Study Reveals Limitations of Carbon Cost Reimbursement in EU Shipping ETS
A recent study highlights the challenges of enforcing reimbursement rights for carbon costs under the EU ETS for shipping. As ship operators face significant contractual barriers, the findings indicate a need for clearer contractual frameworks to ensure effective cost recovery across the industry.
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A study from Erasmus School of Law indicates that shipowners may struggle to recover carbon costs from charterers under the EU Emissions Trading System (EU ETS). The Directive suggests a statutory right to reimbursement, but practical barriers include ambiguity in charter chains, reliance on English law, and arbitration outside EU jurisdiction.
Since 2024, shipping companies must buy emission allowances, yet decisions on fuel and routing often lie with charterers. The study suggests existing contractual frameworks, such as BIMCO clauses, are inadequate for addressing carbon cost allocation and may leave smaller operators vulnerable.
The authors recommend thorough negotiation of carbon cost provisions in contracts to mitigate reliance on statutory rights, which may not hold up under current legal frameworks. Future shipping emissions trading schemes, including the UK's, should consider these enforcement issues to avoid repeating similar gaps.
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