The carbon battle: is CII out of scope with the real world?

One of the biggest challenges for shipowners when it comes to the International Maritime Organization's (IMO) Carbon Intensity Indicator (CII) is that it largely comes down to speed and route optimisation and spending less time in port.  

But these factors are more challenging to manage for some operators and there are many factors – such as congestion, terminal delays and the weather – that are beyond any company’s direct control. Stolt Tankers’ Managing Director, Maren Schroeder, asks how the industry can address this imbalance.  

The International Maritime Organization’s (IMO) Carbon Intensity Calculator (CII) came into effect on January 1, 2023, requiring ship owners to start collecting data for their annual CII rating based on a ship’s CO2 emissions, distance sailed and size. Every ship is given an annual rating on a scale of A to E. Ships with a D rating have three years to correct to a C and E-rated ships are given one year to achieve the same improvement.  

In a previous article, we raised our concerns about the regulation which had yet to come into effect. Just over a year on from its implementation, many of those concerns remain and I want to share some thoughts on how they can be addressed.  

Various actions can be taken to help improve a ship’s CII rating, including hull cleaning, energy reduction devices and using biofuels, the availability of which is dependent on the trade route. However, the biggest improvement is supposedly achieved by optimising the ship’s speed and route, and this is one of the problems with CII that many owners are now experiencing.  

The problem with route optimisation 

Most prudent owners have been implementing route optimisation for many years (along with hull cleaning and other energy-saving measures), considering weather data and currents, and these days most ships are sailing on eco speed, not least because of the price of fuel. 

Route optimisation also involves managing your port-time-to-sea ratio and, on average, ships that spend more time at sea have a better CII, while ships with longer port stays typically have a worse CII rating. Many factors can contribute to longer port stays – including the type of ship and the cargoes it is carrying, port congestion and weather, as well as terminal, customer or ship operator delays – and most of these delays are beyond the control of ship owners in terms of implementing preventative and corrective actions. trying to correct the CII we inherently consume more fuel and produce more carbon emissions. This is the opposite of what the IMO intended when it introduced the CII to improve a ship’s carbon efficiency." 

For example, rerouting our ships to avoid the current situation in Red Sea means our ratings will automatically improve due to longer voyages, despite higher emissions. Another example of how the CII regulation is counterproductive would be one of Stolt Tankers’ 22,000 deadweight-tonne (dwt) ships transiting from Houston to Mexico.

We recorded the port stay as six days with four days at sea and a total fuel consumption of 210 tonnes. This ship was given an E rating for the voyage (we broke it down voyage by voyage to see the impact). If we take that same class ship and swap the tradelane sailing from the US to the Mediterranean, we recorded 13 days in port, 21 days at sea and 608 tonnes of fuel consumed, attracting a slightly better D rating. Other voyages for that same ship may even receive a C rating. 

Ballast voyages help to improve the rating. The longer the voyage, the better. Less cargo means a lighter ship and lower fuel consumption over the recorded distance of the voyage, lowering the CII and giving a better rating.  

By default, we are placing our older ships – which naturally consume more fuel – in the trades with longer port stays so the emissions are somewhat contained. However, if we want to achieve a better CII rating for these ships, they should go on longer voyages with long ballast legs. More fuel-efficient ships would then have to take the trades with the longer port stays, probably bringing down an A-rating to a B-rating, which is fine. 

These examples show that by trying to correct the CII we inherently consume more fuel and produce more carbon emissions. This is the opposite of what the IMO intended when it introduced the CII to improve a ship’s carbon efficiency. How can we as an industry address this? 

Real-world CII solutions 

One option is to apply correction factors based on certain types of ships whereby periods of the operations are removed from the CII calculation because what may be true for a bulk carrier or VLCC is not necessarily applicable to a chemical parcel tanker.  

While this would look better on paper, often the data is not easily obtainable or verifiable and it would just increase the admin load. Also, factors outside the control of the operator, such as weather events or port congestion, would be difficult to capture.  

This is why we think a ‘pilot station to pilot station CII’ would be preferable. This could be split into a ‘sea’ assessment and a ‘port’ assessment, acknowledging that the ports/terminals in question would have to be partly accountable for the latter.   

This would also allow for a more accurate measurement of a ship’s energy efficiency performance when transiting under normal working conditions at sea. And this is what CII should be measuring in terms of efficiency.   

Another pitfall of the CII is that every ship is looked at individually. Assume you have an E-rated ship and want to use biofuel to correct that rating. However, the ship is in a part of the world where compliant biofuel is not readily available. The current regulation does not allow ship owners to consume a matching amount on a different ship and allocate the abated emissions to the E-rated ship.  

One solution would be a book-and-claim system, allowing the allocation of CO2 reduction measures to the ships that need it most. Why consume biofuel on an A-rated ship and pay extra? But what if the abated emissions could be allocated to an E-rated ship? The planet would be happy in terms of overall emission reductions, and at the end of the day, this is what matters most. But at this point, operators do not have any incentives to further improve ships with better ratings. 

A new way forward? 

The goal for the shipping industry is to be carbon neutral by 2050. With CII having been implemented in 2023 and the EU Emissions Trading System (ETS) becoming law in January 2024, the maritime industry is anxious to see what will happen next. CII has some pros and many cons, but there must be a better and easier solution. 

Stolt Tankers believes a separate CII for sea and port ratings (with port ratings being the port's responsibility) and a book and claim system are the fairest and most accurate ways to measure and encourage a reduction in CO2 emissions.  Whatever happens, the industry should take a step back, re-evaluate and collaborate on how we could make emissions reduction a better, more relevant process for all stakeholders.