Supply chain companies and shippers will want to familiarize themselves with these terms: Energy Efficiency Existing Ship Index (EEXI), the enhanced Ship Energy Efficiency Management Plan (SEEMP), and the Carbon Intensity Indicator (CII).
EEXI, SEEMP, and CII: three new acronyms that we need to learn, understand, and of course pay attention to in 2023 and into the future.
Back in 2019 and 2020, we reported on IMO2020 in which the ocean carriers implemented their changes in the fuel type that they used or installed scrubbers to adhere to the new regulations. This change was significant in how the carriers implemented their changes and how shippers managed the carrier selection.
In 2021 and into 2022, the global supply chain has been faced with many new challenges that disrupted companies’ ability to plan and manage the movement of ocean cargo. We see 2023 will continue with new challenges as we begin to understand what changes IMO2023 will bring to the world of global shipping.
A series of new international regulations that target vessel efficiency and carbon intensity will take effect and be known as IMO 2023. Three measures have been approved to meet the target set by the IMO Initial GHG Strategy – to reduce the carbon intensity of all ships by 40%.
The regulatory requirements are expected to enter into force on November 1, 2022. If that happens, the requirements for EEXI and CII certification will come into effect from January 1, 2023. This means the first annual reporting will be completed in 2023, with the first rating given in 2024.
So, what changes are expected with IMO 2023 and what is the objective for each of these measures?
- The Attained Energy Efficiency Existing Ship Index (EEXI) is required to be calculated for most commercial vessels in accordance with different values set for vessel types and size categories. This indicates the energy efficiency of the vessel compared to a baseline. Vessels are required to meet a specific required Energy Efficiency Existing Ship Index (EEXI), which is based on a required reduction factor (expressed as a percentage relative to the EEXI baseline). All vessels must have a calculated EEXI.
- The Ship Energy Efficiency Management Plan (SEEMP) is a mandatory, ship-specific document that lays out the plan to improve the vessel’s energy efficiency in a cost-effective manner.
- A vessel’s Carbon Intensity Indicator (CII) links the GHG emissions to a ratio of the amount of cargo carried and the distance traveled. The CII will determine the annual carbon reduction factor needed to ensure continuous improvement of the ship's operational carbon intensity within a specific rating level.
All vessels must have an established CII and will receive a rating (A, B, C, D, or E – where A is best).
A ship rated D or E for three consecutive years must submit a corrective action plan to show how the required index (C or above) may be achieved.
There are many things a ship can do to improve its rating through various measures taken on existing capital. Many efficiency improvements and emissions reduction pathways are being executed by carriers, such as hull cleaning to reduce drag, steam speed adjustment, routing optimization, and fuel switching.
The IMO is yet to set a net-zero emissions target, but many individual ocean shipping companies—including container lines—already have.
Customer demand for green transport is pushing carriers and shipowners to action and invest in carbon-neutral vessels. This is creating an environment where access to green shipping lanes in the not-so-distant future will offer a competitive advantage to BCOs seeking to progressively reduce their global shipping emissions.
The regulations will encourage the improvement of vessel efficiency, adoption of low-carbon alternative fuels, and lower emissions in international shipping. These coming changes create challenges and opportunities for the vessel owner/operators seeking compliance and the beneficial cargo owners seeking opportunities to lower the energy cost and emissions needed to get their goods to customers. How all of these changes will impact the industry is a guess at this time, some opinions will state that costs for ocean shipping will increase greatly while others will state that all of the measures are needed to help solve and comply with goals that are needed.
