IMO amendments raise awareness on the charterer's role in reducing emissions

During an IMO meeting last week member states agreed on a plan to facilitate the reduction of the carbon intensity of international shipping. A key point was the approval of operational ship performance requirements. The focus on operational performance targets the existing fleet, and it raises awareness on responsible charterers' role in reducing shipping emissions.

IMO’s Marine Environment Protection Committee (MEPC 75) agreed on several amendments to the MARPOL Annex VI (the environmental regulations). Introducing two new efficiency measures both targeting the existing fleet fills important gaps in the existing regulation.

  • The Energy Efficiency Existing Ships Index (EEXI) that applies to all existing ships regardless of year of build. The EEXI can be compared to the Energy Efficiency Design Index (EEDI) that all newbuild ships obtain following sea trials. The calculation of the EEXI is along similar lines as the EEDI using ship particulars such as main engine power, fuel type and consumption, ship design speed, the ships deadweight capacity and more as input factors. The index is an efficiency measure likely to return a calculated gram CO2 per tonne mile for each ship.
  • The Carbon Intensity Indicator (CII) is a rating system for individual ships operational performance ranging from A (best) to E (worst). The base calculation into the CII rating follows the Annual Efficiency Ratio (AER), which divides the annual CO2 emissions of a ship by the product of the distance sailed and the deadweight of the ship. The rating is to be conducted on an annual basis and requires ships with D and E score to present improvement plans.

In addition, an enhanced Ship Energy Efficiency Management Plan (SEEMP) with mandatory content, approval and subsequent audits is required. Before 1st of January 2023, all ships above 400 GT need to have an approved SEEMP onboard. The implementation of the SEEMP will be subject to audits. For ships above 5,000 GT, the SEEMP also needs to include a mandatory implementation plan on how to achieve the CII targets.

The amendments are expected to be adopted at MEPC 76 in June 2021 and enter into force 1st of January 2023.

There is a widespread concern that IMO’s measures would achieve too little, too late.

Sveinung Oftedal, a specialist director of the Norwegian Ministry of Climate and Environment, and the leader of the IMO working group for reducing GHG emissions summarizes last week’s agreement as follows.

“If the agreement was a final step it would not be enough but being an initial step, it is a good place to start” he says.

In 2018 the IMO adopted a strategy to reduce the annual GHG emissions by at least 50% by 2050, and the carbon intensity by 40% by 2030.

“We have agreed on a framework that is necessary to reach the 2030 goals, and it is targeting today’s fleet” he adds.  

New ships and new ship technology are not enough to cut emissions according to plan, so targeting the existing fleet is crucial.  

The Siglar CEO, Sigmund Kyvik, also emphasize the need to target the existing fleet. To him the most important role of the new amendments is that they strongly underline the impact that operational decisions have on emissions.  

“Operational decisions greatly affect shipping emissions. Underlining this fact can raise awareness to the carbon consequence of such decisions throughout the shipping value chain” he says.  

Even if the ship owners according to the GHG protocol “own” the emissions, they do not always own the decisions. Decisions like selecting ship, sailing route, ship speed and the destination for a cargo, all major emission drivers, are mainly controlled by the charterer.  

At Siglar, we think that the introduction of the EEXI and CII fill important gaps in the existing regulation. The new measures target existing ships and incentivize carbon efficient chartering and operational decisions. It raises awareness on the carbon consequence of operational chartering decisions and motivates responsible ship owners and charterers to reduce shipping emissions by making carbon efficient decisions.

"This way short term emissions reduction from international shipping can be achieved while waiting for new ship technology and new ships" Kyvik underlines.

We also expect initiatives from the industry such as the Sea Cargo Charter, and pressure from various governments including the EU at the forefront, to continue to challenge all IMO member states for a speedier response to our industry’s climate challenge.