March 22, 2023
To help our customers cut through the complexity of the Carbon Intensity Indicator (CII), Siglar has developed the voyage CII. When we compare a voyage’s CII rating with the voyage's total emissions, a striking pattern emerges: chartering decisions based solely on CII can actually drive emissions and costs up. In this article, we break down why that happens and walk through common voyage scenarios that illustrate the impact.
The IMO’s CII rating introduces a global, easy-to-understand reference that brings attention to operational carbon efficiency in shipping. This is a large and necessary step in the right direction.
However, the CII ratings have been met with criticism. Our experience is that the CII does not provide professionals on the cargo side or the ship side with sufficient incentives to support carbon-efficient chartering decisions. Hence, the full potential of an operational measure to improve efficiency and reduce emissions is not realised.
The weakness of the current CII relates to the fact that the operational efficiency is based on Annual Energy Ratio (AER) calculations which disregard whether the ship is transporting cargo or not. Two consequences of leaving cargo out of the operational efficiency equation are:
The CII rating can for this reason lead to sub-optimal chartering decisions and increased overall emissions, and work against the IMO’s intended purpose which is to reduce shipping emissions.
The best way to understand the consequences of chartering decisions is to zoom in on single voyages. So, to help our customers understand how their chartering decisions impacted the CII, we developed the Voyage CII. When comparing the voyage CII rating to its absolute emissions it is easy to find examples where CII rating and absolute emissions do not coincide.
Have a closer look at this example.
Have a closer look at this example.
Have a closer look at this example.
From the charterers’ point of view, understanding CII variations and how the cargo in question would contribute to each ship’s annual CII is useful in charter party negotiations. However, if the aim is to reduce emissions and regulatory compliance cost, absolute numbers, measured in tonnes of CO2, are the appropriate indicators. Measuring and estimating absolute emissions allows charterers to understand the carbon consequence of their shipping decisions and to make chartering decisions.
From the charterers’ perspective, understanding CII variations and how a given cargo contributes to each vessel’s annual CII can be helpful during charter party negotiations. However, if the objective is to reduce emissions and manage regulatory compliance costs, absolute emissions, measured in tonnes of CO₂, are the more relevant metric. Focusing on absolute emissions enables charterers to assess the carbon and cost impact of their shipping choices and make more informed chartering decisions.
From a charterer’s perspective, the best moment to avoid unnecessary shipping emissions is when planning the voyage. Estimating absolute emissions allows the charterer evaluate the consequence of pre-fixture shipping decisions, like how the ballast leg and cargo destination. Understanding the emissions impact and the related carbon cost of the ballast leg and the cargo destination might trigger the use of flexibility in the chartering program. Using this flexibility leaves opportunities to slash emissions at low cost and at large scale.
To help our customers cut through the complexity of the Carbon Intensity Indicator (CII), Siglar has developed the voyage CII. When we compare a voyage’s CII rating with the voyage's total emissions, a striking pattern emerges: chartering decisions based solely on CII can actually drive emissions and costs up. In this article, we break down why that happens and walk through common voyage scenarios that illustrate the impact.
The IMO’s CII rating introduces a global, easy-to-understand reference that brings attention to operational carbon efficiency in shipping. This is a large and necessary step in the right direction.
However, the CII ratings have been met with criticism. Our experience is that the CII does not provide professionals on the cargo side or the ship side with sufficient incentives to support carbon-efficient chartering decisions. Hence, the full potential of an operational measure to improve efficiency and reduce emissions is not realised.
The weakness of the current CII relates to the fact that the operational efficiency is based on Annual Energy Ratio (AER) calculations which disregard whether the ship is transporting cargo or not. Two consequences of leaving cargo out of the operational efficiency equation are:
The CII rating can for this reason lead to sub-optimal chartering decisions and increased overall emissions, and work against the IMO’s intended purpose which is to reduce shipping emissions.
The best way to understand the consequences of chartering decisions is to zoom in on single voyages. So, to help our customers understand how their chartering decisions impacted the CII, we developed the Voyage CII. When comparing the voyage CII rating to its absolute emissions it is easy to find examples where CII rating and absolute emissions do not coincide.
Have a closer look at this example.
Have a closer look at this example.
Have a closer look at this example.
From the charterers’ point of view, understanding CII variations and how the cargo in question would contribute to each ship’s annual CII is useful in charter party negotiations. However, if the aim is to reduce emissions and regulatory compliance cost, absolute numbers, measured in tonnes of CO2, are the appropriate indicators. Measuring and estimating absolute emissions allows charterers to understand the carbon consequence of their shipping decisions and to make chartering decisions.
From the charterers’ perspective, understanding CII variations and how a given cargo contributes to each vessel’s annual CII can be helpful during charter party negotiations. However, if the objective is to reduce emissions and manage regulatory compliance costs, absolute emissions, measured in tonnes of CO₂, are the more relevant metric. Focusing on absolute emissions enables charterers to assess the carbon and cost impact of their shipping choices and make more informed chartering decisions.
From a charterer’s perspective, the best moment to avoid unnecessary shipping emissions is when planning the voyage. Estimating absolute emissions allows the charterer evaluate the consequence of pre-fixture shipping decisions, like how the ballast leg and cargo destination. Understanding the emissions impact and the related carbon cost of the ballast leg and the cargo destination might trigger the use of flexibility in the chartering program. Using this flexibility leaves opportunities to slash emissions at low cost and at large scale.
