(www.MaritimeCyprus.com) As interest grows in carbon capture, utilisation and storage (CCUS) throughout Europe and Asia, substantial investment and development has been made in infrastructure to transport and store captured emissions. It is apparent that shipping will play a crucial role in connecting industrial emitters, such as factories and power plants with offshore or remote CO2 storage sites. Captured carbon may also be used to create synthetic fuels or injected into oil fields to help extract remaining oil.
Without a new standardised contract, parties would have to rely upon existing LNG or gas charterparties. While these forms provide a useful starting point, they are not fully suitable and therefore create uncertainty, risk and complications. The introduction of CO2TIME therefore provides a much-needed standardised framework which will now increase confidence across the industry and support further market development.
Although primarily focused on CO2, the charterparty has been drafted flexibly enough to be used for other liquefied gases. In order to ensure familiarity, the charterparty has been developed from existing gas tanker chartering principles and adapted to accommodate regulatory, technical and operational characteristics of CO2. This approach is particularly attractive as it enables parties to rely upon well-established legal interpretations and will reduce the amount of time involved in negotiating bespoke agreements/clauses.
A central theme of this charter is that liabilities and costs are assigned to the party with operational control. This is not generally an approach that is adopted in other charterparties which usually follow more rigid allocation structures of liability between owners and charterers. However, the approach taken in CO2TIME is a more commercially sensible approach factoring in risk and decision-making authority involved in the transportations of CO2.
The contract was developed by a BIMCO drafting subcommittee with experience from across the industry, including owners, charterers, technical experts, insurers and legal advisers. Chaired by Marcus Dodds of Capital Gas, the subcommittee comprised John Reay (Navigator Gas), Jocelyn Harriman (Ineos), Marceli Marczyński (Orlen Trading), Martin Halcrow (Babcock), Tommy Baggio and Elwin Taylor (Independent / former Clarksons), Andreas Fjærvoll‑Larsen (Wikborg Rein), Krester K. Kjær and Peter Hazell (Skuld), Karolina Mentz (UK Club), and Mark Rudd (who was UK Club at the time). This breadth of expertise has been central to ensuring that CO2TIME 2026 is technically robust, commercially balanced and aligned with established industry practice, while addressing the specific characteristics of CO₂ transport.
As part of the drafting process, the subcommittee also conducted a wider industry consultation through a sounding board, allowing a broad cross‑section of stakeholders to review and comment on the developing draft. This consultation tested the contract across a range of operational and commercial scenarios and helped shape a form that reflects the realities and expectations of the wider industry as this emerging trade continues to evolve.
A key objective for the drafting subcommittee was to build on familiar concepts from the gas tanker sector. By retaining well‑established time charter principles and tailoring them to the specific characteristics of CO₂ transport, CO2TIME 2026 aims to reduce contractual uncertainty and promote confidence among owners, charterers, financiers and project developers entering this market.
“CO₂ transport is still an emerging trade, but it is firmly rooted in established gas shipping practice. CO2TIME 2026 brings these together by offering a familiar time charter structure adapted to the specific technical, operational and regulatory requirements of CO₂ transport,” says Marcus Dodds of Capital Gas, Chairperson of the CO2TIME 2026 drafting subcommittee.
Central to the structure of CO2TIME 2026 is a vessel-specific “Technical Annex”. The annex plays a pivotal role in defining the vessel’s cargo containment system, operating parameters, permitted cargoes and operational limitations. Many of the charter party’s risk allocation mechanisms rely directly on these technical descriptions, underlining the importance of accuracy and clarity when completing the “Technical Annex” to be attached to the charter party.
The charter party includes a range of provisions reflecting the operational realities of CO₂ transport. These include bespoke clauses addressing venting, vapour return, cargo conditioning, tank preparation and in‑transit loss, reflecting both the physical characteristics of CO₂ and the operational interface between vessels and shore or offshore installations. Liability and cost are allocated by reference to the party controlling the relevant operational decision, providing a clear and practical framework for day‑to‑day operations.
Environmental regulation and its impact on CO₂ transport form an integral part of the contract. CO2TIME 2026 includes a dedicated “Cargo Emissions Clause” that distinguishes between emissions arising from the cargo itself and emissions resulting from vessel propulsion and operation. This approach provides contractual clarity alongside existing regulatory regimes, including the EU Emissions Trading System, while maintaining flexibility to adapt to future regulatory developments.
