BIMCO Moves to Resolve Shipping's 'Split Incentive' Problem with New Retrofit Contract

## BIMCO Targets the 'Split Incentive' Barrier to Shipping Decarbonisation One of shipping's most persistent structural obstacles to energy efficiency investment is coming under fresh scrutiny, with BIMCO developing a new contract designed to fairly distribute the costs and benefits of fuel-saving retrofits between shipowners and charterers. As reported by Splash247, the core problem is straightforward but commercially complex: a shipowner who invests capital in efficiency upgrades — such as air lubrication systems, hull coatings, or waste heat recovery units — may see the vessel pay back the retrofit cost through fuel savings long before the owner themselves recovers their investment. Under conventional charter arrangements, it is typically the charterer who pays for bunkers and therefore captures the lion's share of the operational savings, while the owner bears the upfront capital expenditure. This misalignment of incentives, often referred to in the industry as the 'split incentive' or 'landlord-tenant' problem, has long been cited as a structural barrier to accelerating fleet-wide efficiency improvements — a concern that is growing more acute as regulatory pressure intensifies. DNV's Maritime Forecast to 2050 underscores the urgency, projecting that significant investment in vessel efficiency will be essential to meet international decarbonisation targets. Yet without contractual mechanisms that ensure owners can recoup retrofit expenditure, the business case for voluntary upgrades remains difficult to make. BIMCO's intervention reflects a broader industry recognition that technical solutions alone are insufficient. Commercial and legal frameworks must evolve in parallel to unlock private capital for green shipping investments. The new contract clause, as described by Alex Byelyavtsev in Splash247, seeks to create a structured arrangement whereby fuel savings generated by a retrofit are shared between owner and charterer in a manner that allows the owner to recover their outlay over an agreed period. Such mechanisms are not entirely new — green lease clauses and efficiency-sharing agreements have been discussed in various forms for years — but a standardised BIMCO instrument would carry significant weight given the organisation's central role in setting global shipping contract standards. The development comes as the International Maritime Organization's Carbon Intensity Indicator (CII) regulations place growing importance on operational efficiency ratings, adding a further commercial dimension to retrofit decisions. Vessels with poor CII scores face increasing chartering restrictions, giving both owners and charterers a shared interest in improving performance. Industry observers will be watching closely to see whether a standardised contractual solution can move the needle on retrofit uptake, particularly among owners of older tonnage where the efficiency gap — and the potential savings — is greatest.