Charter Parties to address legal and operational challenges as the use of low-carbon fuels in shipping increases.
As the shipping industry decarbonizes, regulatory frameworks reshape companies’ fuel strategies. The integration of biofuels into charter party agreements is complex, however, and often raises questions around fuel quality, engine compatibility and liability.
The clause provides clear definitions, agreed fuel specifications aligned with ISO standards and a structured process for sampling, testing, storage, and handling of biofuels. It also offers mechanisms for performance adjustments when fuels with different calorific values are used and ensures fair adjustment of existing speed and consumption warranties under the charter party.
In addition, the clause addresses safeguards connected to fuel stability, segregation of batches and storage life which reflect operational best practices for the safe use of biofuels on board.
In the process of developing contractual solutions that address various aspects of the transition to alternative fuels, BIMCO has already published an LNG Annex to the BIMCO Bunker Terms 2018 as well as additional clauses to be incorporated in charter parties for LNG fuel supply. An annex addressing methanol bunkering and a new Methanol Annex to the BIMCO Bunker Terms 2018 have also been adopted. Work to develop an annex for Ammonia is expected to start this year.