2023 - Act Now – EEXI and CII

Existing ships of 400 GT and above will be required to calculate its attained Energy Efficiency Existing Ship Index (EEXI), which indicates its energy efficiency. The vessel must then meet a specific required EEXI, which is based on a required reduction factor to reduce its carbon emissions.

The EEXI is a variant of the Energy Efficiency Design Index (EEDI), which applies to new ships built after 2013 and where the requirements become increasingly stringent over time. The EEDI measures the theoretical CO2 emissions performance based on engine design and performance data to promote the use of more efficient (and less polluting) engines. It allows for different types and sizes of vessels by using a capacity per mile rating (e.g. grams CO2 per tonne mile). The smaller the EEDI, the better!

The implementation and enforcement of EEXI will broadly follow that of EEDI, including survey and certification. It is expected that vessels must meet the required EEXI by the first intermediate or annual survey after the 2023 enforcement date.

EEXI Benchmarking – Act now

We urge our Members to act now and commence EEXI benchmarking of their fleet as soon as possible. This will allow an owner to understand what modifications or changes need to be made to achieve the EEXI requirements when they enter into force in 2023.

This will also help with addressing any potential future charterparty issues. For example, power limitation could impact speed and performance and vessel description warranties; therefore, these will require careful review. Hull fouling or weather may also have an impact on power margins.

Time charters that span 2023 and beyond may need careful consideration and, if possible, re-negotiation to address matters such as allowing owners to dry dock for modifications and allowing owners to amend the vessel description where necessary.

Charterers need to understand their rights and remedies if an owner fails to meet the EEXI requirements or maintain an International Energy Efficiency Certificate (IEEC).

The earlier this process is started and discussions between owners and charterers take place, the better!

Clarity in the charterparty drafting will help to prevent disputes further down the line. For more information  please see https://www.nepia.com/contractual-and-charterparty-issues/. You could also contact us at  decarbonisation@nepia.com or your usual FD&D contact will be able to assist.

Power limitation – a popular choice

Shaft power limitation (SHaPoLi) or engine power limitation (EPL) is likely to be a popular choice for many shipowners to meet the EEXI requirements. It is a relatively simple and cost-effective solution and should cause minimal disruption to the vessel’s operation.

At MEPC 76 in June 2021, a resolution was adopted that provides guidelines on compliance with the EEXI requirements and the use of a power reserve in limitation devices. Shipowners should be aware of these recent developments and how it impacts power limitation arrangements.

Overridable power limits

Both SHaPoli and EPL systems are non-permanent, tamper-proof, and approved, verified methods of power limitation. The former applies a limit to the maximum shaft power and the latter to the engine power.

A power reserve sits above the maximum power limitation and is only to be used in the interests of safety or saving life at sea. It can only be overridden by the Master or officer in charge of the navigational watch from the bridge without the need for entry into a machinery space (if possible).

The use of the power reserve must provide an alert and be properly recorded in the vessel’s Onboard Management Manual (OMM). The vessel’s Flag State (or recognised organisation acting on Flag State’s behalf) and the competent authority of the relevant port of destination are to be notified without delay.

As overridable power limits do not reduce the installed power it should not change the vessel’s compliance with the minimum power requirements which only applies to EEDI certified ships. For more information see MEPC.1/Circ.850/Rev.2

Impact on power and safety

A key parameter used to calculate EEXI is the maximum engine power (P_ME), which is a percentage of the engine’s MCR – maximum continuous rating.

For overridable systems, the P_ME will be the lower of:

• 83% of the limited installed power (MCR_lim); or
• 75% of the original installed power (MCR)

Remember, classification societies may have certain rules regarding engine and shaft power limitation (e.g. ice class vessels), so always carry out any modifications in full consultation with Class.

For permanently derated main engines with non-overridable power limits, we understand P_ME will be 75% of the new de-rated MCR. Always seek confirmation with Class and check for any NOx recertification requirements that apply to non-overridable arrangements.

