Who pays for certified green fuel under a time charter?

Under standard time-charter forms, the charterer provides and pays for bunkers, so the green-fuel premium falls on the charterer by default. However, retrofit and engine-modification costs remain with the owner. A bespoke carbon-cost adjustment clause, such as the model clause in this article, is essential to apportion the full economic burden fairly and avoid disputes.

Can a charterer force an owner to burn an alternative fuel?

Generally, no, unless the charterparty expressly permits it and the vessel is technically certified for that fuel. Owners retain operational control, and the master has an overriding safety duty. If the charterparty requires fuel switching, it should include technical warranties from the charterer, clear indemnities, and a safety-override mechanism.

What should parties do if certified green fuel is unavailable at a Singapore port?

Follow the operational playbook: give immediate written notice to the counterparty, document all attempts to source alternative certified supply, notify P&I and H&M insurers, preserve evidence including supplier refusals, and consider tendering NOR with a clearly worded fuel caveat. The recommended shortage clause in this article permits a fallback to conventional fuel without breach.

Are carbon levies insurable by P&I or H&M?

Carbon levies and regulatory fines are typically excluded from standard P&I and H&M policies. P&I cover responds to pollution liabilities but does not generally extend to carbon taxes or emissions-related penalties. Owners and charterers should seek bespoke endorsements and engage their clubs early to clarify the scope of available coverage.

Do charterparties need to address who owns carbon credits earned from green-fuel use?

Yes. Carbon credits and emissions allowances generated by burning certified green fuel have real commercial value. Without an express clause, ownership of those credits is uncertain and potentially disputed. The model hybrid shared-cost clause in this article allocates carbon credits by agreement between the parties.

What evidence should be preserved for a bunker or fuel-specification claim?

Parties should retain bunker delivery notes, fuel-spec certificates, bunker samples (as required by MARPOL), all correspondence with fuel suppliers and the counterparty, port authority notifications, vessel logs recording fuel consumption and any fuel-switch events, carbon-credit documentation, and any expert reports on fuel quality or engine damage.

Decarbonisation Charterparty Singapore

Singapore’s position as the world’s largest bunkering port means that every wave of decarbonisation policy lands here first, and in 2026, the commercial shock waves are reaching charterparty negotiations with unprecedented force. The intersection of decarbonisation, charterparty drafting and Singapore’s regulatory environment now presents owners, charterers, P&I clubs and in-house counsel with a triple challenge: allocating the premium cost of green fuels, satisfying tightening emissions-reporting duties, and managing the dispute risk that arises when legacy contract language collides with new operational realities. This practical playbook sets out the model clauses, allocation frameworks, operational checklists and interim-relief strategies that Singapore-focused shipping practitioners need right now.

Executive Summary, Three Quick Decisions for Counsel

Before drafting or amending any fixture, counsel should resolve three threshold questions. The tables below provide a rapid reference point; each is explored in full detail later in this article.

Decision 1, Who pays for green fuel and carbon costs? Allocation depends on whether the fixture is a time charter or voyage charter and whether the parties have inserted a bespoke carbon-cost clause. Without one, the default bunker clause governs, and it was never designed for fuels that cost two to four times more than conventional VLSFO.

Decision 2, What notices must be given in the first 48 hours of a fuel-related dispute? Immediate written notice to the counterparty, the P&I club, and (where relevant) the Maritime and Port Authority of Singapore (MPA) can preserve rights and evidence that would otherwise be lost.

Decision 3, What interim remedies are available? Singapore offers emergency arbitration, High Court injunctive relief for evidence preservation, and (in limited circumstances) ship arrest, but the available relief depends entirely on the dispute-resolution clause selected at the fixture stage.

