Biofuel Clause for Time Charter Parties 2026

Background

The Biofuel Clause for Time Charter Parties 2026 has been developed in response to the growing industry focus on alternative fuels, with biofuels identified as a key transitional option in meeting the maritime sector’s decarbonisation objectives. Biofuels offer shipowners and charterers a readily available solution for complying with emerging regulatory requirements — including FuelEU Maritime — and for mitigating financial exposure under applicable emission trading schemes.

The clause establishes a clear contractual framework for the allocation of responsibilities and costs between owners and charterers, recognising that the safe and proper handling of biofuels is essential to maintaining efficient vessel operations. Under subclause (a), the parties are encouraged to give careful consideration to the type of biofuels to be supplied and the intended blend ratio.
In this regard, the clause includes an “ATTENTION” statement reminding the parties to consider the maximum blend ratio to be inserted in subclause (a) and the impact of biofuel consumption on speed and performance warranties prior to incorporating the clause.

Drafting Team

The Biofuel Clause for Time Charter Parties 2025 is the result of a collaborative and consensual process between owners, charterers, a fuel expert and P&I Club. BIMCO is grateful to the drafting team for their considerable time, effort and commitment in producing the Biofuel Clause for Time Charter Parties 2026:

• Lars Mathiasen, Torm
• Jenny Bazakas, Norden
• Michael Rasmussen, Hafnia
• Mathias Drost, CMA CGM
• Kelly Vouvoussiras, Rio Tinto
• Gunnar Kjeldsen, Bunker Holding Group
• Joanne Sharma, Steamship Mutual P&I

BIMCO Secretariat:

• Carl Wilhelm Lindahl
• Vasileios Patonis

As part of the development work, the subcommittee consulted a large group of stakeholders engaged in shipping and decarbonisation. BIMCO would like to thank them all for their support and valuable input to the process.

Explanatory Notes

These explanatory notes are intended to provide an insight into the thinking behind the Biofuel Clause for Time Charter Parties 2026. They also explain how the clause is intended to operate and the allocation of responsibilities and costs between the parties. If you have any questions about the clause, please contact us at contracts@bimco.org and we will be happy to assist.

Key Features of the Clause

Definitions

“Biofuel”: The definition of “Biofuel” is drafted to provide a clear and consistent understanding of what qualifies as biofuel under the clause. It aligns with the terminology and structure adopted by the International Organization for Standardization (ISO), ensuring coherence with established industry standards.

The clause includes definitions of “LCV”, “LCV Adjustment Factor” and “Reference Fuel” to support the operation of the speed and consumption adjustment mechanisms in subclause (j)

Subclause (a) 

Subclause (a) enables the parties to specify the agreed fuel specifications for the Biofuel that charterers may supply to the vessel during the charter party period. ISO 8217:2024 is identified as the preferred specification because it reflects the most recent standard published by ISO. However, recognising that this specification may not always be readily available in the market, the subcommittee has included ISO 8217:2017—together with defined Fatty Acid Methyl Ester (FAME) related requirements—as the default specification. In addition, ISO 8217:2017 with specified HVO related requirements has been incorporated to accommodate the use of HVO based biofuels.

It should be noted that charterers may supply fuels that comply with any of subclauses (a)(i)–(iii). They are not required to select a single specification for the full duration of the charter; rather, they may utilise any of the agreed specifications at any time, including any additional specifications and grades introduced under subclause (a)(iv). It is also important to emphasise that the agreed percentage by volume of biofuel is to be inserted into each subclause. Accordingly, charterers may only supply the default specifications where the fuels also comply with the agreed biofuel percentage by volume. It should be noted that a biofuel portion exceeding 30 percent may require flag state approval, subject to applicable flag state requirements.

It is important to note that subclause (a)(ii) permits the charterers to supply Biofuel where the bio-based component contains FAME, subject to the condition that the FAME bio portion meets either EN 14214 or ASTM D6751 (each with the stated carve-outs for sulphur content, cloud point, and cold filter plugging point).

Where the parties do not insert a percentage, the clause now provides a default position: the blend percentage by volume must not exceed the bio portion requirements for the fuel to comply with Regulation 18.3.1 of MARPOL Annex VI (or any subsequent amendment). 
This approach was adopted to reflect current market practice while avoiding “hard coding” a fixed blend limit in the standard wording. As discussed during the drafting process, the industry evolves quickly and a fixed percentage that reflects current conditions may not remain appropriate over time.

Subclause (b)

Subclause (b) permits charterers to supply biofuel of a specification, grade, or blend not listed in subclause (a), provided that the owners give their prior written consent. Any biofuel supplied under this subclause (b) must have a clearly defined specification against which it can be tested, ensuring that fuel quality can be verified.

Under this subclause, the Owners have an absolute right to refuse the supply of biofuel that is not specified in subclause (a). 

