EEXI – ENERGY EFFICIENCY EXISTING SHIP INDEX

EXI and CIIs – Changes and

implications post IMO MEPC 76.
Webinar Questions & Answers.

July 2021

info.lr.org/eexi
Q&A Contents.
1. APPLICABILITY OF MARPOL ANNEX VI CHANGES. .......................................................................................................... 3
2. EEXI CALCULATIONS, INCLUDING REFERENCE SPEEDS. ............................................................................................... 4
3. EEXI - OVERRIDABLE POWER LIMITATION. ..................................................................................................................... 7
4. EEXI – ALTERNATIVES TO OPL. ..................................................................................................................................... 10
5. EEXI FOR EEDI CERTIFIED VESSELS. ............................................................................................................................. 11
6. CII – REFERENCE LINES, REDUCTION FACTORS AND RATINGS METHODOLOGY. ....................................................... 13
7. CII – TIMELINES FOR GUIDELINES AND RATINGS. ....................................................................................................... 15
8. CII – CONSEQUENCES OF POOR PERFORMANCE. ....................................................................................................... 16
9. CII - CORRECTION FACTORS. ........................................................................................................................................ 19
10. CII – USE OF ALTERNATIVE FUELS. .............................................................................................................................. 20
11. CII - OPERATIONAL/COMMERCIAL IMPACTS. ................................................................................................................ 21
12. RELATIONSHIP BETWEEN EEXI AND CII. ...................................................................................................................... 22
13. EEXI AND CII VERIFICATION REQUIREMENTS. ............................................................................................................. 23
14. IMO STRATEGY, FUTURE CONSIDERATIONS AND OTHER DECARBONISATION SCHEMES. ....................................... 24
1. Applicability of MARPOL Annex VI
Changes.
1.1. Do container ships include small multi-purpose (up to 15000 dwt) vessels?
Multi-purpose vessels would fall within the scope of the definition of a general cargo ship
rather than a container ship, and EEXI (new regulations 23 and 25 of MARPOL Annex VI) and
operational carbon intensity (new regulation 28 of MARPOL Annex VI) would apply.
1.2. I work in the Naval domain, and there is some uncertainty regarding the applicability
of this requirement. Are you able to comment?
Article 3 of the MARPOL Convention excludes any warship, naval auxiliary or other ship
owned or operated by a State from application of the Convention, including Chapter 4 of
MARPOL Annex VI. There is no application unless the Flag Administration decides to apply
the provisions to warships and naval auxiliaries.
1.3. What is the impact of these updates on High-Speed Crafts (HSC)?
EEXI does not apply to HSC. However, operational carbon intensity does and is potentially
very challenging for HSCs above 5000gt because they are treated as ROPAX ships. Interferry
has raised the issue at IMO and is seeking special consideration for these vessels. Further
information will be available by MEPC 78 at the latest.
1.4. Is EEXI applicable to fishing vessels >400t working internationally?
No.
1.5. Do the EEXI and CII limit values apply to special ships? What differences in regulations
are there compared to general professional shipping?
No, they do not apply to special ship types at present.
1.6. Are EEXI and CII requirements also applicable to offshore construction vessels (as EEDI
is not applicable for these vessels)?
No, offshore construction vessels fall outside the scope of the definitions of ship categories
in regulation 2 of MARPOL Annex VI, so EEXI and operational carbon intensity do not apply.
2. EEXI Calculations, including reference
speeds.
2.1. Was there any decision on the EEXI calculation of LNG carriers using cargo as fuel?
The 2021 Guidelines on the method of calculation of the attained EEXI (Resolution
MEPC.333(76)) were adopted, and these include paragraph 2.2.1, which states: “For LNG
carriers, the power from combustion of the excessive natural boil-off gas in the engines or
boilers to avoid releasing to the atmosphere or unnecessary thermal oxidation should be
deducted from PME(i) with the approval of the verifier.”
2.2. In the case of bulk carriers, the sea trials are usually conducted in ballast conditions.
In the sea trial report, they provide an "estimated speed power curve" for the
scantling draught. Can that estimated speed power curve be used to calculate the
Vref?
Yes, as long as the ship speed Vref is obtained from an estimated speed-power curve as
defined in the Guidelines on survey and certification of the attained EEXI.
2.3. Quote~ Notwithstanding the above, the SFC specified by the manufacturer or
confirmed by the verifier may be used. unquote~ @ ISWG-GHG 8/WP.1 Annex 1, page 7.
Who is the manufacturer they are referring to, and where I can find this definition of a
manufacturer?
The engine manufacturer.
2.4. In the context of charterers, one cannot actually account for the sea trail speeds being
noted. Is there an alternative method to account for Vref? Can we deduce the speed
power curves from the interpolation of the current operating profile?
No. Vref needs to be determined from an approved speed power curve (EEDI ships) or an
estimated speed power curve (pre-EEDI ships). Estimated speed power curves can be
generated from sea trials, model tests, Computational Fluid Dynamics (CFD) or a statistical
method only.
2.5. For determination of Vref, is it required for an existing ship, with a Speed Power curve
prepared during the sea trials before delivery, to carry out sea trials again in a fully
loaded condition to generate the in-service speed and power curve?
An EEDI-certified ship with an approved speed-power curve in the EEDI Technical File does
not need to carry out further sea trials, unless the ship has been modified or fitted with
energy saving technologies and the contribution of these to the attained EEXI is unknown.
In this case options would be sea trials after installation, model tests or numerical
calculations (paragraph 2.2.3.6 in the 2021 Guidelines on the method of calculation of the
attained EEXI (Resolution MEPC.333(76)).
2.6. Can Vref be determined from the Ballast sea trial interpolated to scantling draft speed
based on the model tank test?
Yes.

