MARPOL Annex VI Regulations for the Prevention of Air Pollution from Ships dictates specifically emissions of SO_x, NO_x, Ozone depleting substances, VOCs and CO₂ from ships as well as operating limits for shipboard incinerators. With industry-wide concerns over the global sulphur cap in recent years, efforts on carbon control by IMO and other organisations seem to have been overshadowed by the consumption of VLSFO on vessels. The IMO Marine Environment Protection Committee (MEPC) held its 76^th session from June 10^th to 17^th, 2021 and adopted amendments concerning short-term measures for GHG emissions reduction, which have combined both technical and operational approaches. The Energy Efficient Existing Ship Index (EEXI) and annual operational carbon intensity indicator (CII) were introduced to improve the energy efficiency of both new and existing ships. For owners of ships that cannot be technically transformed to meet IMO rating standards, new challenges are coming in terms of implementing the requirements.

I. Reducing carbon emissions

It has been a global consensus that our world is getting warmer due to the increasing concentration of GHG in the atmosphere. The Kyoto Protocol aims to cut emissions of six main GHG, namely carbon dioxide (CO₂), methane (CH₄), Nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF₆). CO₂ accounts for about 75 percent of total GHG emissions and contributes to 55 percent of the rising temperature, which makes the control of carbon emission an essential task. To address the problem of climate change with combined efforts, the UN Framework Convention on Climate Change (UNFCCC) was developed in 1992 and ratified by 154 countries. Following that, the Kyoto Protocol was adopted to commit developed countries to achieve quantified emission targets, and the Paris Agreement was adopted to bring all nations into the climate change combat towards an ambitious goal of limiting global warming to well below 2, preferably to 1.5 degree Celsius.

Although the shipping industry is not directly binded by these international treaties on climate change, IMO as a UN specialised agency whose responsibilities include ensuring the safety and security of shipping and preventing marine pollution by ships has been committed to reducing carbon emissions in shipping with a set of strategies developed in line with UNFCCC goals.

II. Measures taken and the IMO Initial GHG Strategy

In 2011, regulations on energy efficiency for ships in MRPOL Annex VI were made mandatory with the adoption of resolution MEPC.203(62). The Energy Efficiency Design Index (EEDI) for new ships and the Ship Energy Efficiency Management Plan (SEEMP) for all ships came into effect on 1 January 2013.

In 2016, resolution MEPC.278(70) was adopted to require international ships of 5,000 gross tonnage and above to collect and submit fuel oil consumption data from 1 January 2019 for that and each subsequent calendar year.

In 2018, resolution MEPC.304(72) on the Initial IMO Strategy on Reduction of GHG Emissions from Ships was adopted to identify quantified targets and measures to reduce carbon emissions with possible timelines. That is, to reduce CO₂ emissions per transport work by at least 40% by 2030 as an average across international shipping, pursuing efforts towards 70% by 2050, compared to 2008; and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008 whilst pursuing efforts towards phasing them out before the end of the century.

Three stages of measures were developed: short-term measures (2018-2023) are related to further development of the technical and operational energy efficiency measures for both new and existing ships and research on innovative technologies and alternative fuels. Mid-term measures (2023-2030) include implementation programme for the effective uptake of alternative low-carbon and zero-carbon fuels, and enhancement of technical cooperation and capacity building activities. Long-term measures (after 2030) focus on the provision of zero-carbon fuels and encouragement of the general adoption of possible new emission reduction mechanisms.

In 2019, resolution MEPC.324(75) was adopted to adjust required Phase 3 EEDI for certain ship types, and some were hence required to be compliant by 1 April 2022.

III. Next-step decarbonisation measures

As EEDI was designed to improve efficiency of new ships, the industry realized that in order to reach net zero, decarbonisation of the large number of existing ships should also be taken into account. In 2019, 67% of the 0.8 billion tons of CO₂ were produced by existing ships above 400 GT and built before 1 January 2013, for whom EEDI does not apply. Amendments to MARPOL Annex VI were adopted at MEPC 76 to address the problem and are expected to enter into force on 1 November 2022.

IV. The EEXI framework

The EEXI is applicable for all oceangoing vessels above 400 GT falling under MARPOL Annex VI (the 12 ship types where EEDI applies), requiring a calculated attained EEXI equal or less than a required EEXI at the first annual, intermediate or renewal survey of the IAPP Certificate or the initial survey of the IEE Certificate, whichever is the first, on or after 1 January 2023.

The calculation of EEXI is based on the calculation guideline of the EEDI, and the required EEXI value is defined for different ship types with reduction rates times the EEDI reference curve value. Where the attained EEXI exceeds the required EEXI, measures to optimise energy efficiency such as the shaft/engine power limitation shall be taken. For ships with a calculated EEDI that also complies, the EEDI value as carried in the IEE Certificate or the EEDI technical file can be conversed.

