Maritime

The Carbon Intensity Indicator – what have we learnt so far

The IMO introduced the Carbon Intensity Indicator (CII) regulations at the MEPC 76 in June 2021. Now, about six months after they were adopted, we want to share with you some key takeaways on what we have so far learnt about implementing the CII in this statutory news.

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Relevant for ship owners and managers.

The CII regulations establish a method to measure how efficiently a ship transports goods or passengers, and based on the performance the ship is given an annual rating of A to E. To drive the emissions from shipping down and towards the targets set by the IMO, the minimum rating is C and the thresholds for the ratings will become increasingly stringent towards 2030.

Below are some selected topics on CII – this is not a comprehensive overview as such but rather some frequently asked questions and recent learnings:

CII, AER, cgDIST – what do they mean?

The carbon intensity metric used in the CII scheme depends on the ship segment. It is either the Annual Efficiency Ratio (AER) or the capacity gross ton distance (cgDIST), both given in grams of CO2 emitted per cargo-carrying capacity and nautical mile, including correction factors and voyage exclusion if applicable (which to be finalized in MEPC 78 in June 2022). The cgDIST is based on gross tonnage as cargo-carrying capacity and is applicable to cruise passenger ships, vehicle carriers and RO/RO passenger ships, while the AER is based on deadweight and applicable to the remaining ship types. The IMO is currently considering also applying the cgDIST to RO/RO cargo ships. As no cargo data is available, the cargo-carrying capacity is used as a proxy for the actual transport work.

DNV’s CII dashboard lets you monitor your CII today – available for all IMO DCS customers

DNV’s Emissions Insights tool (available in My Services on Veracity) tool has been further enriched with a CII dashboard which was introduced shortly after MEPC 76, allowing our DCS customers to monitor their preliminary CII results.

Based on our experience so far, CII performance within a fleet can vary considerably depending on ship type and size, operation, and technical abilities. To comprehend how the CII scheme will affect your fleet and operation, you need to calculate and regularly monitor the fleet’s status. Having the full overview of your fleet will also enable you to better assess when and for which vessels you can introduce CO2-reducing measures.

In addition to the IMO requirements, there might be other stakeholders such as banks and charterers who require performance within a certain threshold. The Poseidon Principles and the Sea Cargo Charter are two examples of frameworks where vessel emissions are put into a system. There are clear indications that a poor rating could negatively influence access to financing and the market, which is why continuously improving fleet efficiency is also becoming business critical.

What is the effect of engine power limitation (EPL) on your CII results?

During the MEPC 76 meeting in June 2021, the IMO also adopted a requirement on an Energy Efficiency Design Index for existing ships (EEXI). Engine power limitation (EPL) is one possible solution to fulfil the requirements of the EEXI, and presumably many ships will choose the EPL solution as it is relatively effortless compared to other measures. Whether the introduction of EPL will influence a ship’s CII results or not will depend on which level the power range limitation is set, and on what the normal operation of the ship is. If a ship will have to sail at a lower speed than normal due to the EPL, that will reduce the amount of CO2 emitted by the vessel, thus improving the CII rating. Studies we have conducted based on available data shows that EPL will affect the operation for certain vessel types, particularly for full laded operations.

Measures to improve the CII rating

Based on the performance in 2019, the definition of the reference lines and rating thresholds, and the agreed reduction rates, various studies indicate that about 70-80% of all ships (segment specific differences, however) will require operational improvements by 2030 to stay compliant and within A, B or C for CII. This is an indication that many shipowners will have to select and implement carbon reduction measures as required by the SEEMP III to be submitted by the end of 2022. Examples of measures that are available today which can reduce the carbon intensity of a vessel are listed below, indicating the range of “typical” effect on CII from selected measures (related to ship and trade):

Measures"Typical" effect on CII
Speed reduction, logistics>20%
Hydrodynamics (ALS, cleaning, coating, hull form optimization5-15%
Machinery (machinery improvements, waste heat recovery, de-rating, battery hybridization)5-20%
Use of alternative fuels (LNG, LPG, ammonia, etc.)0-100%

Which combination of measures that should be introduced for a vessel will be subject to an assessment of both the cost and the effect. It is recommended that actions are evaluated together with prospective EEXI measures where applicable.

The implementation plan to be developed as part of the SEEMP

For CII, shipowners or ship managers must determine the carbon intensity profiles of their ships and develop an enhanced Ship Energy Efficiency Management Plan (SEEMP) by the end of 2022. This mandatory document is a ship-specific plan, and it demonstrates your concrete plans to improve the energy efficiency and CII of a ship. DNV is currently working on effective ways to handle the SEEMP, and more updates will be communicated by DNV in due course.

DNV finally wants to stress the importance of DCS and CII in broader context of decarbonization; see the insert on DCS:

It starts wiith the IMO DCS

The IMO DCS has been mandatory since 2018. The data collection is the first step on a broader decarbonization journey for the shipping industry. DNV offers digital reporting and continuous data checks of DCS data, allowing continuous calculation and monitoring of attained CII – and not only a one-off exercise. Frequent analysis of emission data (e.g. daily, or per voyage) is necessary for effective monitoring, improvements and reporting. With DNV as your DCS verifier, you get a full overview of your fleet performance in DNV’s Emissions Insights, which you can view in the My Services on the DNV Veracity portal.

Recommendations

DNV recommends reporting DCS data frequently and monitor CII results to obtain a fleet status. Then assess which targets you must meet or exceed to stay in compliance with relevant stakeholders. Also consider if the introduction of EPL will affect your CII results, and whether you are able to receive the rating you aim for based on your current performance. Finally, plan for work on the enhanced SEEMP (on SEEMP: more info will follow from DNV early 2022).

DNV customers which have not explored the Emissions Insights and CII dashboard, we encourage our customers to visit the tool in My Services via the Veracity data platform. We also remind you that the CII is listed in the Compliance Planner, also this available in My Services, offering a 360-degree overview of regulations impacting the fleet.

References

For more information about decarbonizing shipping and about relevant DNV services on GHG, visit:

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