Effective from January 2023, the International Maritime Organization’s (IMO) Carbon Intensity Indicator (CII) will be applied to all vessels. It will impact operational measures with the aim of reducing emissions. The challenge for ship owners is to adequately prepare for its implementation. Digital technology will play a vital role in meeting this challenge.
The IMO has developed its CII regulation as part of its strategy for supporting the UN’s climate action targets by substantially reducing greenhouse gas (GHG) emissions from ships. The aim is to reduce GHG emissions by 50 percent from 2008 levels by the year 2050, and to lower the carbon intensity of ships by 40 percent by 2030. Carbon intensity is a measure derived from the emissions per ton mile, and will need to be reported to the IMO on an annual basis. The ship is then assessed with a CII rating from A (excellent) to E (bad).
The new CII regulation will enforce the development of technical and operational efficiency measures for both new and existing ships. At the same time, the IMO will introduce its Energy Efficiency Existing Ship Index (EEXI), which is based on the vessel’s design and measures CO2 per ton mile.
CII essentially measures how efficiently a ship transports goods or passengers. It is given in grams of CO2 emitted per cargo-carrying capacity and nautical miles travelled. It is derived from the Annual Emissions Ratio (AER), and is calculated as follows:
Based on the general formula above, the IMO introduced several correction factors for specific ship types (see image below). Corrections are applied for ships with ice class, refrigerated cargo, or having heating or cooling systems for cargo or cargo handling systems. There are also additional exclusions, such as for shuttle tankers in ship-to-ship cargo operations and for chemical tankers and structurally enhanced bulk carriers.
Image: CII calculation including correction factors
All cargo, RoPax, and cruise vessels above 5000 GT will be required to have a CII rating based on data provided annually to the IMO. In order to be compliant and to continue normal operations, the rating must be C or better. Any ship receiving a D rating for three consecutive years, or an E rating will be required to implement a corrective action plan. This will be part of the Ship Energy Efficiency Management Plan (SEEMP), and will impact the ship’s annual statement of compliance.
Over time, the CII will become ever stricter, and the values for ratings will diminish. This means that should a vessel maintain a specific CII value, it will move into a lower rating over the years. In order to remain within its CII rating category, it will need to continuously reduce its emissions, either through design or operational improvements.
CII Rating will become stricter over time (Source: DNV)
In preparing for the new CII regulations and the assessment of a vessel in advance of being graded, digital tools will be of vital assistance. One requirement will be a reporting system for collecting a vessel’s data according to the Data Collection System (DCS) standard. Also needed will be an advanced reporting system that can report according to the fuel consumption by purpose, which will become relevant when the IMO finalizes its corrections and exclusions to the CII calculation.
Additionally, monitoring of the fleet to constantly check CII performance and the quality of the date collected and to predict the annual CII rating for each vessel, will be necessary. So too will be an automated data interface for CII tracking. This should be user-friendly and require minimal human interaction in order to deliver the most accurate results. Finally, a simulation tool will be able to assess a year-end rating, while also providing potential alternative scenarios for each vessel’s voyage plans.
The information provided by these digital calculators and simulators will give owners the data needed to make the right operational decisions for minimizing emissions. For example, speed adjustments to achieve the best arrival time and thus reduce fuel consumption – and by extension emissions – could be accurately assessed. The same goes for route optimization.
Strategic Power Routing, based on track and weather forecasting, allows constant power to be maintained, fuel consumption to be optimized, and RPMs to be appropriately adjusted. A Fuel Optimization Service could also be used to reduce overall fuel consumption, while adhering to the required ETA. This might not give a constant power setting, but rather it analyses the entire operational performance of the vessel to reduce fuel consumption.
Digital solutions could also be employed to improve technical fuel performance. For example, by assessing the entire chain between bunkering (looking at fuel quality) and vessel performance. This allows fuel consumption reduction activities to be made within each major function. Software can also be used to monitor the key technical parameters, and to optimize them against baselines.
Another benefit of digitalisation is in the setting of Performance Alerts to indicate which operational measures can be leveraged to improve fuel consumption and reduce emissions. Alert services can be customized for each vessel’s CII parameters, and can be accessed via email, text messaging, through an app, or web portal. Alerts can also be tailored to specific commercial requirements, such as charter party compliance and speed management, as well as technical performance, meaning weather, voyage execution, data quality, and emissions.
CII ratings will have a significant impact on the business performance of all shipping companies. Abiding by the regulations and keeping vessels at or above the C rating will be essential. Failure to adhere to the CII regulations will risk losing charter business, and will impact how charter parties are managed. Vessel financing will also be affected, since access to investment capital and the cost of capital for new tonnage will be affected by the CII rating. Furthermore, port access and fees could be dependent on the CII rating. In short, businesses will need to thoroughly assess their asset values.
Counter-productive measures in the search for ways to reduce emission measurements, such as limiting a vessel’s use, reducing cargo, or shortening voyage lengths, need to be avoided as they risk having a negative impact on the ship’s commercial appeal. The most viable solution to improve a vessel’s CII rating is, therefore, to leverage the operational parameters.
Accurate reporting from quality data will be the key enabler for shipping companies, and in this the use of digital tools will play a central role.