Reducing shipping emissions: A look into EEXI and CII

Dropping emissions is a hot issue in the world with latest analysis by Climate Action Tracker (CAT) showing that 36 out of a total of 37 countries are off the 1.5 trajectory, despite an alarming 2021 analysis by IPCC that showed some climate change consequences are already irreversible. At the moment, shipping transport accounts for around 3% of the world’s GHG emissions which is heard as a low percentage, but complacency and inaction on the issue is expected to result in a 50% – 250% increase by 2050, then irreversibly diverging from the track of Paris Agreement.

What are the EEXI and CII?

To remind, the IMO’s contradictory MEPC 76 meeting last June adopted the already-agreed amendments to MARPOL Annex VI, setting two new measures into effect at the start of 2023 – the energy efficiency index for existing ships (EEXI) and the carbon intensity indicator (CII), aiming to improve energy efficiency in line with the 2018 Initial IMO Strategy. This strategy aspires carbon intensity for international shipping to decline through a 40% reduction by 2030, and a 70% reduction by 2050 compared to 2008.

To help these ambitious goals, the new measures require ships to calculate their EEXI and to establish their annual operational CII and CII rating. Applying to vessels over 400 GT that fall under MARPOL Annex VI, EEXI is a framework for determining energy efficiency of ships. The EEXI requires ship operators to assess their ships’ energy consumption and CO2 emissions against specific requirements for energy efficiency for each vessel type. To do this, ship owners may need to implement technical measures to adjust their vessels’ emissions to the required level.

Applying to ships of 5,000 GT and above, CII is an operational index based on the Annual Efficiency Ratio (AER). This ratio measures all carbon emissions from all ballast and laden voyages, anchorage, port stays, all divided by the deadweight and distance sailed in a year, according to NAPA.

How are EEXI and CII calculated?

“EEXI calculations are based on the methodology developed for the Energy Efficiency Design Index (EEDI) for newbuilds… A ship’s CII is calculated as the ratio of the total mass of CO2 emitted to the total transport work undertaken in a given calendar year. A vessel’s performance rating is determined by comparing a ship’s operational carbon intensity performance with the average performance of others ships of the same type,

…Bureau Veritas explained.

AER is calculated based on data reported under the IMO Data Collection System, and include fuel consumption, the distance traveled, and hours underway. Based on AER, ships will be grouped into different CII ratings, with the most environmentally friendly receiving an A and the less receiving an E.

What do EEXI and CII practically mean for shipping?

EEXI and EEDI concerns the vessel design, while CII deals with the operation of the vessel, explains Carla Audroing, Marine Manager, Verifavia shipping.

This is important to distinguish because the vessel can continue to operate with a non-compliant CII rating (of course with a plan to attain compliance) but certainly not with a non-compliant EEXI value,

…she said.

From 2019, receiving a B and not taking action for the next two years means that a ship could receive a rating of C next year. From 2023, if a vessel receives a D or E, the shipowner must update the SEEMP disclosing how to improve their rating. Meanwhile, shipping stakeholders are urged to provide incentives for vessels rated as A or B.

Imagine buying the most energy-efficient gasoline car in the world. Sure, you would be ticking the EEXI compliance box. But suppose you drive that car extremely inefficiently, braking and accelerating a lot, leaving gear shifts until the last minute, speeding, the engine idling when parked and letting the tires deflate. That same “energy-efficient” car would end up with a poor CII rating because of how you used it,

…explained Ossi Mettälä, Customer Success Manager, NAPA Shipping Solutions.

What should the industry expect?

On the one hand, these measures were well-received as an important step in IMO’s work for a unified approach on combatting shipping emissions, at a time when the European Commission is increasingly examining the scenario of a domestic approach to monitor emissions through the Emissions Trading System (ETS). On the other hand, the estimated 11% improvement by 2026 compared to 2019, that the measures can ensure, was seen by environmental groups and major states as a weak energy efficiency target.

Even though the industry seems divided as to what opportunities EEXI and CII will bring for the future of shipping emissions, classification societies and consulting groups all agree that shipowners and managers must prepare for these requirements in advance, taking time to assess and improve their vessels as needed, if they wish to continue global operations as normal. For CII, managers should in advance determine ships’ carbon intensity profiles and develop an optimized Ship Energy Efficiency Management Plan (SEEMP) by the end of 2022, in a bid to increase energy efficiency of a ship while managing cost. Meanwhile, the grant of incentives to highly rated ships could mean costly repercussions for shipowners with low-rated vessels.

EEXI and CII are part of a greater strategy to push back on the consumerism and create a balance. Therefore, I would venture to say…mass extinction of the aging polluting fleet on the sea is the only option we have,

…explains Mrs. Audroing.