2.7. With regards to the effect of Energy Saving Devices (ESDs), can the original model
test results (done before applying the ESD) be used? Can this be used for all the sister
ships, or would CFD / Sea trials be required to be done again?
Paragraph 2.2.3.6 in the 2021 Guidelines on the method of calculation of the attained EEXI
(Resolution MEPC.333(76)):

In cases where the energy saving device is installed, the effect of the device may be
reflected in the ship speed Vref with the approval of the verifier, based on the following
methods in accordance with defined quality and technical standards:

1. sea trials after installation of the device; and/or

2. dedicated model tests; and/or
3. numerical calculations.

The contribution of ESDs should be assessed on a ship by ship basis. Numerical

calculations can be used as an alternative to sea trials, provided that the methodology and
numerical model used have been calibrated against parent hull sea trials and/or model
tests.

2.8. It happens that NOx technical files are only available with MGO as fuel, but the vessel
is operating on HFO, so the EEXI will have to be calculated based on MGO as fuel. How
will this translate to the power limitation when operating on HFO?
MGO is the reference fuel. As is the case for EEDI.

2.9. As per MEPC 76 results, will the formula 2.2.3.4 for Vref as per MEPC 76/7/4 based on
initial sea trial results at design draft be used?
Paragraph 2.2.3.4 should remain as drafted in the 2021 Guidelines on the method of
calculation of the attained EEXI (Resolution MEPC.333(76)).
2.10. If the towing tank data is missing, can we estimate to produce the power curve?
If there is no towing tank data, and the sea trial data is only for ballast condition, the
options that are available are the approximate method described in paragraph 2.2.3.5 of
the EEXI guidelines; perform a sea trail at the EEXI load condition, and CFD at the EEXI load
condition calibrated by the sea trial data.
2.11. Many of the applied ESD's onboard existing vessels comes with no additional
trial reports. So, they cannot be used for the EEXI calculation at present – are there
any developments expected on this?
The contributions of ESDs can be assessed by sea trials after installation, model tests or
numerical calculations (paragraph 2.2.3.6 in the 2021 Guidelines on the method of
calculation of the attained EEXI (Resolution MEPC.333(76)).
3. EEXI - Overridable Power Limitation.
3.1. When Engine Power Limitation (EPL) is applied, will the vessel need to comply with
Minimum power requirements? (IMO guidelines MEPC.1/Circ.850/Rev.2)
Minimum power requirements only apply to EEDI certified ships. As overridable power
limits do not reduce the installed power, this should not change the vessel’s compliance
with the minimum power requirements.
3.2. Where EPL is applied to ice classed vessels, will the notation be lost? Will minimum
power requirements be applicable?
Overridable power limits do not change the installed power on the ship and therefore there
should be no impact on notations or minimum power requirements for ice class vessels.
Note that Polar Code Category A ships are not required to comply with EEXI (regulation 19.3
of MARPOL Annex VI).
3.3. Can you provide insight on the iterative method that is used to calculate the EPL and
the reduced speed corresponding to EPL?
The P_ME is calculated for a given power limitation. The vessel speed for this P_ME is
obtained from the EEXI load condition speed-power curve. The Specific Fuel Consumption
(SFC) of the main engine is also determined for the calculated P_ME. This data is then used
to recalculate the EEXI. This procedure is iterated until EEXI compliance is achieved.
3.4. Can we apply EPL more than once?
If EPL is mechanical, this may not be possible but would be a matter to discuss with the
engine’s original equipment manufacturer (OEM). For electronic EPL it may be possible,
depending on the software used.
3.5. In the case of a permanent main engine derating with non-overridable EPL, PME = 75%
Maximum Continuous Rating (MCR) of the new derated MCR is used for the EEXI
calculations, but 83% of MCRlim applies for OPL. We have heard in other webinars
that in the first case, the NOx technical file should be amended, whilst in the second
case, this is not necessary. Is this accurate?
As it stands, unless an engine has been de-rated and the engine re-certified at a lower
maximum continuous rating (MCR) then any power limitation is considered as overridable
for the purposes of calculating the attained EEXI and is subject to PME = 83% of MCRlim or
75% MCR whichever is lower. Where an overridable power limit is used there is no
requirement for NOx re-certification unless the reduction requires the engine to operate
outside its NOx critical settings. This is covered by paragraphs 5.2 and 5.3 of the 2021
Guidelines on the shaft / engine power limitation system to comply with the EEXI
requirements and use of a power reserve (Resolution MEPC.335(76)).
3.6. With EPL, an additional ship will be required to meet total cargo delivery at a specific
delivery schedule. With this additional ship, how can we achieve a reduction in GHG
emission holistically??
Evidence suggests that EPL, at least in the bulker, tanker and container sectors is likely to
be set at levels above current average main engine loads. This means that EPL is not
expected to result in significant changes to the operating profile of the global fleet in terms
of requiring additional, compensatory tonnage.