To reflect modern operating practice, CO2TIME 2026 adopts a performance regime based on representative assessment periods rather than isolated voyages. Speed and fuel consumption warranties are assessed over consecutive periods, with balancing mechanisms to account for both underperformance and savings. Optional provisions allow for performance assessment of newbuildings and reassessment following drydocking, enhancing transparency and reducing the risk of early disputes.
The form also addresses the challenges of trading within an evolving terminal infrastructure. Detailed compatibility provisions allocate cost, time and risk where terminal requirements change or where the vessel is ordered to terminals outside the agreed compatibility parameters. This framework recognises that CO₂ transport chains are likely to develop progressively as projects mature and infrastructure expands.
Overall, CO2TIME 2026 is intended to serve as a robust and adaptable contractual framework for an emerging trade. By drawing on established time charter concepts and integrating CO₂‑specific provisions, the form aims provides a clear and workable framework to support the safe, efficient and commercially viable transport of liquefied CO₂, while retaining flexibility to accommodate future technological, regulatory and market developments.
Key features of CO2TIME
Technical Annex
The Technical Annex is one of the most significant components of the charterparty. This Annex defines the vessel’s cargo containment system, operating parameters, permitted cargoes and operational limitations.
A lot of the charterparty’s risk allocation provisions are reliant upon these technical descriptions, and it is therefore critical that care and attention is paid to ensure that the information provided within this Annex is accurate. Any inaccuracies could lead to significant operational and liability implications.
Emissions clause – Clause 33
Unlike traditional emissions clauses, the purpose of this clause is to govern who is responsible for the greenhouse gas (GHG) emissions that are produced from the cargo itself as opposed to those produced during the operation of the vessel.
Separately, (at clause 32) the charterparty incorporates BIMCO ETS CLAUSE 2022, thereby avoiding overlap and/or double counting.
The risk allocation of this clause takes a similar approach to other risk allocation clauses within the charterparty whereby it is aligned with operational control. Since charterers control the nature of the cargo, cargo related emissions also remain their responsibility.
However, the clause contains an important carve out exception where the emissions arise due to owners’ breach of charterparty. A breach includes unseaworthiness and other express contractual obligations. In such instances, it is acknowledged that the underlying cause of emissions falls within owners’ responsibility and therefore, charterers are relieved from liability.
Current regulatory frameworks only focus on emissions generated from fuel combustion involved in shipping operations and do not consider cargo related CO2 emissions.
Even though these cargo related emissions are not yet subject to monitoring or allowance surrender obligations, CO2TIME has been drafted to recognise that public law may evolve. By separately addressing cargo emissions, the charterparty is somewhat future proofed against future cargo-based emissions regulations. However, it is critical that should future regimes address cargo related emissions, the parties reconsider this clause to determine whether any amendments are required.
In Transit Loss – Clause 20
Given the physical characteristics of CO2 and its use within this the industry, there is the risk of loss of cargo during carriage. Clause 20 has therefore been designed to take these risks into account. The clause removes liability from owners in circumstances of cargo shortage where such shortage has been caused by either incondensable matter or falls within the tolerance threshold. In all other circumstances where owners may be liable, the charterparty provides clear instructions on how the loss shall be calculated and evidenced.
Vapour Return – Clause 21
Vapour return is a bespoke clause that has had to be considered in CO2TIME. In order to manage pressure, safety and environmental risks, specific loading or discharge ports may require vapours from shore to be returned to the vessel’s cargo tanks. Evidently, this may expose owners to risks such as contamination of cargo tanks or vessel systems. The purpose of this clause is to ensure owners are not left open to liability for risks that are out of their control. Since charterers control the vessel’s employment and govern which terminals she is to call at, the clause has been drafted to shift liability towards them.
Owners are asked to approve the shore tank certificate of quality before the vessel is able to connect to the vapour return lines, but this approval is not to be unreasonably withheld. Charterers are then to provide owners with an indemnity protecting them from the associated risks. Such an approach recognises the risks associated with vapour return and reallocates that risk to the controlling party.
Source: BIMCO
