As the entry into force of IMO’s energy efficiency regulations EEXI and CII rapidly approaches, data-driven assessments and expert advice are essential starting points for any discussion on compliance.
With less than a year until entry into force, it is no surprise that IMO’s Energy Efficiency Index for Existing Ships (EEXI) and Carbon Intensity Indicator (CII) are dominating discussions in shipping. Although both address the same challenge – aiming for rapid reductions in greenhouse gas emissions by improving energy efficiency – they are very different concepts; one requires a one-off calculation of theoretical design efficiency, the other is based on real-life measurements and sets ever stricter targets. So, what to do? A quick fix now to comply with EEXI and worry about long-term operational efficiency later, or tackle the vessel’s CII compliance across its life today?
To comply with EEXI, owners must upgrade vessels and prove their compliance by updating their energy efficiency documentation. These updated values are fed into a formula to create a final number. If the number is below the required limit, you can sail away happy; if not, you either put in the work or permanently drop anchor. CII is based on real-life CO2 produced versus nautical miles sailed, not design efficiency. What’s more, there’s no one-off pass or fail; compliance is graded A–E and the goalposts get narrower over time. If your vessel is the class underachiever, with a D rating three years in a row or a single annual E grade, you will need to show plans to whip it into shape.
Nor is regulation the only driver for improving vessel efficiency. As part of a charter known as the Poseidon Principles, banks are beginning to offer sustainability-linked loans where interest rates are linked to Annual Efficiency Ratio (AER) or Energy Efficiency Operational Indicator (EEOI) scores. Charterers too are taking a much keener interest in the sustainability of their supply chains, with big global brands often having CO2 reduction targets that bite far harder than the IMO’s. Put simply, IMO’s short-term measures are the tip of a very big iceberg that will necessitate emission reductions across the lifecycle of vessels. A long-term view is essential.
A quick fix or a longer-term strategy?
Engine power limitation (EPL) and shaft power limitation (ShaPoLi) are both cheap, quick-to-implement solutions that enable compliance with EEXI. However, they will only have an impact CII if the vessel reduces real emissions by sailing slower. Because these solutions are likely to be chosen by vessels already sailing at slow speeds, this cannot be taken for granted.
Giulio Tirelli, Director, Business Development, Wärtsilä Marine Power, explains: “A power limitation that affects EEXI but does not assure long-term CII compliance means further investments will likely be needed at a later stage. This can work in some cases – for older vessels, for example – but for many it is not the best choice in the long term.”
For most vessels, dealing with immediate EEXI and long-term CII requirements at once makes sense. In 2020, IMO’s Fourth Greenhouse Gas Study identified 44 currently available greenhouse gas abatement technologies. These include shaft generators that reduce reliance on auxiliary engines, air lubrications systems that help vessels maintain the same speed with less power, and wind rotors that can generate additional thrust, reducing propulsion power requirements. All these solutions enable compliance with both EEXI and CII while allowing vessels to continue sailing at market speeds, thereby maintaining their attractiveness to charterers and potential buyers.
OK, I get it. What next?
Though the decision to go with a longer-term strategy may seem easy on paper, deciding how to implement it is anything but. Two elements are needed. First is a clear view of current emission performance and compliance status, along with the ability to model the evolution of compliance in the future. Second is the capability to understand and simulate how various solutions will affect future performance.
A trusted expert with a full view of all available technology is invaluable. Pinning hopes on a single technology is rarely the optimal solution; a single vessel may need several solutions to ensure compliance, while suitable technologies may vary even across a fleet of similar vessels.
Tirelli notes: “We have the whole spectrum covered, from multi-fuel engines to shaft generators, hybrid systems, propeller caps and solar power as well as hull air lubrication and rotor sails. This, combined with our technology expertise and project experience, puts us in a unique position to act as an advisor when it comes to mapping out ship owners’ routes to decarbonisation.”
Model, simulate, advise
Wärtsilä has seen a surge in ship owners requesting evaluations of their vessels in recent months, Tirelli reports. These evaluations provide an understanding of the optimal pathway towards compliance with decarbonisation targets.
One of the key components of Wärtsilä’s advisory offer is CII Insight – an internal tool developed over many years that uses machine learning algorithms to harvest a vast data set based on publicly reported emissions data.
Combined with internal data resources and Wärtsilä’s deep pool of in-house knowledge – as well as understanding installed technology and the impact of other technology options – CII Insight can illuminate how an owner’s vessel or fleet can optimally meet EEXI and CII requirements.
Using these capabilities, Wärtsilä can create a digital twin of each vessel and simulate the effects of different combinations of energy saving technologies, power-limitation solutions and future fuels. The result is an unbiased, transparent evaluation – based on highly accurate data modelling – of the optimal solutions for your stated goals. This no-obligation recommendation can range from installing Wärtsilä or third-party solutions – or even doing nothing at all and scrapping your vessel when its time has come.
An exercise conducted on the global fleet with the CII Insight tool highlights the challenging situation facing owners. Based on today’s fleet and with no changes to installed technologies or operating profiles, by the time CII enters into force in January 2023, 45% of the fleet will be in the D and E categories, meaning they are not compliant with the IMO’s target trajectory for 2030. As early as 2024 – just one year after the regulations come into force – more than half of the world fleet will not be compliant without further action.
If the challenge is clear, so too is the solution; an evidence-based, data-driven assessment supplemented by expert advice can help owners find their way through the maze of compliance options to find a solution tailored to their business needs.
“Quite simply, consulting with Wärtsilä takes the guesswork out of compliance and provides owners with an actionable plan to start decarbonising based on solid data,” concludes Tirelli.