3.7. After implementation of EPL, could we wait for the 1st annual survey in 2023 for it to
be verified by class?
Yes.
3.8. For EEXI, can I avoid the additional penalty from the change from 75% to 83% Pme by
permanently derating the engine prior to EEXI certification, so that it meets the
requirement without any further overridable EPL?
Yes, provided that the permanent de-rating is reflected in the NOx Technical File and so can
be taken as the new maximum continuous rating (MCR) of the engine. For tankers and bulk
carriers, the permanent de-rating would also need to be assessed against minimum power
limits for EEDI-certified ships.
3.9. The modification of the attained EEXI formula for ships using overridable power
limitation is sometimes leading to extreme, unrealistic values of reduction. Is there
any cap set as per guidelines or expected in the future?
The only cap is for an EEDI-certified ship where the SHaPoLi / EPL system is applied and
results in NOX critical settings and/or components needing to be altered beyond what is
allowed by the engine technical file. In this case the re-certified engine power is limited by
needing to not be lower than the minimum power requirement. The overall impact of EEXI
will be assessed as part of a review due to be concluded by 1 January 2026.
3.10. Has any data been released on how much engine de-rating can be done for
ShaPoLi/EPL without going beyond the level of minimum propulsion power
requirement as required by MARPOL?
No. This is a ship specific question. Please note that overridable EPL/SHAPOLI is not de-
rating of an engine. The maximum continuous rating (MCR) of the engine remains
unchanged.
3.11. OPL - we have tankers who require additional power during pilotage in seasonal
freshnet conditions. Would this be accepted whilst maintaining compliance?
The power reserve can only be used for the purpose of securing the safety of a ship or
saving life at sea (regulation 3.1 of MARPOL Annex VI). In principle, the ship should avoid
situations whether it needs to use the power reserve, but if this is not possible then the use
of the power reserve will need to be reported to the flag State Administration or RO.
3.12. What is LR’s view on the interpretation of a non-overridable / fixed power
limitation in terms of what definition of P_ME would apply?
 Strictly speaking all forms of power limits are overridable in the context of EEXI and should
have PME set to 83% MCRlim or 75% MCR - whichever is lower. The other issue for fixed
power limits is that they do not conform to the 2021 Guidelines on SHAPOLI/EPL system to
comply with the EEXI requirements and use of the power reserve (Resolution
MEPC.335(76)).
3.13. Is the Master liable to explain the use of the override to a flag or RO?
Yes, refer to the 2021 Guidelines on SHAPOLI/EPL system to comply with the EEXI
requirements and use of the power reserve (Resolution MEPC.335(76)). Reporting of use of
the power reserve will need to be included on the onboard monitoring manual (OMM)
developed by the Company.
3.14. In my opinion, power limitation overrides could be used many times during
stations, arrival and departure. Would this be required to be reported to RO / flag etc.?
Reporting of use of the power reserve will need to be included on the onboard monitoring
manual (OMM) developed by the Company. Any use of the reserve power needs to be
reported, including the location, time, reason and duration of use. Refer to the 2021
Guidelines on SHAPOLI/EPL system to comply with the EEXI requirements and use of the
power reserve (Resolution MEPC.335(76)).
4. EEXI – Alternatives to OPL.
4.1. Concerning the EEXI, you mentioned a possible solution to change the type of fuel to
reduce the attained EEXI. Instead of considering LNG as an alternative fuel, would it
be possible to use onboard only HFO instead of Diesel oil (being the CF_HFO <
CF_Diesel)? Especially for those cases where the difference between the attained EEXI
and the required one is small?

Using alternative fuels covered by the EEDI/EEXI framework is possible, but to get credit for
doing so may require recertification of the engine so that the conversion factor and the
specific fuel consumption obtained from the NOx Technical File reflect the use of HFO
rather than diesel oil as the reference fuel. It should also be noted that the lower calorific
value of HFO relative to diesel oil may erode the potential benefit of recertification and
calculation of the attained EEXI using the conversion factor for HFO rather than diesel oil.
4.2. How can shipowners benefit from enhanced propulsion systems such as wind
propulsion or ventilation?

These systems can be considered in the attained EEXI and any reductions in fuel consumed
as a result of the use of alternative propulsion or assistance systems would be credited in
the calculation of annual operational carbon intensity.
4.3. What do you believe is the optimal method to meet the EEXI power requirements in
terms of systems to be installed and retrofitted onboard a vessel to dynamically
regulate the engine speed accordingly?

The optimum arrangement will be ship specific and reflect the most cost-effective means
of complying with EEXI and subsequently achieving desired ratings (C or above) under the
operational carbon intensity requirement. What is critical to understand is that overridable
power limitation is a quick fix for EEXI but does not substantially contribute to operational
carbon intensity reduction.
4.4. How can the effect of High-Performance anti-fouling paint be estimated?

