EU ETS in 2026: Full Scope, Full Cost – Why Ports of Call Matter in Time Charter Drafting

Full Phase-In of Maritime EU ETS

The EU ETS, governed by Directive 2003/87/EC (as amended by Directive (EU) 2023/959), applies to cargo and passenger vessels of 5,000 gross tonnage and above calling at ports within the European Economic Area (EEA), regardless of flag. The system has been phased in gradually:

• In 2025, allowances for 40% of verified 2024 emissions had to be surrendered.
• In 2026, 70% of 2025 emissions must be covered.
• Starting in 2027, 100% of verified emissions from 2026 onward for each reporting year must be offset by surrendering allowances by 30 September of the following year.

In addition to carbon dioxide (CO₂), the scope of regulated greenhouse gases has expanded. From 1 January 2026, methane (CH₄) and nitrous oxide (N₂O) are also included in the EU ETS, significantly increasing the volume of emissions subject to allowance costs.

Voyage Scope and Emissions Coverage

Under the EU ETS, 100% of emissions are covered for voyages between EEA ports or within an EEA port. For voyages between an EEA port and a non-EEA port, 50% of emissions are covered. These percentages apply to emissions from the entire voyage leg between two “ports of call.”

The term “port of call” is defined in Article 3(b) of the MRV Regulation (EU) 2015/757 as a port where a vessel loads or unloads cargo or embarks/disembarks passengers. Stops solely for refuelling, repairs, crew changes, or shelter do not qualify. This definition is central to determining which emissions fall within the EU ETS scope. For a more in-depth analysis of the term “port of call”, please refer to our article published in 2025.

The BIMCO ETSA Clause: Charterers’ Responsibilities

The BIMCO ETSA Clause was developed to allocate responsibility for emissions allowances between owners and charterers. Subclause (c) establishes that, unless otherwise agreed, “[T]hroughout the Charter Party period the Charterers shall provide and pay for the Emission Allowances corresponding to the Vessel’s emissions under the scope of the applicable Emission Scheme”.

This reflects the “polluter-pays” principle: the party procuring and consuming the fuel, typically the time charterer, is responsible for the associated emissions costs. The clause requires owners to monitor and report emissions and notify charterers monthly of the quantity of allowances due. Charterers must then transfer the corresponding allowances to the owners’ nominated account.

The Hidden Risk: Delivery and Redelivery Outside Ports of Call

A critical issue arises when delivery or redelivery under a time charter does not occur at a “port of call”. Instead, the vessel may be mid-voyage between two ports of call when the charter period begins or ends. Because ETSA calculates emissions pursuant to the “port of call”-definition and differentiates the emission coverage for voyages involving non-EEA and EEA ports, it is highly important for owners and charterers to consider the vessel’s latest port of call prior to delivery and the port of call following redelivery when negotiating the charter party.

If charterers take delivery mid-voyage and the “port of call” prior to delivery was an EEA port, and the next “port of call” is also within the EEA, then charterers will be liable for 100% of the applicable emission allowances for the voyage leg under the charter party. However, if the “port of call” prior to delivery was a non-EEA port, charterers will instead be liable for 50% of the applicable emission allowances. Similarly, if redelivery takes place mid-voyage between two “ports of call”, charterers will be obliged to cover allowances for the charterer’s leg based on the “port of call” following redelivery. The inclusion of the BIMCO ETSA Clause ensures that the charterers’ obligation to provide allowances commences at delivery and continues until redelivery, irrespective of whether the vessel calls at an EEA port during the charter period.

The standard wording and default allocation of the BIMCO ETSA Clause therefore leaves room for unforeseen outcomes unless amended - such that the charterer may end up covering more or fewer allowances than anticipated based on “ports of call” before delivery or following redelivery, which may in turn lead to unforeseen disputes.

Contractual Solutions: Mitigating Exposure

To avoid unintended liability and disputes, the parties should as far as possible:

• Take into account the vessel’s last “port of call” before delivery and its next “port of call” after redelivery when agreeing on the place of delivery and redelivery under the charter; and

• Amend subclause (c) of the BIMCO ETSA Clause to ensure the responsibility for providing and paying for emission allowances is fairly allocated between the owner and the charterer based on delivery and redelivery of the vessel.

Final Thoughts

With the EU ETS now fully operational for maritime shipping and the inclusion of additional greenhouse gases in 2026, the financial and contractual stakes have never been higher. Parties must understand their obligations under the BIMCO ETSA Clause and take proactive steps to align their contracts with the realities of emissions accounting under EU law.

We strongly recommend that stakeholders review their charter party terms and seek legal guidance to ensure compliance and avoid unintended liabilities and disputes. For tailored advice on navigating the EU ETS, ETSA and emissions clauses, please don’t hesitate to reach out to us.