The global response to
climate change has prompted initiatives to reduce greenhouse gas (GHG)
emissions, with the European Union Emissions Trading System (EU ETS) playing a
pivotal role. The inclusion of maritime transport in EU ETS marks a
considerable shift in the regulatory landscape, demanding adjustments across
the shipping sector and global trade. Shipping companies, now required to
surrender emission allowances, face increased operational costs, administrative
burdens, and profitability challenges. These costs are poised to affect freight
rates and contractual structures, with charterers and cargo interests bearing a
share of the financial impact. Contractual complexities arise as EU ETS
obligations lie with the shipping company. Standard charterparty terms do not
adequately address cost allocation regarding EU ETS, which prompted the Baltic
and International Maritime Council (BIMCO) to introduce tailored clauses to
clarify responsibilities. This article examines these clauses, their
implications, and how they aim to distribute compliance costs. The broader
economic repercussions of EU ETS on shipping extend beyond the industry itself,
ultimately impacting end-consumers as well. By exploring these multifaceted
impacts, the article highlights the critical interplay between regulatory
compliance, contract evolution, and the broader economic consequences of
decarbonizing maritime transport through EU ETS.