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Shaping the future of Shipping: The IMO’s role in the climate change crisis

Posted: 17/11/2021

The International Maritime Organization (IMO) is the United Nations agency responsible for shipping. It provides the forum through which governments can create global regulations regarding the safety, security, and efficiency of ships, and maintains the framework of global maritime safety regulations.

The IMO has a broad purpose but, in recent years, it has devoted significant resources to finding international consensus on how to minimise the maritime sector’s impact on the environment.

The IMO’s ambitions

As discussed in our recent article on the decarbonisation of the shipping sector, the IMO adopted the International Convention for the Prevention of Pollution from Ships (MARPOL) in 1973 and it has regulated maritime emissions since 1997.

Following the implementation of regulations dealing with pollution, the IMO has recently implemented a number of measures designed to reduce greenhouse gas emissions from the shipping sector. This includes the introduction Energy Efficient Design Index (EEDI) for new ships and regulations concerning emissions of NOx and SOx.

The IMO continues to focus on the shipping sector’s impact on the environment and its stated aim is to cut greenhouse gas (GHG) emissions from the shipping sector as a matter of urgency and as soon as possible within this century.

In 2018, the IMO’s Marine Environment Protection Committee (MEPC), announced an initial climate change strategy (GHG Strategy) for shipping aimed at a reduction in total GHG emissions from international shipping. The GHG Strategy includes short, mid, and long-term measures with proposed timelines and targets at each stage. The headline initiatives in the initial GHG Strategy include:

  • reducing the carbon intensity of vessels through implementation of further phases of the energy efficiency design index (EEDI) for new vessels;
  • to reduce CO2 emissions across international shipping, by at least 40% from 2008 levels by 2030, with the aim of increasing this reduction to 70% by 2050;
  • to ensure that GHG emissions from international shipping reach their peak as soon as possible and to reduce the total annual GHG emissions from 2008 levels by at least 50% by 2050.

The new regulatory framework

In June 2021, the IMO adopted further amendments to MARPOL Annex VI. These amendments, which are intended to regulate the design and operational efficiency of vessels in order to reduce greenhouse gas emissions and improve efficiency, introduced the Energy Efficiency Existing Ship Index (EEXI) and the requirement to reduce operational carbon intensity through the Carbon Intensity Indicator (CII). They will have effect from 1 January 2023.

Efficiency Existing Ship Index (EEXI)

The EEXI is a means of determining the technical efficiency of ships. It builds on the Energy Efficiency Design Index (EEDI), but when implemented EEXI will apply to all ships over 400GT (including existing tonnage) whereas EEDI applies only to new ships.

The EEXI is a framework through which CO2 emissions and the energy efficiency of in-service vessels can be measured. Ship owners will be required to submit technical documentation to their classification society, which will undertake a one-time International Energy Efficiency (IEE) survey and will issue an International Energy Efficiency Certificate (IECC).

The IECC will give each vessel an ‘Attained EEXI’ value which will be measured against the EEXI value which that specific vessel is required to meet (the ‘Required EEXI’). For all vessels, the Attained EEXI values must at least meet the Required EEXI and should a vessel fail to meet these requirements then owners must take steps to comply.

The EEXI is primarily concerned with a vessel’s design efficiency and so the natural method of compliance will be to alter a ship’s design. There are no prescribed standard modifications that must be made; rather the regulations place the burden into the hands of the ship owner.

Given that the EEXI concerns design efficiency, it may be possible for ship owners to satisfy the regulations, by making relatively minor operational or technical modifications. Some suggested modifications include engine/shaft power limits, the use of alternative fuels, installing batteries, waste heat recovery systems or modifying the propeller.

Carbon Intensity Indicator (CII)

The CII measures how efficiently a vessel transports goods or passengers, calculated in grams of CO2 emitted per cargo-carrying capacity and nautical miles, and the vessel is then given a rating. There are five CII ratings ranging from A (being major superior) to E (being inferior) and this performance level will need to be recorded in the ship’s Ship Energy Efficiency Management Plan (SEEMP). The aim of the CII is to reduce operational carbon intensity in line with the IMO’s GHG Strategy. The CII will apply to all vessels above 5,000 GT.

A vessel receiving a ‘D’ or ‘E’ rating for three years will need to submit a corrective action plan. Where a ship has an ‘E’ rating, they will have one year to improve, whereas a ship with a ‘D’ will have three years. The minimum CII rating for a vessel is ‘C’ (Moderate), however shipowners may wish to aim for an ‘A’ or ‘B’ rating as the requirements will become harder to meet as time progresses, with the reduction rates set to reduce by 2% per year from 2023 (although this has yet to be confirmed). For ships on long term charter, early consideration should be given as to who is responsible for the cost of modifications and when the changes will be made.

Upon receiving a CII rating that is not an ‘A’ ‘B’ or ‘C’ shipowners, managers, and operators must prepare a corrective plan, that will need to be approved, to make operational changes in order to obtain a better rating. This may include measures such as slow steaming/reducing speed, reducing cargo volume intake, and installing energy efficient technology. It should be anticipated that at some point in the future a vessel will need physical and/or design modifications to ensure compliance with the regulations and to make sure, at a minimum, a ‘C’ rating is maintained.

Is the IMO sufficiently ambitious?

The IMO aims to reduce carbon emissions by 70% from 2008 levels. This level of reduction will require significant technical development and will also likely cause a significant disruption to the shipping sector. There has, however, been criticism from a number of sectors that the IMO’s ambitions are not sufficiently bold. Indeed, in advance of COP26 in Glasgow in November 2021, the UK Chamber of Shipping with support from the UK Government’s transport secretary indicated that the shipping sector should aim to achieve net zero carbon emissions by 2050.

The IMO Marine Environment Committee (the Committee) is due to meet at the end of November 2021 when the IMO’s Working Group on the Reduction of GHG Emissions from Ships will present its latest report. The Committee will consider a number of measures intended to help the IMO reach its mid-term GHG reductions targets. These proposals include what are described as “market-based measures”, a GHG levy, a GHG fuel standard, a GHG cap and trade system and combinations of all of the above. There will also be proposals presented on how the IMO can deal with the “intense workload related to reducing GHG emissions”.

The IMO is keeping its options open as it and the shipping market continue to explore technical and regulatory solutions to the GHG crisis. We wait to see which of the Committee’s proposals are taken forward by the IMO and whether there are any further development following on from COP26 in Glasgow earlier this month.

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