A Shipowner's dilemma

As part of its commitment to reducing the carbon intensity of global shipping, the IMO has approved the introduction of an Energy Efficiency Design Index for existing ships. The regulation promises to cut emissions by requiring shipowners to improve efficiency in line with vessel-specific design and arrangements.

MEPC 76 (June 2021) approved and adopted extensive amendments to MARPOL Annex VI introducing mandatory goal-based technical and operational measures to reduce the carbon intensity of international shipping.??

The amendments will enter into force on 1 November 2022 and were adopted as a new consolidated Marpol Annex VI, including restructuring and renumbering existing regulations.

The measures include:

? The Energy Efficiency Existing Ship Index (EEXI), applicable from the first annual, intermediate or renewal IAPP survey after 1 January 2023

? The enhanced Ship Energy Efficiency Management Plan(SEEMP), whereby an approved SEEMP needs to be kept onboard from1 January 2023

? The operational Carbon Intensity Indicator (CII) rating scheme, taking effect from 1 January 2023.

?Like the Energy Efficiency Design Index (EEDI) for newbuilds, the EEXI necessitates a specified level of efficiency based on the vessel's type, capacity, and individual characteristics. Compliance depends on the attained EEXI being less than or equal to the required EEXI, which describes a ship's maximum CO2 emissions per cargo-tonne-mile. How compliance is demonstrated varies depending on whether the vessel was built before January 2013 (pre-EEDI) or after (EEDI-certified). The new regulation applies to existing ships of 400 gross tonnage or more and falling under MARPOL Annex VI.

MEPC 76 adopted guidelines on the method of calculation of EEXI, guidelines on the survey and certification of the attained EEXI and finally guidelines on the shaft/power limitation system to comply with EEXI requirements and use of a power reserve.?

The key decisions regarding EEXI guidelines include:

?? In case an engine power limitation (EPL) is installed, the engine power in the EEXI calculation (PME) should be 83% of the maximum limited power (MCRlim) or 75% of maximum power (MCR), whichever is lower.?

? Numerical calculations were accepted as an alternative to tank tests when calculating the speed in the EEXI calculation (vref).?

? Additional options for calculating vref using in-service speed measurements will be further discussed and may be included at a later stage.?

? Consideration of energy efficiency technologies such as wind propulsion systems was deferred.?

? An additional capacity correction factor for ro-ro cargo ships (vehicle carrier) was agreed.

A strengthening of the SEEMP (Enhanced SEEMP) to include mandatory content, such as an implementation plan on how to achieve the CII targets, and making it subject to approval. Verification and audit requirements for the SEEMP will only apply to ships above 5,000 GT subject to the CII requirements. The draft SEEMP guidelines were not finalised due to time constraints and will be further studied at MEPC 78 in 2022 at the latest.

Carbon Intensity Indicator (CII) The CII measures how efficiently a ship transports goods or passengers and is given in grams of CO2 emitted per cargo-carrying capacity and nautical mile. The vessel is then given an annual rating ranging from A to E, whereby the rating thresholds will become increasingly stringent towards 2030.?Compliance with CII requirement is mandatory for all cargo and cruise ships above 5000 GT.?

The route to compliance

Owners of pre-EEDI ships will have to calculate the attained EEXI and compile an EEXI technical file. This applies to most tanker owners, with 70% of the current global tanker fleet having been contracted before 2013.?

If the attained EEXI is less than or equal to the required EEXI, the technical file would be submitted to the flag administration or recognised organisation (RO) for verification and issuance of the new International Energy Efficiency Certificate (IEEC).?

For EEDI-certified ships, the attained EEDI must be less than or equal to the required EEXI. If this is the case, the owner can apply to the flag administration or RO for the IEEC.?

If the attained EEXI (in the case of pre-EEDI ships) or EEDI (in the case of EEDI-certified ships) is greater than the required EEXI, emissions abatement measures must be implemented. An estimated 7,000 tankers and 7 in 10 bulk carriers will have to adopt such measures, examples of which include main engine power limitation or de-rating, engine or propulsion optimisation and the use of alternative fuels or technology such as ducted propellers.

Main engine power limitation can reduce EEXI by up to 37% at a relatively low cost and is expected to be among the first methods applied. However, decreasing the power output of the main engine will also diminish ship speed.?

Commonly referred to as 'slow steaming', speed reduction has been identified as an effective means of reducing fuel consumption and greenhouse gas emissions, but it remains a controversial method. Critics argue that it will eventually lead to an increase in total CO2 emissions as more ships are needed to transport the same volumes of cargo.?

Before 1 January 2023, ship's of 5000 GT and above will need to revise their SEEMP to include :?

a. A description of the methodology to be used to calculate the ship's Attained Annual operation CII and the process that will be used to report this to the administration

b. The Required Annual Operational CII for the next three (3) years

c. An implementation plan documenting how the Required Annual Operational CII will be achieved during the next three (3) years

d. A procedure for self-evaluation and improvement.?

An shipowners' dilemma

However, compliance is achieved, it will come at a cost. Shipowners will have little time to decide whether to invest in new technologies, seek financing or simply scrap their vessels, and technology providers will have the task of persuading them that the efficiency benefits of their solutions justify the investment.

Another crucial consideration for shipowners is the accuracy of measurements. A proactive approach for the calculation of the EEXI based on the decisions of MEPC 76 is recommended. This will allow owners and operators to establish a roadmap for their vessels and investigate the potential energy-saving measures they can adopt at an early stage to remain compliant and competitive.?

Although the marine industry has understandably focused on compliance with EEXI, the implications from the compliance with Carbon Intensity Index will radically change the shipping industry. Initial studies based on 2019 emission data have shown that the great majority of the existing ships will not comply unless energy abatements measures are being implemented.?

While the coming decade in shipping will be characterised by the widespread adoption of green technologies, the human factor will continue to play an integral role in operations. As crew adapt to new equipment, the importance of seamanship will be reinforced, and seafarer training will be a vital element in the efficiency equation.

Being the backbone of the global economy and by far the most efficient mode of transporting goods, the maritime industry, together with all industrial civilisation, is at crossroads.?

A significant shift is underway, leading to the widespread adoption of "green" energy technologies in the following decades. The road to decarbonisation will not be a smooth one, but it is the road the maritime industry must take to secure a sustainable future.?