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21. December 2021 | Coach Solutions

The IMO established its greenhouse gas (GHG) reduction strategy in 2018 to reduce emissions from the shipping industry. One of the main goals is to reduce carbon intensity with 40% by 2030 compared to the 2008 level and with 70% by 2050. To achieve this goal a number of energy efficiency and emission reduction regulators will be put in place.

The 3 main regulators which the IMO have put in place are the Energy Efficiency Existing Ship Index (EEXI) concerned with how ships are equipped or designed, the enhanced Ship Energy Efficiency Management Plan (SEEMP) concerned with the management system, and finally, the Carbon Intensity Indicator (CII) rating scheme addressing how the ships are operated. This article will touch upon the key points of CII ratings to help you prepare for when it enters into force.

So, what is the CII? Well, imagine you have a brand-new ship with the most sophisticated engine and CO2 reduction equipment onboard – that vessel would come out looking excellent on the EEXI. However, if you run the vessel extremely poorly, not optimizing routes, not adjusting speed, and not making sure the hull is kept smooth, that great ship would still receive a poor CII rating.

The CII rating is calculated by comparing the actual energy efficiency of the vessel with a vessel type specific benchmark. The CII rating achieved by the vessel will depend on the ratio between the actual and the benchmark energy efficiency.

The actual energy efficiency is calculated using the Annual Efficiency Ratio (AER). The AER measures energy efficiency in terms of CO2 emissions per transport work i.e., how emissions-efficiently the vessel can transport cargo over a certain distance. In lieu of the actual cargo carried, the AER uses the DWT description of the vessel. Every part of the vessel’s operations is taken into consideration in this calculation: ballast voyages, laden voyages, port stays, fuel used for cargo heating, etc., are all included in the calculation for a certain year.

The benchmark used for comparison is set by the IMO and is split by vessel type and in some cases also by vessel size (expressed in DWT). The benchmark is based on world fleet averages from 2019, when the first IMO DCS numbers were collected, and will be tightened on a yearly basis towards 2026 in order to reflect the desire to drive a decarbonization of the world shipping fleet.

When calculating the CII rating, the actual energy efficiency is divided by the benchmark figure and the resulting number decides the CII rating (A – E, A being the best). The limits for moving from one rating to another are vessel specific just like the benchmark.

A visualization of how this might look is given in the figure below, where the tightening of the benchmarks is seen by the downward slope over time. This means that if a vessel does not improve its energy efficiency, it may be compliant in 2021 but not in 2023 when the regulation comes into force and the benchmarks have tightened.

If a vessel falls in the D or E rating from 2023, they will be required to update their SEEMP to show which corrective measures will be taken in order to mitigate the poor energy efficiency. Hereafter it is up to the stakeholders of the shipping industry to provide incentives for owners and operators to make sure their vessels fall within the A, B or C category. Therefore, IMO have also urged financial institutions, ports, insurance companies etc. to adopt the CII measure.

What can then be done to stay compliant with CII?

The overall objective for CII is of course to reduce CO2 emissions for the shipping industry. Vessels can be optimized both from an operational point of view and a technical.

If the vessel owners aim to be EEXI compliant it will influence the CII positively. Looking purely on the operational side many actions can be taken which will have a positive influence on the CII. The return on investment on some of these solutions are relatively low. These could for example be weather routing and route optimization or constant performance measurement to secure timely hull cleanings. Route optimization can be implemented immediately, and payback time is relatively low and will lead to significant fuel savings which, as a bonus, results in greater profit. Performance monitoring, which can evaluate the vessels performance in isolation despite the different conditions the vessels will be in, will easily help in identifying hull fouling or other insufficiencies.

It is therefore now time to start preparing for being CII compliant. The first step is to implement a performance monitoring system which can give you an overview of your fleet’s CII ratings to identify vessels in danger of non-compliance. Once that overview is found, continued use of route optimization and performance monitoring will help you optimize the operational performance of your vessels. At COACH Solutions, we can help you with every step of this voyage so sign up your vessels now to be prepared for CII compliance when it enters into force.

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The IMO established its greenhouse gas (GHG) reduction strategy in 2018 to reduce emissions from the shipping industry. One of the main goals is to reduce carbon intensity with 40% by 2030 compared to the 2008 level and with 70% by 2050. To achieve this goal a number of energy efficiency and emission reduction regulators […]

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