ON THE HORIZON 2026 | CO2TIME 2026. A new frontier and where to next?

Introduction

It is a fair question to ask whether the shipping industry needs a bespoke charterparty for a cargo that has yet to reach anything close to commercial scale. The global fleet of LCO₂ carriers remains very small, and arguably parties could manage with adapted tanker and LNG forms. Nevertheless, BIMCO has published CO2TIME 2026, its first standard form charterparty designed specifically for the carriage of liquefied carbon dioxide. This article examines what the form offers, and what it leaves unanswered.

LCO₂ in a standard form

CO2TIME 2026 is structured in the same way as other BIMCO forms, with the usual “Boxes” in Part I followed by detailed contractual clauses in Part II. It follows a structure that many in the shipping industry will be familiar with and utilises many of the same clauses and concepts found in other BIMCO forms.

As such, some may question whether, given that the global fleet of LCO₂ carriers remains very small, a bespoke standard form charterparty is needed specifically for the carriage of LCO₂. In particular, why not simply use an amended version of one of the many tanker or LNG charterparty forms that already exist (as many have been doing to date)?

We would argue that the answer to this is that a standard form is helpful because LCO₂ is a unique cargo and simply adapting existing forms risks leaving important issues unaddressed. For example:

• From a technical perspective, LCO₂ is, amongst other things, highly susceptible to temperature and pressure changes and can be corrosive.
• Commercially, it is an unusual cargo because it is essentially a waste product — LCO₂, in and of itself, is not a valuable commodity but rather something that emitters are seeking to dispose of (and to benefit from the carbon credits associated with carbon capture and storage). We discuss this point further below.
• As to the risks associated with a cargo spill, LCO₂ is not necessarily toxic but a loss of cargo would be a contribution to the release of greenhouse gases into the atmosphere (and there are safety risks for crew and marine life in the event of a significant spill).

To address some of these unique factors, CO2TIME includes, alongside the familiar framework, various LCO₂ -specific clauses dealing with the particular issues arising from the carriage of LCO₂ These include “Cargo Segregation and Contamination/Number of Grades”, “In Transit Loss” and “Vapour Return”. These clauses, amongst others, will be a welcome addition for those grappling with complex, LCO₂ -specific issues (and indeed for those looking to carry other types of liquefied gases, given the form’s built-in flexibility).

LCO₂ as a waste product

Whilst a charterparty aimed specifically at the carriage of LCO₂ is a welcome starting point, some of the more distinctive characteristics of LCO₂ may raise interesting questions down the line.

In particular, as mentioned above, LCO₂ is technically a waste product. It does not have commercial value in the same way as other types of liquid cargo such as LNG. The value in LCO₂ lies in the carbon credits that can be obtained in exchange for permanently storing it beneath the seabed; in other words, its value lies in disposing of it, rather than in using it.

However, CO2TIME 2026 still contains many of the usual provisions found in a traditional charterparty and it will be interesting to see how the industry looks to address some of these concepts in the context of LCO₂. For example:

• CO2TIME still includes a provision entitling owners to exercise a lien over cargo for amounts due under the charter. This poses a curious question: what would an owner do upon exercising such a lien over a cargo that cannot easily be stored or sold? In other words, what would a shipowner do with a cargo of LCO₂ that only has value if it can be permanently stored in the context of the charterer’s carbon capture project? CO2TIME has no answer to this, which means that for the time being this appears to be a fairly toothless remedy in an LCO₂ context.
• Further, clause 56 contains a typical exclusion of consequential loss. However, if a party loses a cargo of LCO₂, it has not lost something with intrinsic value, and the question arises whether the loss of carbon credits would constitute a consequential loss irrecoverable pursuant to clause 56, which is a fairly significant risk allocation point.

We can therefore see that some of the more traditional concepts found in standard form charterparties and now included in CO2TIME 2026 may require some additional thought by owners and charterers regarding how they would operate in practice.

Interaction with the rest of the contractual chain

Further, CO2TIME addresses only the shipowner/charterer bilateral relationship, but in practice the charterparty will likely sit beneath a transport and services agreement (“TSA”) and follow a shipbuilding contract. The charterparty’s risk allocations (off-hire, delivery and force majeure, to name a few) will need to flow through to the TSA and, importantly, be acceptable to the emitter who has invested heavily in a capture plant.

Some examples of issues that would require flow through or alignment with the rest of the contractual matrix are as follows:

• TSAs are likely to include send-or-pay provisions. CO2TIME’s off-hire regime does not distinguish between vessel unavailability caused by the charterer, the owner, or force majeure. This is a distinction which, in the context of a carbon capture project, will be critical for determining whether the emitter should still be paying under the TSA.
• CO2TIME includes a Technical Annex which will likely need to be aligned with the wider technical reference points in the rest of the project.
• When it comes to dispute resolution, as with other BIMCO charterparties and indeed the majority of English law charterparties, the default forum is arbitration pursuant to the rules of the London Maritime Arbitrators’ Association (“LMAA”). However, it is usually preferable in large-scale projects to adopt a single dispute resolution forum across all project contracts. The question then is whether an onshore emitter would be willing to accept LMAA arbitration in the other contracts, including the TSA, or whether a preference for, say, LCIA or ICC arbitration across the rest of the contractual matrix would necessitate amendments to the charterparty.
  In other words, CO2TIME presents a helpful starting point, but more remains to be done to bring standardisation and alignment to carbon capture projects utilising LCO₂ carriers.

Conclusion

Whilst the global fleet may be in single digits at the time of writing, the carriage of LCO₂ presents risks that are unique to this cargo. This makes a standard form charterparty in the form of CO2TIME a useful and appropriate first step for owners and charterers alike, providing the foundation for standardisation that the market needs if the carriage of LCO₂ is to grow. However, as we have identified, questions remain — not least around how traditional charterparty concepts translate to a cargo whose value is measured in carbon credits that are contingent on successful storage rather than traditional spot pricing.

As the carbon capture and LCO₂ carriage industries begin to expand, careful thought will need to be given to the interaction between CO2TIME and the wider contractual framework required for a carbon capture project, so as to ensure alignment across the entire chain. We expect this will be the next issue for the industry to tackle.