Charter type	Default cost bearer (no bespoke clause)	Recommended bespoke allocation
Time charter	Charterer provides and pays for bunkers	Insert carbon-cost adjustment clause with audit rights and cap/floor mechanism
Voyage charter	Owner bears fuel cost within freight rate	Insert green-fuel surcharge clause with verified-fuel specification and price escalation trigger

Action	Timeframe	Responsible party
Written notice of fuel dispute to counterparty	Within 24 hours of event	Claimant (owner or charterer)
Notification to P&I club	Within 24 hours	Owner (or charterer for FD&D cover)
Preservation of bunker samples and fuel documentation	Immediately upon discovery	Master / owner’s superintendent
MPA notification (if fuel switch or safety concern)	As required by port regulations	Master / owner

Singapore Policy and Market Context, MPA, GCMD, Green Corridor and SPEED

Singapore’s decarbonisation agenda is not aspirational, it is operational. The Maritime Singapore Decarbonisation Blueprint, published by the MPA, sets out a national strategy anchored in developing green-fuel bunkering infrastructure, supporting research and piloting low- and zero-carbon vessel technologies. The Blueprint commits Singapore to facilitating the transition across its port ecosystem, with implications for every vessel calling at the port and every charterparty governing that call.

The Global Centre for Maritime Decarbonisation (GCMD), headquartered in Singapore, runs pilot projects that test alternative fuels, including methanol and ammonia, in real-world port conditions. These pilots directly affect fuel availability assumptions in charterparty negotiations: if a pilot fuel is available at the port but not yet commercially scaled, who bears the procurement risk?

In parallel, MPA has renewed its Green and Digital Shipping Corridor agreements, including the Singapore–Los Angeles–Long Beach corridor. These memoranda of understanding create practical obligations for vessels trading on designated routes, including emissions-data sharing and green-fuel procurement targets. The Ministry of Trade and Industry’s SPEED programme (Supporting the Pace of Energy Evolution and Development) adds a domestic supply-side dimension, accelerating hydrogen and ammonia infrastructure development.

Initiative	What it requires	Charterparty implication
MPA Decarbonisation Blueprint	National framework for green-fuel bunkering, R&D support, regulatory readiness	Charterparties must anticipate evolving fuel specifications and port-level compliance duties
GCMD pilot programmes	Real-world trials of methanol, ammonia and biofuels at Singapore port	Fuel-availability and quality clauses need to account for pilot-stage supply risks
Green & Digital Shipping Corridor (SG–LA–LB)	Emissions data reporting, green-fuel procurement targets on corridor routes	Vessels on corridor trades require bespoke reporting and fuel-procurement obligations in fixtures
SPEED programme (MTI)	Domestic hydrogen and ammonia infrastructure acceleration	Long-term supply certainty improves, but near-term procurement risk remains with charterer or owner depending on clause allocation

Key fact (source: MPA): The Maritime Singapore Decarbonisation Blueprint positions Singapore as a hub for green-fuel bunkering and commits the port authority to regulatory and infrastructure readiness for alternative marine fuels.

Legal Landscape, IMO, National Law, Carbon Tax and Reporting Duties

Charterparty decarbonisation obligations do not exist in a vacuum. They sit within a framework of international and domestic regulation that determines who must report, what must be measured, and what costs are imposed for non-compliance.

At the international level, IMO targets for greenhouse-gas reduction from shipping drive flag-state and port-state regulation. The IMO’s revised strategy commits to achieving net-zero GHG emissions from international shipping by or around 2050, with intermediate checkpoints that are already influencing fleet investment, fuel procurement decisions and, critically, the allocation of carbon costs in charterparties. Industry observers expect the implementation of an IMO-level carbon pricing or levy mechanism to accelerate contract-level disputes over who absorbs these costs.

Carbon Tax and Local Levies

Singapore’s national carbon tax applies to large direct emitters and is part of the broader national climate strategy. While the carbon tax does not directly apply to international shipping bunker fuels in the same way it covers shore-based emitters, the likely practical effect is an indirect cost pass-through: onshore fuel producers and suppliers factor carbon costs into pricing, and those costs flow into bunker invoices. Charterparty clauses that do not address this pass-through leave the cost allocation to implied terms and industry custom, a recipe for dispute.

