April 12, 2023
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The article series "How a CII approach to chartering can increase emissions and cost" presents common voyage examples highlighting the sometimes unfortunate correlation between CII rating, absolute emissions and carbon cost. In this example we compare the voyage CII to the EU ETS carbon cost of three potential ships for an MR voyage, transporting CPP from Rotterdam to La Coruna.
The best way to understand the consequences of day to day chartering decisions is to zoom in on single voyages. So, to help our customers understand how their chartering decisions impact the CII, we developed the Voyage CII. The Siglar Carbon Ship Finder display both the voyage CII rating and the EU ETS carbon cost from potential ships so that unintended consequences of a CII approach to chartering is highlighted.
Comparing three potential ships for an MR voyage highlights how the ship with CII rating A would get the higher carbon cost.
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The above example is made from a spot charterer looking to load 37 000 tonnes of CPP in Rotterdam, discharging in La Coruna between 11-25 November 2022. The Siglar Ship Finder located 61 potential ships. Ranking the ships by absolute emissions resulted in the below list, where the three ships are highlighted.
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Having a closer look at each of the above ships, we can see the related EU ETS carbon cost of each alternative.
The most carbon efficient ship is a newer ship located in Rotterdam. With no ballast leg emissions included, it is expected to emit 275 tonnes of CO2 from discharge to discharge and the related EU ETS carbon cost would be approx. 25 000 USD. However, the ship gets a voyage CII rating B because it is a short haul voyage with no ballast leg.
The ship ranked as number 8 is expected to emit 377 tonnes of CO2 on the voyage and the related EU ETS carbon cost would be approx. 34 000 USD. It is an older ship doing a short haul voyage with no ballast, and the voyage CII rating is D.
Ship number 29 on the absolute emissions ranking is expected to emit 1 019 tonnes of CO2 and the related EU ETS carbon cost would be approx. 92 000 USD. The ship does however get the voyage rating A. This is an older ship, but the relatively long voyage from Taranto Italy with no cargo is rewarded in the AER calculations and is why this ship gets a top CII rating.
This is an intra EU voyage hence the carbon cost would correlate with absolute emissions and the ship with CII rating A would give the higher carbon cost.
For simplicity, in this example the price of the EU allowances was set to 95 USD and 100% of emissions were included. However, the price fluctuates and the amount of eligible emissions would depend on the year of the voyage according to the phase-in of maritime emissions in the EU ETS. Read more about the inclusion of the maritime industry to the EU ETS.
See example where we compare voyage CII to absolute emissions on MR voyage.
