IMO will set the rules for its upcoming carbon intensity index (CII) measure for reducing greenhouse gas emissions from shipping in June
IMO’s Marine Environment Protection Committee (MEPC) is expected to finalise CII rules at its remote meetings between 10-17 June 2021. The CII measures are based on an operational approach that supports IMO’s objective of reducing the carbon intensity of international shipping.
The CII is expected to come into force 1 January 2023, and a panel of experts debated the disruptive ramifications of the regulation for shipowners and operators during Riviera Maritime Media’s Vessel optimisation: a digitalised approach to CII compliance webinar.
Dorian LPG fleet performance manager Grzegorz Zboś, G2 Ocean senior fuel performance specialist Henning Rebnord and Verband Deutscher Reeder technical advisor Sebastian Ebbing agreed that careful planning, detailed understanding and decisive action is required ahead of the regulation’s implementation to enable shipowners and operators to achieve the minimum acceptable CII rating.
“The CII-framework and ratings will apply for all vessels of more than 5,000 gt,” said Mr Ebbing. “The annual attained CII will be rated against the required CII benchmark by flag state authorities.”
Mr Ebbing explained how IMO’s mandatory fuel oil data collection system (DCS) for international shipping will be key to determining attained CII. Ships will be rated A to E depending on their carbon intensity.
“Ships with a D rating for three consecutive years or an E rating for one year are required to take corrective actions to achieve the required CII,” he said.
Mr Ebbing said shipping companies need to calculate CII for their ships and use the information to reduce fuel consumption and expenditure. “This should be a business strategy, not a regulatory burden,” Mr Ebbing said. “Companies can take some serious honey out of it if they focus on how to reduce carbon intensity and climate protection within their strategy.”
Attendees of the webinar agreed CII will be useful for company strategy and vessel optimisation. 92% of the audience agreed CII may become a key performance indicator after 2023.
Mr Rebnord said CII will have “major implications” in shipping and the sector’s supporting supply chains and shipping companies that have prepared for the regulation’s introduction in 2023 will have an advantage over those that have not.
“This will be disruptive in the industry and it will be survival of the fittest,” Mr Rebnord said, before offering examples of practical implications for shipping companies with diverse fleets of vessels in terms of age and operational efficiency.
CII will be vessel-specific, to force companies to address efficient operations on board each vessel and to prevent companies from using newbuild vessels to average out carbon intensity across a fleet.
The CII rating for a ship is expected to change regularly, becoming stricter over time. “It will be a moving target, making it harder to comply,” said Mr Rebnord.
Mr Rebnord said many shipping companies will be forced to determine whether to invest in existing ships or to sell them for demolition.
“Early scrappage will be inevitable as owners may not get their return on investment in [energy saving] technology,” said Mr Rebnord. “Owners need a good plan and need to use operational measures such as slow speeding, weather routeing, cleaner propulsion, using energy-saving devices and trade vessels partially laden,” he said.
Nearly three-quarters of webinar attendees agreed slower speeds would be a primary method used to achieve CII compliance. Around 73% agreed slow steaming will be the dominant measure used to comply with CII, while 27% disagreed.
Mr Zboś said data management, storage and processing will be important for CII compliance and will improve the quality of ship operations. After calculating CII for each vessel, data analytics can be used to consider where improvements can be made.
Dorian LPG has started preparations for CII. “We are preparing the data with a corporate solution to leverage CII and get a view of fleet performance for the future,” said Mr Zboś. “It is a perfect storm for shipping, and we are preparing for that storm and what we will be going through in the future.”
It seems many shipping companies are not as well advanced in their preparations for CII implementation in 1.5 year’s time. Ony 45% of attendees said their companies had started calculating CIIs for each vessel while 55% have not.
In another poll question, 52% of delegates said they were calculating CII based on available knowledge and past performance when preparing their fleet’s CII calculations. 48% said they were not doing anything in this area until IMO guidelines were ready.
Attendees were asked if CII is an appropriate operational measure to achieving IMO greenhouse gas objectives until 2030, 2040 and 2050. Just 11% said yes it was an appropriate measure and 78% said the CII approach is suitable but it requires regular review and strengthening. Another 6% said the CII methodology will not contribute to any reduction of shipping’s carbon intensity and 5% said it is simply another regulatory burden for shipping companies.
However, webinar attendees said they expect IMO’s CII will bring considerable change when it is implemented. When asked whether CII will bring disruption to the shipping industry, 45% agreed and another 6% strongly agreed. Some 19% disagreed, 11% strongly disagreed and 19% were undecided.
When asked if they thought vessel-specific CII assessment would promote investment in renewable energy sources, 64% said yes, it is important all vessels reduce their carbon footprint; 36% voted for no – a fleet average CII compliance would allow shipowners to invest in new, more efficient vessels with alternative fuels and propulsion systems, which could balance out the carbon footprint of older vessels.
Attendees were then asked if CII would bring innovation in the form of energy-saving technology and alternative fuels. 72% agreed, 10% strongly agreed, 7% disagreed, 3% strongly disagreed and 8% were undecided.
On Riviera’s Vessel optimisation: a digitalised approach to CII compliance webinar panel were (left to right) Dorian LPG fleet performance manager Grzegorz Zboś, G2 Ocean senior fuel performance specialist Henning Rebnord, and Verband Deutscher Reeder technical advisor Sebastian Ebbing
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