MPA Reporting and Port Notifications

Vessels calling at Singapore are subject to MPA port regulations, including requirements relating to fuel declarations, bunker delivery notes (BDNs), and, increasingly, emissions data reporting aligned with green-corridor commitments. Failure to comply can trigger port-state control deficiencies and operational delays.

Reporting obligation	Owner (vessel)	Charterer
Fuel consumption and emissions reporting to port (MPA)	Master/owner prepares BDN and fuel logs; owner liable for accurate vessel records and submission unless contract states otherwise	Charterer may be obliged to provide fuel purchase records and fuel-spec certificates if charterparty requires it (model clause can specify)
Notification of fuel switch / alternative fuel burn	Owner/master must notify port, vet, and ensure safety compliance; owner retains operational control	Charterer may request a fuel switch but needs owner consent unless charterparty makes it charterer’s obligation and indemnifies owner
Carbon cost / levy payments	Owner pays for bunkers supplied to vessel; may be contractually recharged to charterer under specific clause	Charterer pays extra fuel/carbon surcharge where contract allocates cost (time/voyage differences set out in model clauses)

Who Pays? Allocating Green-Fuel and Carbon Costs in Decarbonisation Charterparty Drafting

This is the question driving the most commercial friction in Singapore fixture negotiations. The cost differential between conventional VLSFO and certified green methanol or bio-VLSFO can be substantial, early indications suggest premiums of 100–300 per cent depending on the fuel type, supplier and availability. Legacy bunker clauses were drafted for a world in which fuel cost was significant but relatively predictable. The green-fuel charterparty requires a fundamentally different allocation framework.

Time charter default position: Under standard time-charter forms, the charterer provides and pays for bunkers. The charterer therefore bears the direct green-fuel premium, but the owner may face capital costs for engine retrofit, tank modifications, or crew training to handle alternative fuels. Without a bespoke clause, neither party has an obligation to share these costs, and disputes arise over whether the charterer can instruct the use of a fuel the vessel is not technically or contractually warranted to burn.

Voyage charter default position: Under standard voyage-charter forms, the owner bears fuel cost within the agreed freight rate. If green-fuel mandates or corridor requirements apply, the owner’s cost base can increase dramatically, but the freight rate was negotiated before those costs crystallised. A green-fuel surcharge clause is essential to bridge this gap.

Sample Clause Language, Carbon Cost Charterparty Provisions

The following model clauses are designed as starting points for negotiation. Each should be adapted to the specific fixture, trade, and fuel-availability profile.

Clause 1, Time-Charter Carbon Cost Adjustment: “Any carbon levy, carbon tax, emissions charge or equivalent cost imposed by any governmental, port or international authority in respect of the Vessel’s fuel consumption during the charter period shall be for Charterers’ account. Owners shall provide Charterers with documentary evidence of such charges within [14] days of receipt. Charterers shall reimburse Owners within [30] days of presentation of verified invoices.”

Clause 2, Voyage-Charter Green Fuel Surcharge: “Where Owners are required by regulation, port authority directive, or green-corridor commitment to procure and burn certified green fuel (as defined in the Fuel Specification Annex) on any leg of the contractual voyage, Charterers shall pay a Green Fuel Surcharge equal to the verified price differential between the green fuel actually supplied and the prevailing Singapore-delivered VLSFO price on the date of bunkering, as published by [agreed pricing source].”

Clause 3, Hybrid Shared-Cost with Audit and Credit: “The additional cost of certified green fuel above the Baseline Fuel Price shall be shared equally between Owners and Charterers. Each party shall have the right to audit the other’s fuel procurement records and carbon-credit purchases. Any carbon credits or emissions allowances earned by the Vessel’s use of green fuel shall be allocated [50/50] [to Owners] [to Charterers] [as agreed in the Emissions Credit Annex].”

