All You Need to Know About the IMO 2023 Regulation

Following the introduction of sulfur fuel regulations in 2020, the International Maritime Organization (IMO) will launch a new set of rules called IMO 2023 to further reduce carbon emissions from ocean freight.

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IMO 2023 regulation is part of the International Maritime Organization's (IMO) Greenhouse Gas Strategy (GHG), which aims to reduce carbon emissions from international shipping by 40% by 2030 and 70% by 2050 versus the 2008 levels.

New regulations targeting ships' efficiency and carbon emissions, effective by January 1, 2023, are the next chapter in the green transformation of international shipping, creating a new wave of uncertainty and questions.

Here's what you need to know about the new IMO 2023 regulation and what it means for sea freight.

What Changes Are Implemented by IMO 2023?

The IMO 2023 regulation affects both commercial and non-commercial vessels.

It introduces mandatory reductions in carbon emissions for both new and existing ships, using energy efficiency indicators to determine these levels.

The measures include the following:

The Energy Efficiency Existing Ship Index (EEXI)
The Carbon Intensity Indicator (CII) rating scheme

What is The Objective for Each of These Measures?

Overall, IMO 2023 aims to reduce carbon emissions from the global shipping industry by implementing new measures that promote greater fuel efficiency and reduced emissions in shipping.

Here is a brief overview of the two main IMO 2023 measures and their objectives:

Energy Efficiency Existing Ship Index (EEXI)

While an Energy Efficiency Design Index (EEDI) for new build ships is in place already, the IMO is now introducing a framework for existing ships. EEXI is a rating system that assesses the energy performance of existing ships based on energy consumption data and other key metrics such as speed, power, and engine size.

The EEXI is based on the ship's specifications, not its actual operating performance. Non-compliant vessels that receive an EEXI rating below a certain threshold may be subject to IMO 2023 penalties and restrictions and need to make modifications to engines or systems. EEXI will be assessed at the first International Air Pollution Prevention Certification survey after January 1, 2023.

Carbon Intensity Indicator (CII) Rating Scheme

IMO 2023 also introduces the CII. This new global shipping carbon intensity indicator is used to rank and monitor the efficiency of individual ships. It links the GHG emissions to the amount of cargo carried, and the distance travelled ratio.

The CII rating threshold will become stricter over time and will therefore determine the annual carbon reduction factor needed to ensure compliance. Each vessel will receive a grade from A (good) to E (poor), starting in 2023. Ships with three years of D grades or one year receiving an E grade will have to put a corrective action plan in place.

How Does IMO 2023 Impact Sea Freight?

The IMO 2023 regulation is likely to impact the global shipping industry significantly. By introducing new energy-efficient fuels and implementing stricter regulations for carbon emissions, IMO 2023 helps reduce the environmental impact of sea freight transport on a global scale.

The Impact of IMO 2023 May Be Felt Most by Shipowners and Operators

They need to make investments into energy-efficient measures and technologies to comply with IMO requirements.

They may also face new restrictions on ship operations, such as limitations on speed or the use of older vessels.

Both EEXI and CII Could Negatively Affect Shipping Capacity

EEXI by requiring vessels to idle for modifications, and CII by incentivizing carriers to slow steam to reduce fuel consumption and hence CO₂ emissions.

Some Shippers May Also Be Facing Higher Shipping Costs

IMO 2023 regulations can increase the cost of sea freight to help pay for new energy-efficient technologies and comply with IMO requirements.

In the long term, IMO 2023 should help promote greater sustainability in sea freight transport and contribute to the broader goal of limiting global warming.

How to Comply with IMO 2023 - EEXI and CII

Ship owners and operators must prepare for EEXI and CII requirements in advance, taking time to assess and improve their vessels if needed. It is crucial to ensure that ships are ready for January 1, 2023, to earn the proper certificates to continue sailing and trading internationally.

Achieving EEXI Compliance

Vessels can obtain a compliance statement after passing a preliminary assessment and approval of preliminary technical files.

The EEXI verification of the ship is carried out at the vessel's first annual, intermediate or renewal survey for the International Energy Efficiency Certificate (IEEC) after January 1, 2023.

Achieving CII Compliance

Ship owners and operators are required by the end of 2022 to determine the ship's carbon intensity profile and prepare an optimized Ship Energy Efficiency Management Plan (SEEMP). This mandatory document is a ship plan that provides a mechanism to help improve a ship's energy efficiency in a cost-effective way.

To reduce carbon emissions and improve fuel efficiency, vessel owners and operators have several options, including:

Operations optimization
Modernization of vessels with energy-saving technology
Switching to low-carbon fuels

Bottom Line

IMO 2023 is a new global shipping regulation that aims to reduce carbon emissions and promote greater energy efficiency in the sea freight industry. With its focus on implementing stricter regulations for carbon emissions, IMO 2023 is likely to affect the global shipping landscape significantly.

These coming changes create challenges and opportunities for shippers. For example, ship owners and operators may need to invest in new fuel technologies or upgrade their fleets to meet IMO 2023 requirements, which may lead to capacity restrains and have an influence on shipping rates.

At the same time, IMO 2023 presents opportunities for businesses that can capitalize on emerging energy-efficient technologies or improve their efficiency in other ways.

Whether you are a ship owner or a shipper, IMO 2023 is something that should be on your radar. By understanding how it works and its potential impacts on your business, you can take steps to adapt and stay ahead of the curve in this rapidly changing industry.