Guidelines Supporting the EEXI Framework

Res.MEPC.333(76): 2021 Guidelines on the Method of Calculation of the Attained EEXI

Res.MEPC.334(76): 2021 Guidelines on Survey and Certification of the Energy Efficiency

Design Index (EEXI)

Res.MEPC.335(76): 2021 Guidelines on the Shaft/Engine Power Limitation System to Comply with the EEXI Requirements and Use of a Power Reserve

V. The CII framework

From 1 January 2023, the CII rating requirements will take effect for all internationally-trading vessels above 5,000 GT. The annual rating will be given on a scale from A to E (where A is the best). A ship rated D for three consecutive years or E will have to submit a corrective action plan in the SEEMP.

Ships are required to include the calculation methods and reporting procedures of CII for each year since 2023 before the end of 2022. Started from emission of 2023, CII will be calculated based on data including the fuel consumed and distance travelled with source from IMO DCS. The CII rating will be verified by the Administration or RO and added on SOC within the first three months each calendar year beginning from 2024. SOC will be valid thru the five months before the next calendar year.

The required CII is calculated based on the product of the CII reference line value and reduction factor, which will be starting from 5% in 2023 and 2% will be added yearly from 2024-2026. The reduction factor for the years of 2027 to 2030 are to be further developed.

Guidelines Supporting the CII Framework

Res.MEPC.336(76): 2021 Guidelines on Operational Carbon Intensity Indicators and the Calculation Methods (CII Guidelines, G1)

Res.MEPC.337(76): 2021 Guidelines on the Reference Lines for Use with Operational Carbon Intensity Indicators (CII Reference Lines Guidelines, G2)

Resolution MEPC.338(76): 2021 Guidelines on the Operational Carbon Intensity Reduction Factors Relative to Reference Lines (CII Reduction Factors Guidelines, G3)

Resolution MEPC.339(76): 2021 Guidelines on the Operational Carbon Intensity Rating of Ships (CII Rating Guidelines, G4)

VI. EEXI & CII compliance

1. Confirm whether EEDI has been applicable to the ship by checking:

1. if the building contract is placed on or after 1 January 2013; or
2. if the keel is laid on or after 1 January 2013 in the absence of a building contract; or
3. if the delivery is on or after 1 January 2015; or
4. if it’s a gas carrier, ro-ro cargo ship or passenger ship built on or after 1 January 2015 or delivered on or after 1 September 2019.

       2. For EEDI-applicable ships, confirm whether the attained EEDI as shown in the IEEC or the EEDI technical file complies with the requirements of EEXI. No further operation would be required if it does.

       3. For non EEDI-applicable ships, the attained EEXI shall be calculated and meet the requirement. The EEXI technical file shall be approved by the classification society and then carried on board.

       4. Where the attained EEDI/EEXI exceeds the required value, one of the following measures shall be taken to improve the energy efficiency of ships:

1. use of the SHaPoLi/EPL system;
2. installation of energy-saving devices e.g. wake equalizing duct, PBCF, hull coating;
3. change of fuel type e.g. LNG, LPG, CH₄, ethanol, liquid hydrogen or liquid ammonia.

       5. Where the SHaPoLi/EPL system is used, a prepared Onboard Management Manual (OMM) should be approved by the classification society and then carried on board.

       6. SEEMP Part I shall be updated before 1 January 2023 with CII related information. A Certificate of Compliance will be issued then by the Administration or RO.

       7. The EEXI technical file or OMM (if applicable) will be verified by the classification society at the first annual, intermediate or renewal survey of the IAPP Certificate after 1 January 2023 or at the initial survey of the IEE Certificate for ships delivered on or after 1 January 2023.

VII. Practical considerations

According to statistics from the NK classification society, nearly 84% of vessels that classed with them and for which EEXI is applicable shall take actions to meet the requirements. Clarksons Research also suggests that theoretically 60% of the currently operating oil tanker and bulk carrier fleets will be able to meet the EEXI requirements and the other 40% may need to take various actions to be compliant.

Calculation of EEXI and formulation of the EEXI technical file or OMM (if applicable) are not as challenging as the EEXI improvement measures to be taken, especially for owners of aged vessels, considering the time needed for evaluation and implementation of the measures. To meet the EEXI requirements simply by limitation of engine power may not be realistic nor economic in terms of market operation. Owners may consider a combination of other actions including ship modification or installation of energy-saving devices, which are likely to take longer to be effective. It is therefore recommended that these investments should be taken into account as early as possible.

For CII compliance, ships with substandard operational carbon intensity performance are unlikely to face punitive consequences for the time being, but a plan of corrective actions shall be included in the SEEMP. It is recommended that shipowners should get prepared early on for energy efficiency improvement in both operational and management approaches based on the current data.

For more information, please contact Managers of the Association.