Fostering Decarbonization with New Carbon Intensity Regulations from the IMO
"The goal of the new reporting standards is to minimize and reduce carbon intensity for all ships by 40% by 2030 and reach a target of 70% carbon intensity reduction by 2050."
It’s no secret. The shipping industry takes a monumental toll on the environment in numerous ways, one of the biggest of which is greenhouse gas emissions. In fact, the shipping industry accounts for 2.8% of all global GHG emissions, making it a top priority for sustainability officials moving towards global decarbonization.
In response to the impacts global shipping has on the environment, the International Maritime Organization (IMO), a specialized agency of the United Nations in charge of regulating shipping, set forth a new set of emissions regulations for all ships over 5000 gross tons to collect and report data related to their voyages and fuel consumption to calculate their carbon intensity scores. These regulations went into effect on November 1, 2022.
The goal of the new reporting standards is to minimize and reduce carbon intensity for all ships by 40% by 2030 and reach a target of 70% carbon intensity reduction by 2050 - which falls in line with 2050 carbon neutrality benchmarks.
Building on these updates, further adjustments were made that went into effect on January 1st, 2023.
These adjustments require vessels to make mandatory measurements for the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) certifications - which evaluate a ship's overall energy efficiency. Carbon intensity scores are calculated by measuring the greenhouse gas emissions from a ship in relation to the quantity of cargo carried over a specific distance.
Annual reporting will begin in 2023, with the first CII ratings delegated in 2024.
To make further progress, there are now talks of implementing a carbon tax on non-compliant vessels, which would help further progress for the new reporting standards and meet decarbonization benchmarks in the coming years.
Meeting Compliance for IMOs 2023 CII Regulations
For those looking to comply with the 2023 CII regulations and avoid the potential for carbon tax penalties in the future, they need to outline a solid framework and get up to speed with some key details.
A few strategies for CII reductions are outlined below.
1. Identify Current CII Status
Before implementing management strategies to reduce carbon intensity for a ship or fleet, an organization must first identify the vessel-specific requirements for EEXI and CII ratings and evaluate current CII ratings for the ship or fleet. Knowing where a ship or fleet stands presently allows for the evaluation of potential non-compliance and strategies that could alter current ratings.
2. Operating Speed Reductions
Operating speeds impact a ship's carbon intensity more than any other factor due to the cubic relationship between speed and fuel consumption. Since a ship’s carbon intensity and overall emissions rise with speed, reducing standard operating speeds is one way to immediately reduce a ship’s CII scores. While cargo and freight delivery would indeed become slower, it’s a far more carbon-efficient way to operate and may reduce the risk of non-compliance fines and carbon taxes.
3. Clean Technologies and Energy-Saving Machinery
Energy-efficient technologies like air lubrication systems, low-loss hybrid energy systems, and bow modifications directly impact and reduce a ship’s CII rating. Wind propulsion systems (sails, kites, etc.) can also decrease resistance and fuel consumption when transiting through open water, which can further reduce carbon intensity.
While the above-mentioned technologies and modifications can lower CII ratings, they typically will not reduce carbon intensity enough to reach CII compliance. In such cases, energy-saving kits (LED lighting, lighting timers, electrical outlet covers, etc.) can be implemented to further reduce carbon intensity to better comply with the new CII standards.
4. Smart Technologies
AI technologies can be implemented to improve a ship’s energy efficiency and reduce CII scores. Input parameters can be defined in such tools to regulate speed and fuel consumption, which automatically update based on things like ocean currents and weather conditions. Human errors are circumvented by relying on automated smart technologies rather than human decision-making, creating higher efficiency operations and reducing emissions and carbon intensity.
5. Voyage Planning
Planning voyages for ships to arrive at their destination at the ideal times eliminates idle operations and reduces unnecessary emissions. When ships arrive at an end destination when port terminals are full, they are forced to wait and idle for openings. By utilizing ‘estimated time of arrival’ tools, operators can ensure vacant port terminals and reduce CII scores over the longer term. Again, this strategy can reduce emissions but will likely not be enough to meet compliance.
6. Low-Carbon Fuels
Alternative low-carbon fuels are yet to fully take hold in the shipping industry, but a few opportunities are available to those interested. Green hydrogen and liquified natural gas are a few options for commercial ships, but they remain costly to implement. In the future, these fuels will become cheaper and more readily available, but they still may benefit shipping organizations looking to avoid carbon taxes and fines resulting from non-compliance.
7. CII Reporting Systems
Companies looking to meet compliance with the IMO's new CII regulations will need to implement reporting systems to collect and assess emissions data. Advanced reporting systems record fuel consumption over individual journeys and collect data on idle fuel consumption while waiting for docking - which will be beneficial following CII calculations. These reporting systems can also help predict annual CII ratings and measure the impacts of emissions reduction strategies to better plan for compliance in the future.
Dark Shipping: A Challenge that Must Be Tackled to Solidify CII Regulation Success
Dark shipping is a growing concern in the shipping industry, and the growth of dark fleets has been fueled heavily by the ongoing conflict between Russia and Ukraine to support sanctioned trade of natural gas and other materials. However, not just sanctioned trade drives organizations to operate illegally. Dark shipping is a tactic commonly used by Illegal, Unreported, and Unregulated (IUU) fishing fleets, smugglers, and trade organizations to bypass regional, national, and international maritime law. With the rise of innovative technologies, dark shipping is becoming harder and harder to regulate.
Among the biggest concerns related to dark shipping is that dark vessels operate unmonitored, which incentivizes these ships and organizations to disregard any concern for emissions and carbon intensity. Since these ships already operate illegally, there is little to no reason to regulate fuel consumption or implement strategies that lower carbon intensity.
To mitigate instances of dark shipping, maritime authorities must begin to strategize on identifying and monitoring potential or known dark ships and enforce regulations on these vessels.
Strategies include partnerships with companies like Spire Global and ICEYE, which specialize in detecting and monitoring dark vessels. These companies use fleets of satellites in Low Earth Orbit (LEO) equipped with earth observation sensors to capture data from Automatic Identification Systems (AIS) and Radio Frequency (RF) emissions, which can then be used to pinpoint how dark fleets operate and respond to ongoing threats.
In many instances, these companies use Synthetic Aperture Radar (SAR), AIS data, RF data, and other earth observation techniques concurrently to better assess the movements and operations of dark fleets, which has proven increasingly valuable in the maritime domain in recent years.
To learn more about dark shipping solutions and how they can be used for domain awareness and regulatory applications, see the dark shipping solutions page here.