In the context of EEXI, the contribution of high-performance anti-fouling paint can only be
demonstrated through sea trials. In the context of operational carbon intensity, the
contribution of high-performance anti-fouling paint would be reflected in the reductions in
fuel consumption achieved by a ship with such a coating. This may contribute to a more
favorable rating if the reduced fuel consumption contributes significantly to a lower annual
operational carbon intensity.
5. EEXI for EEDI certified vessels.
5.1. When will vessels, that do not have a required EEDI today have a required EEDI as per
table 1 of regulation 21.2?
Pre-EEDI ships do not need to comply with EEDI. Pre-EEDI ships and EEDI ships delivered to
an EEDI phase (renumbered regulation 24 of MARPOL Annex VI) that has a lower reduction
rate than the EEXI reduction rate in new regulation 25 of MARPOL Annex VI (for example, a
Phase 1 bulker carrier that has a required EEXI which is the same as the required Phase 2
EEDI ) will need to comply with EEXI by the first annual, intermediate or renewal survey for
the International Air Pollution Prevention Certificate (IAPPC), after 1 January 2023.
5.2. Will EEDI certified ships also need an EEXI technical file?
Yes, if the ship complies with an EEDI phase (renumbered regulation 24 of MARPOL Annex
VI) that has a lower reduction rate that the EEXI reduction rate in new regulation 25 of
MARPOL Annex VI, then that ship will have an EEDI Technical File and an EEXI Technical
File.
5.3. Do all the pre EEDI vessels need to undergo structural changes for complying with
EEXI, or will good practices be enough?
No. The impact of EEXI on a particular ship is determined by the amount of improvement in
technical efficiency required to comply with new regulation 25 of MARPOL Annex VI.
5.4. If a pre-EEDI vessel doesn't have a valid speed/power curve and no tank test available,
is it allowed to carry out a sea trial and obtain the power curve and Vref to use for
EEXI?
Yes, sea trials can be used to determine the speed-power curve for pre-EEDI ships.
Alternative methods for determining Vref are also available or being considered. Further
details are contained in the 2021 Guidelines on the method of calculation of the attained
EEXI (Resolution MEPC.333(76)).
5.5. Will vessels that are built under EEDI also fall under the EEXI regulation, or will these
remain solely under EEDI?
Yes, if the ship complies with an EEDI phase (renumbered regulation 24 of MARPOL Annex
VI) with a lower reduction rate than the EEXI reduction rate in new regulation 25 of MARPOL
Annex VI, then that ship will comply with EEDI and will then need to comply with EEXI by
the first annual, intermediate or renewal survey for the International Air Pollution
Prevention Certificate (IAPPC) after 1 January 2023.
5.6. For vessels having a model test at less than 2% deviation in displacement between the
EEDI draught and the model test draught, will admiralty coefficient correction be
accepted, or should they use other options for the Vref calculation?
 For containerships, bulk carriers or tankers, the method detailed in section 2.2.3.4 of the
EEXI guidelines could be used.
5.7. Why was EEXI brought in when we already have EEDI?
There was a view that reductions in carbon intensity should be based on pre-certified
requirements which would impose certified limits on the operation of a vessel.
6. CII – Reference Lines, reduction
factors and ratings methodology.
6.1. What are the Carbon Intensity Indicator (CII) baselines for LNG powered vessels?

The reference lines for all ships to which new regulation 28 of MARPOL Annex VI applies can
be calculated from the data provided in the 2021 Guidelines on the reference lines for use
with operational CIIs (Resolution MEPC. 337(76)).
6.2. For a new build not yet delivered, how do we estimate the CII based on the 2019
baseline? With CII being an operational index, the yard does not calculate this for us

Annual operational carbon intensity reductions are calculated by the owner on an annual
basis after delivery. LR’s Marine Performance Services can estimate the CII of a new build
based on an assumed annual operating profile, the speed-power estimates from the yard
and the main and auxiliary engine specifications.
6.3. How do CIIs apply to new builds or future builds which will be delivered in 2023-2026?

They apply from the point at which the ship enters service.
6.4. Can you confirm that as per MEPC 76, the CII reference line is based on the MEPC
76/7/5 ANNEX B?

No. Reference lines are based on a new set of tables in another document. The reference
for that document is ISWG-GHG 8/WP.1/Rev.1/Add.1. The revised tables for reference line
and rating boundary parameters will be included in the finalised guidelines when
published by IMO. The change relates to the use of non-rounded IMO DCS data and in the
major sectors has no material impact. There are potential benefits for LNG carriers below
65k DWT.
6.5. How will CII annual targets be allocated or delivered to vessels? Will this depend on a
reference baseline and has the MEPC 76 developed and reduced rates for the period
2023 until 2030?

Companies will be expected to determine the required reduction rates and include these in
a revised SEEMP for verification by the Administration or Recognised Organisation (RO) by
1 January 2023.
Annual targets will be determined by applying a cumulative reduction rate (5% in 2023,
with an additional 2% annually in 2024 – 2026) to a reference line and determining the
required CII based on either the DWT or GT of the vessel, whichever is applicable.
Reduction rates for 2027 – 2030 are not expected to be decided until 2026, considering the
outcome of the review of the operational carbon intensity requirement which should be
completed by 1 January 2026.
6.6. For new-build ships launched after the current CII baseline, 2019 - how will CII be
calculated against what base year and what % reduction factor for 2023 and 2026?