Challenges ahead

Ships without acceptable documented proof of their speed ~ power curve from sea trials or model tests may have their reference speed (V_REF in the EEXI equation) determined by a statistical method which imposes a penalty of 5% of speed or 1 knot, whichever is greater. In some cases, this may result in more stringent requirements than the EEDI framework for new ships

The IMO Carbon Intensity Indicator (CII) is an operational measure to tackle carbon dioxide (CO₂) emissions. It is applicable to ships of 5,000 GT and above, which aligns with the requirements on recording vessel fuel consumption in accordance with the IMO Data Collection System (IMO-DCS).

Calculating the CII

The determination of the operational carbon intensity indicator (CII) of individual ships will be established in a new Regulation 28 of MARPOL Annex VI.

The attained annual operational CII is calculated as the ratio of the total mass of CO₂ (M) emitted per transport work (W) in a calendar year as shown:

Attained CII_ship = M / W

where:

M – the sum of all CO_{2 ­}emissions (in grams) in a calendar year, which is a function of fuel consumption and an applied fuel-specific carbon factor

W – in the absence of actual transport work data, the supply-based transport work can be taken as a proxy, which is a product of the ship’s capacity and distance travelled in a calendar year

Carriage of cargo

The ship’s capacity will be the deadweight tonnage (DWT) for most cargo carrying vessels. However, the gross tonnage (GT) is likely to be used for other vessel types.

The CII calculation does not consider the mass of the actual cargo carried on a voyage. This means that a vessel’s CII rating will not be impacted by how much cargo the vessel carries during the period under review. For example, a container vessel that operates fully loaded would not benefit over one that is usually partially laden; in fact – it may be at a disadvantage because the extra fuel consumption from being fully laden leads to CO₂ emissions and therefore a poorer CII rating.

It’s important to note that in-ballast passages will not have a negative impact on the vessel’s rating.

Shipowners and operators should be aware that some of the other initiatives that require the reporting and/or calculation of carbon emissions take a different approach to ‘transport work’. For example, the Sea Cargo Charter calculation considers actual cargo carried rather than deadweight, and the EU MRV requires the vessel to report actual cargo carried.

Carbon intensity rating

Each year, the vessel’s ‘Attained Annual Operational CII’ should be documented and verified against the ‘Required Annual Operational CII’. This will determine an operational carbon intensity of A, B, C, D or E as shown below.

It is expected that a ship rated at D for three consecutive years, or E for one year, will be required to submit a corrective action plan, to show how an improvement to meet the required index (C or above) will be achieved.

The corrective action plan should be included in the Ship’s Energy Efficiency Management Plan (SEEMP). The SEEMP will be audited using the principles of the ISM code.

Port Authorities, Administrations and other relevant stakeholders are being encouraged to provide incentives to vessels rated A or B.

An open dialogue between owners and charterers and suitable charter party drafting will be very important to prevent operations having a negative impact on ratings.

Reduction Factor

The ‘Required Annual Operational CII’ will reduce over on a gradual basis between 2023 to 2030. The reduction factor ‘Z%’ for each stage relative to the 2019 reference line is shown below:

This shows a reduction of 2% per annum from 2023 until a 11% reduction factor (relative to 2019) is reached in 2026, whereupon it will undergo a review.

Future timeline

January 2023

In accordance with the revised MARPOL Annex VI Regulation 26, an updated SEEMP will be required on or before 1 January 2023 to include the following:

• A description of the methodology used to calculate the Attained Annual Operational CII, and the process to report this to the Administration
• The Required Annual Operational CII for next three years
• An implementation plan documenting how the Required Annual Operational CII will be achieved during the next three years.
• A procedure for self-evaluation and improvement

The Confirmation of Compliance (CoC) and Statement of Compliance (SoC) are associated with fuel oil consumption reporting and will be modified to address the Operational Carbon Intensity Indicator.

New documents will be issued when amendments enter into force.

January 2026

The above referenced MARPOL Annex VI regulations and guidelines will be reviewed by 1 January 2026 dependant on their effectiveness.

Lowering CO2 emissions

Reducing the fuel consumption of a vessel by one of the below or other methods will assist with achieving a better carbon intensity rating.

• Port optimisation
• Voyage optimisation
• Just-in-time shipping
• Smart vessels and remote monitoring
• Weather routing
• Hull coating and efficiency
• Trim optimisation
• Main engine running condition and fuel optimisation

Such measures are likely to impact the way a charterer will use the vessel. Therefore, consider appropriate charter party clauses to address any required operational changes.