Key takeaways
Biofuels
These are renewable, carbon-neutral fuels.
Technical challenges
Fuel degradation can cause problems when storing and using biofuels.
Biofuels Clause
Addresses some problems associated with using biofuels onboard ships.
Following the introduction of the Fuel EU Maritime Regulation and the forecasted introduction of the IMO Net-Zero Framework, which encourage the reduction of greenhouse gas (GHG) emissions in the shipping sector, Owners, Operators and Charterers are looking for ways to comply with these regulations, be it either by bunkering biofuels or RFNBOs (Renewable Fuels of Non-Biological Origin).
BIMCO has now introduced the Biofuels Clause for Time Charterparties 2026, which seeks to assist parties in navigating the increasing complexities associated with complying with reducing GHG emissions through the use of biofuels.
What are biofuels?
Biofuels are renewable, combustible fuels made from recently living organic matter (biomass), such as plants, algae, and animal waste. They act as a sustainable alternative to petroleum-based fossil fuels.
Unlike fossil fuels (which release carbon dioxide), biofuels operate on a ’closed-loop’ carbon cycle, making them carbon neutral. Essentially, the plants used to create the fuel absorb CO2 from the atmosphere while they are grown; then, when the biofuel is burned, they release the same CO2 back into the air.
Furthermore, given biofuels are created from plants, algae or animal waste, they can be replenished readily, unlike fossil fuels.
Part of the answer, but not without problems…
While there are a lot of positives in the use of biofuels, burning biofuels in vessels’ engines is not without problem and BIMCO’s Clause seeks to address these.
Until recently, biofuels did not have an ISO standard specification, meaning that there was no way of confirming that the fuels being supplied to the vessel were combustible in the vessel’s engines. For example, in 2024 the ISO 8217 marine fuel standard was updated to explicitly include biodiesel (FAME) blends up to B100 for commercial maritime use.
The Clause as drafted includes reference to the ISO specifications and places the onus on the charterers to ensure that the fuel supplied is compliant.
It also provides that the Owners are to give prior written consent to the supply of biofuels of a specification, grade and blend not provided for within the Clause, subject to testing at a jointly appointed laboratory, at the charterers’ cost.
In essence, if the charterers want to supply the fuel, they should pay to ensure its compliance and combustibility.
Should non-compliant bunkers be supplied, they may be off-loaded. However, before that can take place, the parties are to use reasonable efforts to explore whether corrective measures can be taken to render the non-compliant biofuels suitable for consumption.
Despite that, the final word as to whether or not to consume the non-compliant bunkers rests with the owners.
As with RFNBOs, the ability to bunker biofuels is currently geographically limited. At present, there are two main bunkering hubs, one in Europe and the other in the Far East; albeit other hubs are emerging.
The Clause, therefore, addresses this by requiring the charterers to give the owners notice of their intention to supply biofuels.
Biofuels can present technical challenges, not least due to fuel degradation, which can present problems in terms of storage and use of the biofuels.
The Clause looks to address this in a number of ways.
Firstly, the owners are to ensure that the biofuels are segregated into separate tanks within the vessel’s natural segregation, with the owners not being liable for any restriction in fuel capacity as a result of such segregation.
However, practically, not all vessels will have capacity to segregate bunkers.
Secondly and importantly, the charterers are to provide written instructions to the vessel that any biofuels supplied to the vessel are to be consumed within a set number of days, the period of which is to be agreed by the parties.
Generally speaking, biofuels have a short shelf-life and therefore the owners will want as short a time as possible for the consumption of the biofuels so as to prevent the charterers bunkering well in advance (for example, in anticipation of the vessel trading to the EU), the fuel degrading over time and then the vessel being left with problem bunkers to off-load.
If biofuels are kept on the vessel for a period of time, regular testing should be undertaken to ensure stability and to minimise any problems arising. Again, this is addressed by the Clause, with any bunkers found to have degraded and be subsequently non-compliant to be off-loaded at the charterers’ cost and time.
Conclusion
Whether or not the use of biofuels will be the answer to addressing the reduction in GHG emissions required by governmental bodies and regulators remains to be seen. However, BIMCO’s Biofuels Clause for Time Charter Parties 2026 addresses the key difficulties in the supply and consumption of biofuels on board ships and offers helpful delineation of rights and responsibilities between the parties.