For all ships, the reduction required follows a fixed trajectory applied to a reference line for
the ship type derived from IMO.
6.7. Will the existing data from IMO DCS be used to calculate prior to the start of 2023?

Reference lines for the ship types to which new regulation 28 of MARPOL Annex VI applies
have been developed based on IMO DCS data for 2019. No data before 2023 will be
considered when ships calculate their attained annual carbon intensity reduction. What
matters is what is achieved in a particular year and continuing to keep pace with the
reduction requirements to maintain a rating.
6.8. In 2023, must the required CII be 5% below the 2019 reference line for the ship to be
middle of the C-rating band?

That is correct. The mid-point of band C is the trajectory for the required carbon intensity
reduction in any year. This will be a cumulative reduction of 5% in 2023, up to a cumulative
reduction of 11% by 2026.
6.9. Referring to the AER calculation, what distance is relevant? Is it the distance made
over ground or distance made through water?

Total distance travelled as reported under regulation 27 of MARPOL Annex VI (IMO DCS).
6.10. Could you help with the approved CII reference line and boundaries for ratings
A, B, C, D & E? Where can we get the information?

₋ For reference lines: 2021 Guidelines on the reference lines for use with operational
CIIs (Resolution MEPC.337(76)).
₋ For reduction rates: 2021 Guidelines on the operational carbon intensity reduction
factors relative to reference lines (Resolution MEPC.338(76)).
₋ For rating boundaries: 2021 Guidelines on the operational carbon intensity rating of
ships (Resolution MEPC.339(76)).
6.11. Where could we find the formula for the 2019 reference line?

In the 2021 Guidelines on the reference lines for use with operational CIIs (Resolution
MEPC.337(76)).
6.12. Is the rating framework A-E dynamic and changing each year? The reference line is
Baseline 2019 - required reduction as per the year.

Rating boundaries are fixed. They are also independent of peer performance.
7. CII – Timelines for guidelines and
ratings.
7.1. Will the first CII report will be submitted in 2023 or in 2024?

The first three months of 2024, based on the data collected between 1 January 2023 and 31
December 2023.
7.2. When will the first CII rating be released, and how will it be decided?

Statements of Compliance for Fuel Oil Consumption and Carbon Intensity Ratings are
required to be issued to ships no later than the end of the fifth month of the year following
that for which data is reported. Therefore, the first SoCs should be issued no later than 31
May 2024.
Ratings will be calculated and verified based on the fuel oil consumption data reported to
the IMO DCS (Regulation 27 of MARPOL Annex VI). The rating given will be determined by
the distribution of rating boundaries around the required carbon intensity reduction for the
ship.
7.3. When is it expected that the official IMO guidelines adopted by MEPC 76 will be
publicly released?

The IMO Secretariat will publish the guidelines in the coming weeks.
7.4. Will the IMO publish an AER trajectory? They haven't published one so far.

The trajectory will be contained in the package of guidelines associated with new
regulation 28 of MARPOL Annex VI as follows:
₋ For reference lines: 2021 Guidelines on the reference lines for use with operational
CIIs (Resolution MEPC.337(76)).
₋ For reduction rates: 2021 Guidelines on the operational carbon intensity reduction
factors relative to reference lines (Resolution MEPC.338(76)).
7.5. Will the first CII rating be based on AER data of January 2022-December 2023?

No. The first rating of the ship will be based solely on the annual carbon intensity reduction
achieved between 1 January 2023 and 31 December 2023. However, the cumulative
reductions required mean that that the 2% reduction in 2023 is a 5% reduction relative to
the 2019 reference line.
8. CII – consequences of poor
performance.
8.1. What happens if ships do not comply with the CII requirements? When does the ship
need to prove compliance? What are the consequences if a corrective action plan is
inadequate to bring down the CII to a compliant level?

2023 – 2026: If a ship is rated D in three consecutive years, or E in any one year, it shall
develop a plan for corrective actions. Nominally that plan should result in the ship being
rated a level higher in the following year.
If the corrective action plan is not followed, then this is non-compliant with new regulation
28.9 of MAPROL Annex VI. The consequences of not following the plan may be considered
by the Administration as invalidating the Statement of Compliance (SoC) which is issued
based on the submitted plan for corrective actions.
2027 – 2030: A more robust implementation and enforcement regime is expected.
8.2. Am I correct that no ships will need to stop operating due to poor CII performance, at
least until 2026?

This is correct, provided that ship complies with new regulation 28.9 of MARPOL Annex VI
and follows the corrective action plans developed if the ship is rated D in 3 consecutive
years (not possible before 2026) or E in any one year.
8.3. Other than creating a corrective action plan, what will ships have to do to comply with
CII regulations? What incentive is there to adhere to their corrective plan? Will the IMO
punish ships that do not produce/adhere to a corrective plan?