Negotiation Checklist

Define “green fuel” precisely. Reference an agreed specification or standard (e.g., ISCC certification, MPA-approved fuel list). Ambiguity here is the single largest source of disputes.
Agree on a pricing benchmark. Specify the reference price, the date of calculation, and the publication source.
Include audit rights. Both parties should have access to bunker invoices, BDNs, and carbon-credit documentation.
Address carbon credits and allowances. Who owns the emissions reduction benefit? This has real commercial value and must be allocated explicitly.
Cap and floor mechanism. Consider a cap on the charterer’s exposure or a floor on the owner’s contribution to avoid unbounded risk.
Dispute escalation. Specify whether disagreements on cost allocation are referred to expert determination, mediation, or arbitration.

Fuel Switching, Safety, Operational Control and Consent, Who Decides?

A charterer’s instruction to burn an alternative fuel engages fundamental principles of operational control and maritime safety. Under English law, which governs most international charterparties and is frequently chosen for Singapore fixtures, the owner retains operational control of the vessel, and the master has an overriding duty to ensure safety of the vessel, crew and cargo.

This means a charterer cannot unilaterally force an owner to burn an alternative fuel unless the charterparty expressly permits it and the vessel is technically certified to use that fuel. Even where the charterparty includes a fuel-switching clause, the master retains the right to refuse if, in the master’s reasonable judgment, the use of the specified fuel would compromise safety.

The practical consequence is that charterparties need to address fuel switching explicitly, including:

Technical warranties: Owner warrants the vessel is capable of burning the specified alternative fuel, and charterer warrants the fuel meets the agreed specification.
Indemnities: If the charterer requires a fuel switch, the charterer indemnifies the owner against damage, delay, or liability arising from the use of that fuel.
Safety override: The master’s right to refuse or revert to conventional fuel on safety grounds is preserved, with a clear notification and evidence protocol.

Notice, NOR, Deviation and Laytime Consequences

If a fuel-related dispute causes delay, for example, the charterer refuses to accept conventional fuel when green fuel is unavailable, or the owner refuses to burn a fuel the charterer has procured, the laytime and demurrage consequences must be addressed. Notice of Readiness (NOR) tendered with a fuel caveat (e.g., “vessel ready in all respects save green fuel availability”) raises complex questions about valid tender. Charterparties should specify whether such a qualified NOR is valid, and if so, whether laytime runs from its tender or from the resolution of the fuel issue.

Deviation to source alternative fuel at a non-contractual port also raises allocation issues: who pays for the deviation, the additional bunkers consumed, and any delay? The bunker clause decarbonisation framework must address deviation costs explicitly.

Supply Failure, Shortage and Port Unavailability, Operational Playbook

Certified green fuel supply chains are not yet mature. Supply disruptions, specification failures and outright unavailability at the nominated port are realistic scenarios. The following operational playbook sets out the steps to be taken when a charterparty requires certified green fuel and that fuel is unavailable.

Immediate notice to counterparty (within 24 hours): Written notice specifying the nature of the unavailability, the steps taken to source alternative supply, and the anticipated impact on the voyage schedule.
Attempt alternative certified supply: Document all attempts to procure certified green fuel from alternative suppliers at the nominated port or at nearby ports. Retain correspondence, quotes and refusals.
Notify P&I club and H&M insurers: Early notification preserves coverage and enables the insurer to advise on mitigation steps and evidence preservation.
Preserve evidence: Retain bunker samples, supplier correspondence, port authority communications, fuel-test certificates and all related documentation. This evidence is critical in any subsequent arbitration or court proceeding.
Consider tendering NOR with fuel caveat: If the vessel is otherwise ready, tender NOR with a clearly worded caveat and notify the charterer that laytime should commence subject to the fuel-availability issue.
Mitigate: If permitted by the charterparty, consider burning conventional fuel as a fallback, preserving a claim for the cost differential and any regulatory consequences.

