The United Kingdom has expanded the UK Emissions Trading Scheme (UK ETS) to the maritime sector from 1 July 2026. The initial maritime phase is expected to apply to domestic maritime activity, including voyages between UK ports and emissions generated while vessels are in UK ports, such as at berth or anchorage.
For the shipping industry, the UK ETS adds to the regulatory landscape already shaped by the European Union Emissions Trading System (EU ETS) and other applicable emissions trading schemes for greenhouse gases. While the UK regime is being introduced separately from the EU system, it is likely to raise many of the same commercial questions: who is responsible for emissions data, who bears the cost of allowances, when allowances must be transferred or paid for, and how parties should deal with voyages or port calls that fall partly inside and partly outside the scheme?
Does the BIMCO ETS Clause (as currently drafted) adequately accommodate UK ETS?
The BIMCO ETS - Emission Trading Scheme Allowances Clause for Time Charter Parties 2022 (the BIMCO ETS Clause) was drafted primarily with the EU ETS in mind but purposely contains a broad definition of an "Emission Scheme" to include the EU ETS and "any other similar systems". As UK ETS follows the familiar "cap and trade" model whereby covered operators must monitor and report emissions and surrender allowances corresponding to verified emissions, it should, in principle, fall within the clause if it applies to the vessel and the relevant charter period.
The core allocation under the BIMCO ETS Clause is that the party providing and paying for the fuel under the time charter should provide and pay for the corresponding emissions allowances. Owners monitor and report emissions and provide the relevant data and calculations; charterers then transfer the required allowances to owners, on a monthly basis, as set out in the BIMCO ETS Clause, or in any otherwise agreed frequency. This mechanism was designed to avoid disputes over allowance price volatility by requiring transfer of allowances rather than simple reimbursement of costs.
Whilst, at this stage, the arrival of UK ETS does not require any comprehensive changes to the BIMCO ETS Clause, the clause would require careful review in each charter party.
Particular attention should be paid to voyages involving both UK and EU (or other) elements. A vessel may generate emissions subject to different regimes during the same employment period, for example where a time charter includes UK domestic movements, UK port stays, and EU-related voyages. In such cases, the parties will need robust emissions data allocation and clear accounting procedures to avoid double-counting, gaps in recovery, or disputes over whether allowances should be delivered under the UK ETS, the EU ETS (for example), or both.
Whilst the position remains unclear at present, if UK compliance deadlines, reporting cycles or registry processes differ from those under other applicable emissions trading schemes, owners and charterers may need bespoke wording to align monthly allowance transfers (or in any otherwise agreed frequency), final voyage estimates, redelivery reconciliations and any post-redelivery adjustment. This will be especially important for short fixtures, split voyages, or charters ending before final emissions data has been verified.
What to look out for?
When incorporating the BIMCO ETS Clause into time charter parties affected by UK trading, parties should consider adding or confirming wording that expressly identifies the UK ETS as an applicable emissions scheme.
They may also wish to specify the relevant allowance type, treatment of mixed UK/EU or other emissions, evidential standards for emissions data, consequences of late transfer, reconciliation procedures at redelivery and cost allocation of any additional service charges imposed by the UK Government.
The BIMCO ETS clause already provides a flexible framework for allocating emissions allowance costs between owners and charterers. However, as the UK regime develops, parties should ensure that the clause is not treated as a “set and forget” provision. Its effectiveness will depend on whether it is adapted to the specific trade, compliance entity, voyage pattern and allowance-transfer mechanics applicable to each charter.
Conclusion
BIMCO will continue to monitor the developments and operational details as the UK ETS is put into practice in the maritime industry. For now, the BIMCO ETS Clause continues to provide a sound mechanism for allocating ETS-related allowance costs, but that mechanism should be checked against the operational details of the UK scheme.
Owners and charterers should therefore review existing and future fixtures to ensure that UK ETS exposure is expressly covered, accurately measured and efficiently settled.
