EEXI is the ticket to the game, while CII is all about playing the game. Either win or try to survive. A loss would mean your ship can't trade anymore.
In the last article, it was discussed how the Energy Efficiency Design Index (EEDI) or Energy Efficiency Existing Ship Index (EEXI) would affect the vessel owners and operators in 2023. Both of these metrics are about the design aspects of the vessel. If the vessel qualified the design criteria set out by the International Maritime Organization (IMO), necessary certification would be awarded by the classification society after carrying out the due diligence. This is like ‘getting a ticket to the game’ while the real game is still to be played out. And this is what the Carbon Intensity Indicator (CII) is meant to do from 1st Jan 2023.
CII is the actual measurement of the carbon emitted to the atmosphere by an individual vessel. Vessel owners/operators may have the best vessel design in terms of energy efficiency, it wouldn’t infer that the vessel in question will emit less carbon as compared to other vessels in its segment. After all, carbon emission is a function of the fuel consumption which in turn is a function of the power requirement on the ship. Factors like speed, weather, port stay & consumption, hull paint, propeller, main engine, auxiliary engine conditions among others have a significant effect on the vessel’s actual carbon footprint in the atmosphere.
IMO started collecting data from all the vessels in 2019. It was called the IMO DCS data. DCS stands for the Data Collection System. The reason for this collection by IMO was to define the CII reference lines for different vessel types and sizes. Now when these reference lines are set, IMO has assigned the CII targets for all the ships to demonstrate the improvements from this level. Starting from 1st Jan 2023, the CII target will be set at 5% below the 2019 levels with a yearly 2% subsequent reduction until 2026 when the targets will be reviewed. The reduction percentage will likely become more stringent after the review The stepwise reduction is necessary to achieve IMO’s long-term ambition of taking out 70% carbon from the shipping sector by 2050(from 2008 levels).
Credit: DNV
For every vessel, there will be a required CII value which is a calculated one coming out of a well-defined formula adopted by the IMO. Then, there is an attained CII value which is an actual measured value calculated from the fuel consumption, capacity, and the annual distance traveled by ship. This attained CII is also called the Annual Efficiency Ratio(AER)
Depending on the delta between the required CII and the attained CII values, the vessel will be assigned an ‘A to E’ rating on the CII scorecard. While an ‘A’ rating would mean extraordinary performance by the vessel, an ‘E’ rating will mean the worst performance among the peers. If the vessel is awarded either three-time ‘D’ rating or one ‘E’ rating, an improvement plan will have to be submitted, agreed upon, and endorsed by the classification society to carry out the business as usual. For that purpose, all vessels will require to keep a verified Ship Energy Efficiency Management Plan (SEEMP) part III from 1st Jan 2023. This will be an addition to the existing SEEMP I and SEEMP II plans. SEEMP III is also called the Ship Operational Carbon Intensity Plan which deals specifically with the CII performance of the vessel. This plan will describe the methodology used for calculating the required and attained CII values, procedures for self-evaluation and improvement, and also the corrective action plan in case of poor ratings like ‘D’ or ‘E’.
Credit: DNV
The CII reporting period will start from 1st Jan 2023, the first verified attained EEDI value will be out by April 2024 after the submission of 2023 IMO DCS data by 31st March 2023. It will be prudent for the owners and operators to monitor the Year To Date(YTD) CII ratings of their vessels from next year onwards. If the vessel consistently falls in ‘D’ or ‘E’ zones, corrective actions can be taken to avoid an unpleasant surprise in April the following year when CII ratings are out. To improve the CII performance, below are the important measures that can be looked into:
Slower vessel speed (significant impact)
Less time in port (significant impact)
Use of Energy Saving Devices (ESDs)
Maintaining hull, propeller, main and auxiliary engine conditions (significant impact)
Use of less carbon-intensive fuels (significant impact)
Reducing the electric load on the ship
Switching over to the shore power where possible
Improving voyage performance with weather routing, constant power voyages (significant impact)
Less idle time at anchorage (significant impact)
There is a scheduled IMO MEPC(78) meeting in June this year where more decisions will be taken about the CII calculations. One of the important items on the agenda is the introduction of correction factors in calculating the attained CII of the vessels. The correction factors will take into account the special conditions which have a detrimental effect on the vessels’ CII performance. These conditions include adverse weather exceeding Beaufort Force 7, the energy needed for cargo heating/cooling, ice navigation, self-unloading vessels, delays due to port congestion, etc. It will be interesting to see how the correction factors will playout for the shipping companies.
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