Recommended shortage clause: “If certified green fuel as defined in the Fuel Specification Annex is unavailable at the loading or discharge port, Owners shall immediately notify Charterers. The parties shall use reasonable endeavours to source alternative certified supply. If no certified green fuel is available within [48/72] hours, Owners may burn conventional fuel and shall not be in breach of any green-fuel obligation. The cost differential between conventional fuel and certified green fuel shall be [for Charterers’ account / shared equally / determined by expert].”

Interim Remedies, Bunker Claims and Dispute Risk, Singapore Practice

Fuel-related disputes in the decarbonisation charterparty context can escalate rapidly, a vessel waiting for green fuel burns demurrage costs daily, and P&I exposure accrues with every hour of delay. Singapore offers several interim-relief options, but the choice of remedy depends critically on the dispute-resolution clause in the charterparty.

Emergency arbitration: If the charterparty provides for arbitration under institutional rules that permit emergency arbitration (such as the SIAC Rules), a party can apply for interim measures, including orders to preserve evidence, maintain the status quo, or require a party to procure or accept fuel, within days of the dispute arising.

Singapore High Court injunctive relief: Where court jurisdiction is available, the High Court can grant injunctions for the preservation of evidence (e.g., bunker samples, fuel-test records) and to restrain a party from acting in breach of the charterparty. Applications can be made on an urgent, ex parte basis where necessary.

Ship arrest: Ship arrest in Singapore is available under the High Court (Admiralty Jurisdiction) Act for claims falling within the statutory categories. Bunker claims and claims arising under charterparties can support an arrest application, but the remedy is limited to in rem claims and requires careful assessment of whether the claim satisfies the jurisdictional gateway.

Arbitration vs Court, When to Choose Which Forum

Industry observers expect the majority of green-fuel disputes to be resolved in arbitration, given the prevalence of arbitration clauses in standard charterparty forms and the confidentiality advantages. However, where urgent evidence preservation or ship arrest is required, court applications may be necessary as a precursor to or alongside arbitral proceedings. Counsel should consider including a carve-out in the arbitration clause permitting court applications for interim relief without waiving the arbitration agreement.

Evidence checklist for bunker and fuel-switching claims:

Bunker delivery notes (BDNs) and fuel-spec certificates
Bunker samples (retained per MARPOL requirements)
Correspondence between owner, charterer and fuel supplier regarding fuel specification and availability
Port authority notifications and any MPA communications
Vessel logs recording fuel consumption, fuel switch events and any safety incidents
Carbon-credit or emissions-allowance documentation
Expert reports on fuel quality or engine damage (if applicable)

Insurance and P&I Exposure, What Is Insurable?

The P&I exposure from decarbonisation-related charterparty disputes is significant and, in many areas, untested. Standard P&I cover responds to third-party liabilities, including pollution, cargo damage, and personal injury, but the treatment of carbon levies, regulatory fines, and fuel-specification disputes under existing policies requires careful analysis.

Pollution liability: P&I clubs typically cover pollution liabilities arising from the vessel’s operations. If an alternative fuel causes a spill or contamination event, standard P&I cover should respond, but the club will scrutinise whether the fuel was approved, properly handled, and used in accordance with the vessel’s technical certification.
Carbon levies and regulatory fines: These are generally excluded from standard P&I cover. Fines imposed by port authorities or regulatory bodies for emissions non-compliance, carbon-tax defaults, or reporting failures are unlikely to be insurable. Early engagement with the club and bespoke endorsements are advisable.
H&M exposure: Hull and machinery policies may respond to physical damage caused by an incompatible alternative fuel, but exclusions for wear and tear, inherent vice, or use of non-approved fuels could apply. Owners considering engine retrofit or conversion should confirm H&M coverage in advance.
Freight, Demurrage and Defence (FD&D): FD&D cover can fund the legal costs of pursuing or defending charterparty disputes, including green-fuel cost disputes. Charterers should confirm FD&D coverage early.