In addition, the subclause clarifies the sequence and purpose of the testing: any testing owners may require must take place prior to consent being given, and it must confirm compliance with any applicable regulatory, classification society, and original engine manufacturer requirements. The costs of such testing are for the charterers’ account. 

This structure supports future flexibility (where the parties agree to fuels outside the listed specifications) while preserving owners’ ability to manage technical and operational risk through the consent mechanism.

Subclause (c)

Subclause (c) places an obligation on charterers to supply biofuel that is stable, homogeneous, and suitable for consumption by the vessel’s main engine and/or auxiliaries. This requirement is in addition to the obligation to supply biofuels that meet the agreed specifications and blends set out in subclauses (a) and (b).

The subclause also stipulates that all sampling and quality analysis requirements applicable to conventional fuels will apply equally to Biofuel. This is intended to avoid the creation of parallel or duplicative quality analysis regimes.

Subclause (d)

Subclause (d) places an obligation on charterers to give owners reasonable notice before supplying biofuel. This requirement reflects the practical need for owners to prepare the vessel’s fuel tanks in advance. No fixed notice period has been prescribed, as the appropriate timeframe will depend on the vessel’s trade, schedule, and operational circumstances. It is specified that the charterers’ notice must include the intended specification(s), grade(s), blend(s) and quantity. 

In addition, charterers must provide owners with written instructions specifying the intended time at which the vessel will commence using the biofuel. This requirement is important from a fuel management and operational planning perspective, ensuring that owners can make the necessary preparations safely, efficiently, and in good time.

Subclause (e)

Subclause (e) provides that charterers are liable for any loss or damage suffered by the owners or the vessel to the extent caused by any breach of subclause (c). As subclause (c) also refers back to the requirements of subclause (a), charterers’ liability may be triggered by a breach of either subclause (a) or (c). 

The subclause expressly provides that recoverable loss includes (without limitation) any time lost and any costs incurred in off loading any biofuel that does not comply with subclause (c).
The wording “to the extent caused by” was adopted to address causation with the intention being to capture situations where non compliant fuel is a contributory or dominant cause of the loss or damage. 

The clause also provides that owners shall not be liable for any reduction in the vessel’s speed performance, any increase in fuel consumption, any time lost, and/or any other consequences to the extent caused by such breach by the charterers.

Subclause (f)

Subclause (f) has been included to encourage the parties to engage in dialogue before any debunkering takes place. This reflects the recognition that debunkering is often a costly and time consuming process that warrants careful consideration and proactive communication between the parties.

The subclause expressly links this process to off loading under subclause (e) and/or subclause (k)(iii), and provides that, before undertaking any off loading, the parties shall use reasonable efforts to explore whether corrective measures can be taken to render the biofuel suitable for consumption (including but not limited to the use of additives or other appropriate substances).

However, it is important to emphasise that any biofuel that is not compliant with subclause (c) must not be consumed while such discussions are ongoing. This safeguard ensures that potentially non compliant or unsuitable fuel is not used pending the parties’ review and decisions on appropriate next steps.

Subclause (g) 

Subclause (g) sets out the owners’ obligations to ensure that the vessel is properly fitted and equipped to consume biofuel, and that the crew has the necessary competence to handle biofuel safely and effectively on board. The standard to be met is compliance with applicable regulations and recognised best industry practices. Owners must also make all necessary preparations and obtain any required approvals before biofuels are consumed on board.

The owners’ warranty is expressly linked to the scope of fuels allowed under subclause (a) and, if applicable, subclause (b) (i.e. where owners have consented under subclause (b)).

The clause further addresses the allocation of tank cleaning costs. Cleaning costs fall to charterers where owners reasonably require tank cleaning. The phrase “to the extent reasonably necessary and to a reasonable standard” ensures that owners may only request such cleaning where supported by industry standards; otherwise, cleaning remains for owners’ account. It is also clarified that charterers bear these costs only where the cleaning is required as a direct result of the fuels they supply. Accordingly, if the vessel is delivered with existing fuels on board that must be removed or cleaned before biofuel can be loaded, those cleaning costs remain the owners’ responsibility.

In addition, the intended operational allocation of risk is that once a vessel has been prepared for the use of biofuel, that status should not be compromised by subsequent charterer orders. If charterers thereafter order conventional fuel and the biofuel ready status is affected such that additional tank cleaning becomes necessary before biofuel can be used again, those consequences fall within the risk allocation contemplated by the clause.

Subclause (h)

Subclause (h) addresses the segregation of fuels on board. Biofuels of different grades, specifications, and/or batches must be stored in separate tanks, in line with the vessel’s natural segregation arrangement. If the vessel’s ability to receive biofuel is limited as a result of this required segregation, such limitation does not give rise to any liability on the part of the owners.
It is important to emphasise that it is the batches of biofuel—not the suppliers—that must be segregated. This reflects the operational reality that variations between batches may affect fuel quality and handling requirements, irrespective of the source.

