Author: Peter Grima
Growing environmental awareness is shaping the way in which the shipping industry operates as international regulations become increasingly geared towards implementing measures that help mitigate the impact of shipping activities on the environment. Recent years have witnessed a profound impetus to effect change in internal shipping, leading to the International Maritime Organization’s 2020 sulphur cap. This regulation entered into force under the International Convention for the Prevention of Pollution from Ships (MARPOL Annex VI) and in virtue of which the sulphur content in marine fuel reduced from 3.5% to 0.5% across international markets.
The success of the IMO 2020 set the tone for the shipping industry’s decarbonisation goals and the momentum built over the last three years has served as a catalyst for the introduction of new IMO 2023 regulations, which are to be implemented on 1st January 2023. The amendments to MARPOL ANNEX VI came into force on 1 November 2022, introducing new rules targeting vessel efficiency aspects and carbon intensity, all of which shall become mandatory at the start of 2023.
The amendments to MARPOL ANNEX VI include new measures aimed at reducing the carbon intensity of all ships by 40% by 2030 compared to the 2008 baseline. To achieve these goals, ships will be required to calculate their Energy Efficiency Existing Ship Index (EEXI) to determine their efficiency as well as their Carbon Intensity Indicator (CII) to determine their CII rating. These measures are aimed at meeting the target set in the IMO Initial GHG Strategy in the short-term and impose more onerous requirements for ships to improve their energy efficiency as a further means of reducing their carbon footprint.
It shall become mandatory for all ships to calculate their EEXI, to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational CII rating. The first annual reporting is to be completed in 2023 and initial ratings are to be provided in 2024, where the carbon intensity of a ship will be rated from ‘A’ to ‘E’ (‘A’ indicating superior efficiency performance levels and ‘E’ indicating inferior performances levels). The ship’s performance level will then be recorded in a “Statement of Compliance” and further elaborated in the ship’s Ship Energy Efficiency Management Plan (SEEMP).
The EEXI applies to all ships above 400 gross tonnes that are engaged in international voyages, while the CII applies to ships above 5,000 gross tonnes and such ships will need to be surveyed and issued with appropriate certification evidencing compliance with the regulations. A ship’s EEXI will indicate its energy efficiency as compared to the agreed baseline as a percentage of the Energy Efficiency Design Index (EEDI). The attained EEXI for ships must be below the required EEXI value, to ensure the ship meets the minimum energy efficiency standard.
In conjunction with the EEXI is the CII, a rating system for ships that includes a system whereby a fixed percentage in the ships carbon rating increases annually by the factor required to ensure continuous improvement of the ship’s operational carbon intensity. The operation carbon intensity will be within a specific rating level and this operational CII will be documented and verified against the required annual operational CII.
Ship operators will be expected to adopt the required measures to ensure that the ship is compliant with MARPOL ANNEX VI and any ships which get a rating of ‘D’ (indicating minor inferior performance) for three consecutive years, or ‘E’ (indicating major inferior performance) for one year, will be obliged to submit a corrective action plan illustrating how the required index of ‘C’ (indicating moderate performance) or above will be achieved. For those vessels that manage to obtain the highest ratings, MARPOL ANNEX VI encourages port authorities to provide incentives, which may come in the form of discounted ship registrations fees, port fees and other associated shipping costs.
The way vessels may decrease their carbon footprint and rating may vary, although it is widely recognised that one of the most cost-effective means of increasing a ship EEXI and CII will be though speed and routeing optimization as well as regular hull cleaning to reduce drag. It is estimated that such measures alone may be potentially enough to reduce carbon emissions by up to 30%. The use of low-carbon fuels is also highly encouraged although it is expected that this will be a more gradual.
The IMO 2023 Regulations are another step in the right direction for a greener shipping industry and one that will continue to expand as a key feature in the shipping industry’s efforts to address environmental concerns in the years to come. The new measures are expected to evolve over time and the IMO’s Marine Environment Protection Committee (MEPC) is tasked with assessing the effectiveness of the implementation of the CII and EEXI by 1 January 2026.
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