Insurer negotiation checklist:

Confirm whether carbon levies and emissions-related fines are excluded, and if so, whether a bespoke endorsement is available
Notify the P&I club of any planned fuel switch or alternative-fuel trial before the voyage
Provide the club with the vessel’s technical certification for the alternative fuel
Agree warranty wording with H&M underwriters confirming coverage for approved alternative fuels
Review FD&D coverage limits for anticipated green-fuel disputes

Model Clauses and Redlines, Drafting Checklist for Charterparty Decarbonisation

The following model clauses are presented in summary form. Each should be tailored to the specific fixture. The two-column table below indicates the key difference between an owner-friendly and charterer-friendly formulation.

Clause 1, Carbon Cost Adjustment (Time Charter): Allocates carbon levies and emissions charges to charterers, with documentary evidence and reimbursement timeline.
Clause 2, Green Fuel Surcharge (Voyage Charter): Imposes a verified price-differential surcharge on charterers when green fuel is required by regulation or corridor commitment.
Clause 3, Hybrid Shared-Cost and Emissions Credit: Splits the green-fuel premium and allocates carbon credits between the parties.
Clause 4, Fuel Specification and Warranty: Defines “certified green fuel” by reference to an agreed standard and allocates responsibility for fuel-quality failures.
Clause 5, Shortage and Unavailability: Permits fallback to conventional fuel with defined cost-allocation and notification requirements.
Clause 6, Reporting and Data Sharing: Requires both parties to cooperate in emissions reporting and preserve fuel documentation for audit.
Clause 7, Audit and Evidence Preservation: Grants mutual audit rights over fuel procurement records, BDNs and carbon-credit documentation.
Clause 8, Dispute Escalation: Specifies a tiered dispute-resolution mechanism (expert determination → mediation → arbitration) with a carve-out for urgent court relief.

Clause	Owner-friendly formulation	Charterer-friendly formulation
Carbon cost allocation	All carbon levies for charterer’s account; owner has no cap on pass-through	Carbon levies shared 50/50 with a cap on charterer’s annual exposure
Fuel specification risk	Charterer warrants fuel quality and indemnifies owner for damage from non-compliant fuel	Owner warrants vessel is technically capable of burning all fuels in the agreed specification annex
Shortage / unavailability	Owner may burn conventional fuel without breach; charterer bears cost differential	Owner must use reasonable endeavours to source green fuel; cost differential shared or subject to expert determination
Carbon credits / emissions benefits	All carbon credits accrue to owner as vessel operator	Carbon credits accrue to charterer who funded the green-fuel premium
Dispute escalation	Singapore arbitration (SIAC); owner retains right to arrest	Singapore arbitration (SIAC) with mandatory mediation step; limited arrest carve-out

Conclusion, Immediate Next Steps for Counsel

The convergence of Singapore’s green-corridor commitments, evolving MPA reporting requirements and the commercial reality of green-fuel pricing means that every charterparty touching Singapore requires a decarbonisation review. The era of relying on standard-form bunker clauses for green-fuel allocation is over. Counsel advising on decarbonisation charterparty matters in Singapore should prioritise the following five actions immediately:

Audit existing fixtures for green-fuel, carbon-cost and emissions-reporting gaps, apply the model clauses in this article as a baseline.
Insert bespoke carbon-cost and fuel-specification clauses in all new time and voyage charterparties trading to or from Singapore.
Confirm P&I and H&M coverage for alternative-fuel operations, engage clubs and underwriters before the first green-fuel lift.
Establish an evidence-preservation protocol, bunker samples, BDNs, supplier correspondence and port-authority communications must be retained from day one.
Review dispute-resolution clauses, ensure emergency arbitration and court interim-relief carve-outs are available for urgent fuel-related disputes.

Need Legal Advice?

This article was produced by Global Law Experts. For specialist advice on this topic, contact Shanen Nanoo at Incisive Law LLC, a member of the Global Law Experts network.