Subclause (i)

Subclause (i) addresses comingling of fuels and the use of additives, which may only be carried out or introduced upon the charterers’ written instructions. This ensures that any chemical, performance enhancing, or stability related additives are used in a controlled and transparent manner.

It is also important to note that bunkering on top of unpumpable quantities does not constitute commingling unless the quality and/or volume of the fuel already on board—when combined with the quality and/or volume of the fuel to be supplied—is sufficient to create a risk of incompatibility.

This clarification is intended to provide practical assurance while preserving the owners’ ability to manage fuel quality risks appropriately.

This wording is intended to address cases where unpumpable quantities may become material due to the relatively small volumes of biofuel bunkered: an unpumpable quantity that would be immaterial in percentage terms in a full tank may be significant where only a modest quantity of biofuel is supplied, thereby increasing the risk of incompatibility and making tank preparation more critical.

Subclause (j)

Subclause (j) addresses the important issue of how the use of biofuel affects the vessel’s speed and consumption warranties under the charter party. These warranties are typically based on conventional fuels—such as heavy fuel oil or marine gas oil—which generally have higher energy content than most biofuels. This difference is reflected in the fuels’ respective Lower Calorific Values (LCV). Where the LCV of the biofuel is lower than that of the conventional fuel forming the basis of the warranties, the vessel may be unable to meet its speed or consumption warranties when operating on biofuel. Subclause (j) therefore provides the parties with flexibility to agree an appropriate adjustment mechanism tailored to the needs of the particular charter party.

Under the first option, found in subclause (j)(i), the parties may agree on a percentage adjustment to the speed and consumption warranties. This percentage may be either below or above 100%, depending on whether the warranties are to be reduced or increased.

Option two, set out in subclause (j)(ii), allows the parties to apply an LCV Adjustment Factor to modify the consumption warranties. This option has been included as an objective method, where the adjustment is determined solely by the relative LCV values and density. The calculation follows a fixed formula, and the only variable the parties must agree upon is the LCV value itself. If the parties do not specify an applicable LCV value under subclause (j)(iii), the default value will apply (see subclause (j)(iii)). This option also operates as the default mechanism if no percentage is inserted under subclause (j)(i).

Subclause (j)(ii) further provides that the speed warranty shall not be adjusted unless the owners notify the charterers that the vessel is unable to maintain the agreed speed warranties based on the LCV and density of the biofuel supplied. In that case, owners must provide the adjusted speed warranty without undue delay, but always before the commencement of consumption, together with detailed calculations and supporting documentation.

Subclause (j)(iii) enables the parties to agree on the regulatory scheme that will determine the LCV value to be used, with the IMO LCA Guidelines serving as the default position.

Finally, subclause (j)(iv) requires charterers to provide the LCV of the biofuel as documented by the supplier. Either party may also request independent LCV determination (ASTM D240 or equivalent) by a jointly appointed independent laboratory, with costs shared equally.

Subclause (k)

Subclause (k) addresses the limited storage life of biofuels, which is generally considered shorter than that of conventional fuels. To manage this, the parties are given the option to agree on a specific period within which the biofuel must be consumed, with a default period of ninety days. If the biofuel is not consumed within the agreed timeframe, it must be tested at the charterers’ cost. Where testing confirms that the biofuel remains suitable for consumption, it must then be consumed within a further mutually agreed period, with a default period of thirty days. This structure creates a clear obligation on charterers to ensure timely consumption and enables the parties—particularly the owners—to establish an operationally appropriate consumption window.

If the biofuel is found to be non compliant, or if it is not consumed within the stipulated periods, any remaining fuel must be debunkered at the charterers’ cost.

The phrase “unless the failure to consume the Biofuel has arisen from the Owner’s fault” has been added to clarify that when the failure to consume the biofuel results from circumstances attributable to the owners, the obligation to test or debunker at the charterers’ expense is not triggered.

Subclause (l)

Subclause (l) addresses situations where the vessel is redelivered with biofuel remaining on board, provided that such remaining quantities are permitted under the charter party. The subclause establishes a framework for the parties to agree on a price for any biofuel left on board at redelivery.

When determining this price, the parties may consider whether the biofuel holds particular value for the owners in their future trading—such as potential benefits under regulatory schemes like FuelEU Maritime—or whether the owners will treat the remaining biofuel in the same manner as conventional fuel.

If no price is inserted, this subclause does not apply and the bunkers on delivery, including biofuels, are to be considered in light of the relevant bunker on delivery clause in the charter party.

Copyright and Availability

Copyright in the BIMCO Biofuel Clause for Time Charter Parties 2026 is held by BIMCO.