To comply with new regulation 28 of MARPOL Annex VI, Companies need to:
₋ Revise the SEEMP on the ships to which new regulation 28 applies, to include a plan
for delivering the required reductions and establish procedures for ensuring
continuous improvement.
₋ Monitor and report fuel consumption in accordance with regulation 27 (IMO DCS).
₋ Calculate the annual operational carbon intensity reduction based on the data
collected in accordance with regulation 27 (IMO DCS).
₋ Report the data and the carbon intensity reduction within the first 3 months of the
following year.
₋ Develop a plan for corrective action if the ships are rated D for the third consecutive
time, or E.
 ₋ Follow the corrective action plan in accordance with new regulation 28.9.
Enforcement is a matter for Flag Administrations. Ships which do not follow
corrective action plans may face penalties from the Administrations and risk Port
State Control action.
8.4. Please clarify when the different CII guidelines will be released? Also, how will the
corrective action plan for ships banded in D and E be implemented? Do you think the
IMO is relying on potentially negative commercial implications to act as an incentive?

IMO Secretariat will make these available in the coming weeks. This will not include the
Guidelines on SEEMP which would include matters related to the implementation of plans
for corrective actions. The IMO is not relying on potential negative commercial implications
because it has not decided to make the ratings of ships public. However, it is reasonable to
assume that at least between 2023 and 2026 the market may drive more change than the
regulations.
8.5. What are the options for ships rated ‘D' and 'E' on CII compliance?

This will depend on the reason for being rated D or E but in any event operational changes
to reduce carbon intensity will be expected.
8.6. What is the actual (practical) penalty for CII D & E vessels?

Between 2023 and 2026, the administrative burden and commercial impacts of being
required to follow a plan for corrective actions. After 2026, the consequences could be
more significant and include remedial technical efficiency requirements, or goodbye
clauses for persistently under-performing ships.
In addition, the market may generate its own practical penalties, for example D or E rated
ships not being considered favourably in pre-fixture qualification.
8.7. If you can't improve your CII ratings e.g. your ship has an E rating but you can’t achieve
the target in your plan - what will be the sanction?

Between 2023 and 2026, provided that the plan for corrective actions is followed in
accordance with new regulation 28.9 of MARPOL Annex VI, there is no further action that
can be taken. Notwithstanding, ships which are persistently rated D or E may attract
special attention from Flag Administrations and Port States. After 2026, persistent under-
performance is expected to be linked to measures to improve performance which could see
a ship unable to operate if it cannot improve its rating.
8.8. If we get the ‘ticket’ (EEXI compliance), is the vessel able to be operated until 2026,
which will not be prevented by the CII requirements?

EEXI is the ticket to the game, but the game is about operational carbon intensity
reduction. A ship will only be prevented from operating before 2026 if it does not comply
with EEXI. A ship may be prevented from operating before 2026 if it fails to follow a plan for
corrective actions in accordance with new regulation 28.9 of MARPOL Annex VI, if one is
required.
8.9. Regarding pre-EEDI vessels, which do not comply with the CII requirements for 3
consecutive years, do owners need to sell them? What are the consequences?

There is no requirement for an underperforming vessel to be sold. Whether an owner

chooses to retain a vessel will depend on the challenges facing the ship in terms of
delivering corrective actions, where and how it operates and the market expectations for it.
It is not expected that ships will be forced out of the fleet before 2026, but this may change
as 2030 approaches.
8.10. IMO can mandate shore power connection onboard. Who will mandate onshore
provision?

The IMO could also mandate the provision of shore power in ports, in the same way it does
for port reception facilities, but ultimately making this happen would be a matter for port
States.
9. CII - Correction Factors.
9.1. Is there any correction factor for specific fuels when considering all emissions from
the lifecycle of the fuel (extraction, storage, transport, use)?

Lifecycle emissions are currently not factored into either the calculation of the attained
EEXI or carbon intensity indicators (CIIs).
9.2. Tonnage providers will be seriously affected by the current approach as they have no
control over vessel utilisation which is in the hands of charterers. Prolonged
anchorages on some trades (West Africa) will badly affect the vessel’s CII ratings. How
can we ensure the fairness of this system?

There is the potential for some cargo and operational correction factors to be considered,
including for prolonged periods of fuel consumption with no distance travelled. However,
confirmation of these is not expected until Q2 2022. In reality, this requirement is a new
constraint on commercial operations, and owners and charterers do need to find new ways
of working together. We understand that BIMCO is looking at clause options, but this is a
complex process.
9.3. A key argument for correction factors is ensuring a level playing field, as the
benchmark is not considered relevant, e.g. shuttle tankers compared to ordinary
Suezmax tankers. Can a more granular division of ship type subgroups ensure a fair
comparison while including all emissions and thus keep incentives to address all
energy use onboard for all operations?

Yes.
9.4. Are the fuel consumptions related to cargo operations included in the AER
calculation? For oil tankers, they can be quite high and not offset by transport work.

Yes. AER is calculated based on the total annual fuel consumed (based on fuel delivered
and recorded as such in bunker delivery notes). Correction factors for heating and cooling
are being considered.
9.5. Are there any exemptions for vessels on short trades and Dynamic Positioning Shuttle
Tankers (DPST) in the calculations etc.?

