Cost and settlement of allowances
Coverage for the cost of allowances borne by the shipping company will likely be included in the terms of commercial contracts between stakeholders in the value chain.
BIMCO has proposed a contract clause with standard terms for the settlement of transactions related to the cost of allowances. This is intended to protect shipowners from the consequences of GHG emissions incurred by charterers for vessel operations.
According to this clause, the owner and charterer shall cooperate and exchange all relevant data and information in a timely manner throughout the year to facilitate compliance and enable the parties to calculate the number of emission allowances in respect to the vessel that must be surrendered to the authorities for the period of the charter party.
These data will need to be verified so they can be used as a basis for defining commercial obligations. The shipowner’s requirements for the verification of data at the voyage level may include sampling of reported cargo, RoBs and bunkerings.
Settlement of EU Allowances with Emissions Connect
In the case of a time charter, the owner must first notify the charterer of the volume of emissions for which allowances need to be purchased so that the charterer can make an initial transfer to the owner’s nominated account. Prior to redelivery of the vessel, the shipowner must provide an estimate of the remaining quantity of EUAs to the charterer so that the final settlement can be made, either in EUAs or cash paid by the charterer.