Introduction
In an effort to transform the shipping world to a more sustainable and greener “hub”, BIMCO, as a significant ally of the International Maritime Organization and the European Union, has introduced a portfolio of existing and updated clauses aiming to provide efficient solutions to important issues which cause constant concerns to the shipping industry globally.
With EU ETS and Fuel being high agenda items, these clauses can be distinguished as follows:
ETS Allowances Clauses
Last year, BIMCO has published three emission trading scheme (ETS) clauses for the voyage charter party context, well known as “ETS – Emission Scheme Freight Clause for Voyage Charter Parties 2023”, “ETS – Emission Scheme Surcharge Clause for Voyage Charter Parties 2023” and “ETS – Emission Scheme Transfer of Allowances Clause for Voyage Charter Parties 2023”, which mainly deal with costs/fees and responsibilities, arising from the holding, transferring and surrendering of emission allowances for ships operating under the EU Emissions Trading System (ETS).
This year, on 8 May 2024, BIMCO launched its own standard ETS template mandate letter called “ETS Mandate 2024”, which is available in two versions and it is actually an independent and supporting document to the freestanding ETS – SHIPMAN Emission Trading Scheme Allowances Clause 2023 and SHIPMAN 2024.
This new document was designed to simplify the process by filling out the standard form, submitting it to the relevant administering authorities and ensuring compliance with the EU ETS legislation (monitoring, reporting and surrendering of allowances).
FuelEU Maritime and Biofuels Clauses
BIMCO, will be establishing two new subcommittees to prepare the new clauses during 2024, referring as “FuelEU Maritime and Biofuels Clauses”, as to introduce to all shipping parties, the upcoming FuelEU Maritime Regulation, including the reduction of greenhouse gas (GHG) intensity of energy used by ships and encouraging the use of biofuels (such as e-ammonia and e-methanol) in the shipping transportation sector.
Next Steps
While EU ETS and FuelEU were contractually evaluated in this commencement phase, the next steps concern tax – VAT - regulatory and accounting angles that need to be considered. It is of paramount importance that organisations depending on their ESG status promptly assess the tax implications whereby depending on operating model if not promptly managed can cause corporate issues. Invoicing, places of establishment, people and functions looking after the sustainability framework can be instrumental on the ESG and Tax compliance position of each organisation.
By:
Era Xenofontos
ESG Taxes | EY Cyprus
Era.Xenofontos@cy.ey.com