No, although periods where ships are in DP may be considered for a correction factor.
10. CII – Use of alternative fuels.
10.1. Does the use of ammonia, methanol or liquid biofuels improve the CII with the
currently agreed CII regulations? Or will it be clarified in future discussions?

Ammonia would be zero-rated and would improve the CII by displacing fossil fuels.
Although the energy density on Methanol is worse than very low Sulphur fuels oils
(VSLFOs), it may offer an 8% - 10% benefit over VSLFO due to the lower carbon factor.
Liquid biofuels would not further improve the CII because the IMO does not yet consider
lifecycle emissions, and therefore, there is no scope of biofuels being zero-rated at this
stage.
10.2. Biofuels offer a limited option for actual net emissions reduction but are not
presently factored in DCS or CII calculations? Is this likely to change?

The IMO is looking at lifecycle assessment of marine fuels and how to integrate these into
IMO instruments. We are expecting progress on this in Q3 2021.
10.3. In your opinion, what fuel (alternative) would be the recommended one to
achieve and comply with the regulations? There are many opinions, but it seems not a
steady and general view and path.

This will depend on where the ship is operating and the availability of alternatives.
Depending on the performance of the ship relative to the required operational carbon
intensity reduction, exploring energy efficiency and operational changes first may be more
appropriate, ahead of greater certainty emerging around alternative fuels, including the
lifecycle assessment of marine fuels.
10.4. Does Biofuel help with compliance? Some biofuel is showing NOx compliance

Biofuel is only helpful if it is zero-rated. To be zero-rated, the IMO needs to consider the
lifecycle GHG emissions associated with marine fuels. Some biofuels do show NOx
compliance but the current provisions of regulation 18 of MARPOL Annex VI prevent the
widespread use of biofuels: they are subject to a higher in-service NOx emissions standard
than petroleum derived fuels and can only be used for trial purposes. There are also
question marks over the sustainability of certain forms of biofuels and the localized, non-
scalable supply of biofuels being focused on non-shipping emissions reductions. Unless
these three issues are addressed, the prospects for biofuels are unclear.
11. CII - Operational/Commercial
Impacts.
11.1. Will a ship using LNG as fuel comply beyond 2030?

This will depend on how the ship is operated and the reduction rates for operational
carbon intensity required after 2030. At this stage, we only know the reduction rates
required to 2026.
11.2. What will be the overall impact on a mini bulkers fleet (say vessels between
3500 dwt to 15000 dwt)?

As the overall impact is largely driven by operational carbon intensity (new regulation 28 of
MARPOL Annex VI) the impact on this segment will depend on how it adapts to deliver the
operational carbon intensity reductions. However, one of the challenges facing ships with
low DWT is a high probability of being rated D or E, this is compounded if these ships also
operate in short-sea trades with high-frequency port calls.
11.3. In slide 21, does it mean that the bulkers will have the biggest challenges?

Slide 21 indicates that the average bulker in the EU MRV database for 2019 has more to do
to achieve a rating of B or above than the headline cumulative reduction of 11% by 2026
suggests. This illustrates that for many ships, the requirement is far more than just
business as usual. In the case of the bulker fleet, about half of the sample has an AER score
for 2019 above the average.
11.4. How will charterers be involved in the regulation? They are always pushing to
increase the engine's load.

Charters are not regulated by the IMO. How owners and charterers approach the new
constraints on commercial operations will be a contractual and relationship matter.
11.5. Do we have any idea of what speeds may be enforced, if any?

No particular speeds will be enforced.

12. Relationship between EEXI and CII.
12.1. Although we are talking about different requirements, statistically, which of the
EEXI and CII is stricter? Statistically, once a ship is in compliance with EEXI, how
difficult is it to comply with the CII during the first years)?

There is a correlation between technical efficiency and operational efficiency but not
causality. The annual carbon intensity reductions achieved by a ship will be highly
dependent on how it is operated, not just its technical efficiency.
Operational efficiency has no influence on the EEXI.
12.2. If a vessel is EEXI compliant, is she then automatically CII compliant?

No. EEXI is a technical efficiency requirement under reference conditions. Operational

carbon intensity is a real-world requirement to reduce carbon intensity in operation. A ship
can comply with EEXI or EEDI, and this may influence but will not determine compliance
with CIIs.
13. EEXI and CII Verification
requirements.
13.1. IHM, MRV and DCS may be verified by any RO - not necessarily the ship’s own
Class Society. Does the same apply to EEXI, SEEMP and CII?

This depends on the authorisations from the flag State Administration to the ROs.
13.2. Who is authorised to do the CFD equivalent to model tests - is it class,
International Towing Tank Forum bodies or any CFD facility? Will class accept such
calculations?

Any entity can do CFD calculations, provided those calculations are calibrated against
parent hull sea trials/model tests and carried out using the recommended procedures
documented by the International Towing Tank Conference. IACS is in the process of
developing a common methodology for numerical calculation of the reference speed.
13.3. Do we need to do the calculations ourselves and then these to be approved by
the RO/Class?

