Creating transparency to manage CII

As ambitions to decarbonise international shipping continue to grow, maritime stakeholders are under increasing pressure to prove they are taking significant steps to optimise their operations and cut emissions from ocean-going transport.

As ambitions to decarbonise international shipping continue to grow, maritime stakeholders are under increasing pressure to prove they are taking significant steps to optimise their operations and cut emissions from ocean-going transport.

One upcoming measure that will require shipping players to prove their commitment to the reduction of greenhouse gas (GHG) emissions from ships is the International Maritime Organization’s (IMO’s) Carbon Intensity Indicator (CII) rating scheme. From January 1, 2023, owners and operators of vessels above 5,000 GT will be required to yearly submit a rating between A and E that provides transparency on how efficiently a vessel is operated. The rating is based on the amount of CO2 emitted per cargo-carrying capacity and nautical mile (data collected under the IMO’s Data Collection System (DCS), meaning it is directly determined by the fuel consumption of a vessel. An ‘A’ rated vessel indicates a good fuel efficiency, while a vessel rated D or E indicates poor fuel efficiency. Any vessel achieving a rating of D or below will need to submit a plan outlining its actions to improve performance. With the increasingly strict criteria, this might mean in practice, for example, that even if a vessel receives a rating of A but no action is taken for some time, then it could eventually become a 'B' rated vessel or worse. 

The CII scheme is part of the IMO’s GHG Strategy to reduce carbon intensity of international shipping by at least 40 per cent by 2030, compared with 2008.

Urgent action required

With less than nine months to go until the CII rating enters into force, shipping companies need to take urgent action to avoid financial consequences and operational restrictions, warns Dominic Ng, Head of Solutions Advisory at Wärtsilä Voyage.  

A poor CII rating will negatively impact the commercial value of a vessel and its charter ability, says Ng. The vessel operator could face higher fuel costs as a direct result of operating an inefficient vessel, increasing the financial strain on the operator, and eventually the CII rating can become a benchmark based on which high-performing operators are favoured in the market.

A poor CII rating will negatively impact the commercial value of a vessel and its charter ability.

- Dominic Ng, Head of Solutions Advisory at Wärtsilä Voyage

The good thing, according to Ng, is that because the CII rating is determined by how a vessel is operated and maintained, it can be significantly improved with a few human-led adjustments; so, there’s a low-hanging fruit to be picked for a substantial impact.  For example, speed, weather routing, trim, cargo carried, fuel type, hull condition and machinery performance, which are the key drivers of fuel consumption and emissions and therefore the CII rating, can all be modified by implementing performance management measures and making data-driven decisions.

Crystal clear transparency

One of the biggest contributors to inefficient fuel performance is a fast or inconsistent sailing speed. This can lead to vessels idling in already congested ports, further exacerbating ship emissions. The sailing speed of a vessel is impacted by various factors including its physical build, local environmental restrictions, and perhaps most importantly, the terms set out in the charter party agreement. Slow steaming or re-routing a vessel to avoid poor weather may reduce fuel burn and contribute to a higher CII, but if the vessel deviates from the speed or route requirements set out by the charter party agreement, the owner or operator could find themselves in dispute with the charterer and huge penalties or demurrage claims may ensue. 

Another factor that affects CII is hull performance. A clean biofouling-free hull will be around 10-15 per cent more fuel efficient than a fouled hull, says Ng, but it is often overlooked as it’s hard to monitor. Choosing to take the vessel out of chartered service for hull maintenance will improve fuel efficiency and therefore enhance the CII rating, but the owner needs to ensure this is included in the charter party contract to avoid breaching the contractual terms.  

Two more key areas where CII can be impacted is cargo volume and the installation of energy efficient technology. 

Optimising the performance of the engine can have a 3-5 per cent potential increase on fuel efficiency. Moreover, added transparency on the CII rating can be achieved at an early stage, while conducting voyage-planning, and this benefit can’t be overlooked.

- Dominic Ng, Head of Solutions Advisory at Wärtsilä Voyage

The new regulation will require a shift in thinking that encourages transparency and proactivity around carbon intensity management. Shipowners and operators will be solely responsible for ensuring they have the tools and performance strategies in place to submit a CII rating, understand how to improve the rating, and ensure that while doing so the terms of the charter party agreement are met.  

Wärtsilä Voyage is well placed to help shipping companies navigate the complexities of the upcoming CII requirement through its Fleet Operations Solutions (FOS). FOS combines cloud-based analytics, artificial intelligence (AI), and intelligent automation to integrate a vessel’s data with other performance data, delivering a shared digital platform that enables all stakeholders to exchange data and manage processes from both the ship and the shore, explains Ng. The result is a platform that enhances monitoring and reporting capabilities while giving shipping companies the know-how on when and how to intervene, the consequences of not intervening, and the legal, financial and operational implications of any operational or technical decisions they may make.  

One module under the FOS suite is the Compliance and Reporting web-based module, which helps shipping companies to ensure regulatory compliance by reporting and submitting verified data, notes Ng. Even more crucially, the tool supports owners to ensure charter party compliance. This module focusses on speed consumption management, indicating how to run the vessel under specific speed orders, and if there are deviations from the charter party agreement it can be used to defend a vessel’s operational profile or performance. Reducing speed is one of the most effective ways to improve the CII rating: the FOS suite integrates speed and fuel consumption forecast at an early stage, while conducting voyage planning, to give operators visibility and help them to understand impact of the vessel’s speed on the CII rating. 

FOS also features a Hull and Machinery module that delivers alerts on the performance of the hull and other vessel machinery, enabling action to be taken before fuel consumption is impacted. Virtual fuel consumption modelling helps to provide accurate projections of fuel consumption by correcting data quality of reported data, using advanced analytics algorithms and AI. 

By delivering these insights on where there is a problem, an owner can make operational or technical improvements to the performance of the vessel to achieve a higher CII rating. 

Shifting the CII goalpost

While shipping companies will need to spend the rest of 2022 preparing their strategy for CII compliance and 2023 gathering data ready for reporting in 2024, the requirements don’t end there.  The CII goalpost will continue to shift, meaning that a vessel owner will have to continuously introduce new initiatives to improve their ships’ carbon intensity ratings to remain compliant.  

Wärtsilä Voyage helps companies navigate future uncertainties by providing transparency on how performance improvements will affect them, both operationally and commercially.

It’s all about forward planning. Owners can’t afford to be reactive anymore. The time to act is now.

- Dominic Ng, Head of Solutions Advisory at Wärtsilä Voyage

 

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Wärtsilä
Wärtsilä

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