All You Need to Know About the IMO 2023 Regulation
The Impact of EEXI and CII on Ocean Freight And How Shippers Can Comply
Following the introduction of sulfur fuel regulations in 2020, the International Maritime Organization (IMO) launched a new set of rules called IMO 2023 to further reduce carbon emissions from ocean freight on January 1, 2023. It is part of IMO's 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.
What you need to know about the 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. 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.
The measures include the following:
- The Energy Efficiency Existing Ship Index (EEXI)
- The Carbon Intensity Indicator (CII) rating scheme.
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What is the Energy Efficiency Existing Ship Index (EEXI)?
While an Energy Efficiency Design Index (EEDI) for new build ships is in place already, the IMO has introduced 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 is assessed at the first International Air Pollution Prevention Certification survey after January 1, 2023.
How Can Shippers Achieve 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.
What is the Carbon Intensity Indicator (CII) Rating Scheme?
IMO 2023 also introduced the CII. This 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 receives 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.
Achieving CII Compliance
Ship owners and operators are required 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
How Does IMO 2023 Impact Sea Freight?
The IMO 2023 regulation has impacted 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 On Shipowners and Operators
They need to make investments into energy-efficient measures and technologies to comply with IMO requirements.
They may also face restrictions on ship operations, such as limitations on speed or the use of older vessels.
Both EEXI and CII Can 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.
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