Verification of calculations for EEXI and annual operational carbon intensity indicator
needs to be completed by the Administration or a duly authorised RO. Any suitably
qualified entity can do the calculations. LR Maritime Performance Services is offering this
as an advisory service.
14. IMO Strategy, future
considerations and other
decarbonisation schemes.
14.1. It is noted that the European Union (EU) has established a Green House Gas
(GHG) reduction of at least 50% by 2030. In this respect, will LR take these regional
requirements into account when verifying the EEXI calculations?

No. Regional requirements have no bearing on the attained EEXI or a ship.

14.2. Will ships that comply with the CII required trajectory (rating C) be on the IMO
2050 decarbonisation trajectory (Poseidon principles)?

No. A rating of C does not mean that a ship is on the IMO 2050 decarbonisation trajectory. It
may be recalled that the Poseidon Principles trajectory is aligned to the absolute target for
2050, not the 40% reduction in AER by 2030 in the Initial IMO Strategy on Reduction of GHG
Emissions from Ships.
14.3. Has the MEPC discussed alternative methods of reducing CIIs apart from
technical/mechanical improvements e.g. carbon credit offsets etc?

No. Offsets are currently incompatible with the Initial IMO Strategy on Reduction of GHG
Emissions from Ships which seeks to achieve absolute, in-sector emission reductions, not
offset emission reductions.
14.4. Are the reduction factors imposed on the basis of meeting the IMO's 2030
carbon intensity ambition or 2050 absolute reduction ambition?

The IMO’s 2030 carbon intensity ambition.

14.5. Are the reduction factors (22% by 2030) imposed on the basis of meeting IMO's
2030 carbon intensity ambition or IMO's 2050 absolute reduction ambitions?

We do not know what the reductions to 2030 will be yet, but the anticipated minimum is a
22% reduction. Please also see 6.1.
14.6. In terms of the IMO vs EU requirements, are they converging or diverging?

Diverging. The IMO is currently focused on carbon intensity. The EU is focused on absolute
lifecycle GHG emissions.
14.7. How much alignment is there between the AER trajectory as per Poseidon
principles and the newly adopted one?

The two trajectories are not aligned. The IMO is working towards a 40% reduction in carbon
intensity by 2030 relative to 2008, whilst the Poseidon Principles use a trajectory for carbon
 intensity which reflects the IMO ambition to reduce absolute GHG emissions by 50%
relative to 2008 in 2050.
14.8. Within the CII, cargo data will also be documented on a voluntary basis. How is
it planned to use this for CII? Will it change from AER to EEOI at a later stage?

AER will be used for verification of compliance at least until 2026. Other voluntarily
reported metrics, including EEOI, are expected to be collated and used to determine
whether alternative metrics can be used to better drive carbon intensity reduction from
2027 onwards. It is important that the industry uses the opportunity to report alternative
metrics so that the dominance of AER and cgDIST can be challenged.
14.9. You described the proposal for a $100/t levy as being both "widely supported"
and "divisive". Can you clarify how that proposal was received?

Many member States expressed support for the proposal or the principle of considering
market-based measures, but equally a significant number of member States are very
concerned about the impacts of carbon pricing.
14.10. What about these new startups and carbon capture? i.e. Dauphne etc. Are they
feasible?

Carbon capture is not provided for in the EEDI/EEXI framework. The issue was raised at
MEPC 76 but member States expressed concern about the lifecycle handling of captured
carbon.
Current CIIs determine emissions using “fuel consumed x carbon factor of fuel”. There is no
direct measurement of emissions provided for and, therefore, no scope to consider the
contribution of carbon capture at this stage.
14.11. By reducing speed, the voyage time increases, which in turn increases
emissions. Will there be an overall reduction?

Analysis of the impact of operational carbon intensity between 2023 and 2026 will
determine whether or not this is the case. Because emissions roughly reduce with speed to
the power of 3 (i.e. at a much faster rate), even accounting for extra time at sea, the
emissions will reduce at a rate of speed reduction to the power of 2 approximately.
14.12. The impact of speed reduction will mean more ships or bigger ships are required
for the same cargo/miles. I presume this is factored in?

No, it is not. The regulations have been developed purely focused on the effects on
individual ships rather than the systemic impacts on shipping.
14.13. When (or if) do you expect the regulations to change to capture other vessel
types (e.g. specialist, survey, fishing) and/or vessels under 5000gt?

At present extensions to vessels below 5000gt is an option, but to do so would require

reference lines. Currently the IMO methodology is to generate reference lines from the IMO
 DCS data and that means only for vessels of 5000gt and above. Any expansion of the
provisions would require additional, preliminary data collection.
14.14. What prospect is there for a steeper reduction trajectory being implemented
before 2026?

This is unlikely. The IMO needs a period of stability to collect data and prepare for a review
by 1 January 2026.
14.15. How do you see the EU Emissions Trading System having an impact on Co2
reduction?

The impact of the EU ETS will depend on the extent to which it encourages changes in fuel
selection and use behaviours. That in turn depends on the carbon price. The highest
recorded carbon price in the EU ETS is US$60; well below any estimates of climate aligned
carbon prices. Therefore, the potential impact is low, hence the proposed Fuel EU Maritime
Regulation.
 We're here to help.

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Register office.

https://info.lr.org/contact-us-eexi

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