Camilla Søgaard Hudson
Bech-Bruun, Copenhagen
​​​​​​​CSM@bechbruun.com 

With the increased focus on climate change, a series of initiatives have been introduced to reduce greenhouse gas (GHG) emissions in the shipping industry. A combination of already existing requirements and new short, medium and long-term measurements will be implemented to achieve the International Maritime Organization's (IMO's) goal of halving GHG emissions by 2050.

Climate ambitions

In April 2018, the IMO voluntarily adopted an initial strategy on reduction of GHG emissions from ships compared with 2008 levels. The strategy involves reducing the carbon intensity of ships by 70 per cent by 2050, with an intermediate aim of a 40 per cent reduction by 2030. In addition, the strategy includes reducing GHG emissions from international shipping by at least 50 per cent by 2050 (also compared with 2008 levels) and completely decarbonising shipping as soon as possible.

The strategy adopted by the IMO is consistent with the European Union's climate ambitions and goals. The Paris Agreement set a temperature goal that requires a reduction in GHG emissions and so, the climate goals of the IMO strategy align well with the goals of the EU, in this context.

To achieve these ambitious goals, a combination of already existing energy efficiency requirements and new short, medium and long-term measures will be introduced. The IMO will first focus on the short-term measures, and subsequently, the medium and long-term measures will enter into force. The short-term measures are planned out to be adequate for reaching the intermediate aim of a 40 per cent reduction of carbon intensity in international shipping by 2030.

Already existing short-term requirements

Two already existing mandatory requirements adopted by the IMO and the EU respectively are the EU MRV Regulation (the 'MRV') and the Fuel Oil Consumption Data Collection System (the 'DCS'). The MRV – which stands for 'monitoring, reporting and verifying' – is part of the EU strategy for the reduction of GHG. CO2 emissions are to be monitored, reported and then verified. The scope of the MRV is ships of 5,000 GT or above sailing within the European Economic Area. Ships within the scope of the MRV must, inter alia, monitor their CO2 emissions and report the fuel used, cargo carried, port of departure and arrival and CO2 emitted. The company in charge of the ship is responsible for developing its monitoring plan.

The monitoring plan and reports must be submitted to an impartial verifier. Hereafter, the verifier will assess the report for conformity with the monitoring plan. If any misstatements or non-conformities are detected, the reporter must inform the company, and the company must correct these. If the company fails to do so, the verifier will issue a verification report stating that the emission report does not comply with MRV. If no misstatements or non-conformities are found, the report will be verified.

Like the MRV, the scope of the DCS is also ships of 5,000 GT or above. However, the DCS only requires ships to submit annual reports on fuel oil consumption to their flag state. The flag state verifies the data and transfers it to the IMO Ship Fuel Oil Consumption Database. Based on this, the IMO produces an annual report and summarises all the data collected.

Another already existing mandatory requirement is the Energy Efficiency Design Index (EEDI) adopted by the IMO. The EEDI is a measurement of the amount of CO2 a ship is allowed to emit per tonne-mile. The EEDI is only applicable to new ships and intended to ensure that they are designed to be energy efficient. For most ships, the EEDI is mandatory. The purpose of the EEDI is to have ships fitted with engines and equipment that are less polluting so that the ship emits less CO2 per tonne-mile.

The EEDI is based on an approach by which ships must improve their energy efficiency progressively over time. The idea is that, with the EEDI, technology and innovation are being forced to improve constantly.

New short-term measurements                                                       

In June 2021, additional measures were adopted. Two of these were the Energy Efficiency Design Index for Existing Ships (the 'EEXI') and a mandatory Carbon Intensity Indicator (CII). Both measurements will enter into force by January 2023.

The EEXI is a retroactive application of the EEDI to all existing ships above 400 GT, regardless of the year the ship was built. Unlike the MRV and DCS, this measurement is not built on a reporting and verifying system. Instead, the EEXI is intended to be a one-off certification for existing ships, and is comparable with the EEDI.

Contrary to the EEXI being a one-off certification, the CII is a yearly rating system for ships above 5,000 GT. Ships are given a rating of A to E every year, with E being the lowest rating. If a ship receives an E rating for a single year, or a D rating for three consecutive years, a corrective action plan needs to be developed.

The CII will – in grams of CO2 emitted per cargo-carrying capacity and nautical mile – measure how efficiently a ship is transporting goods or passengers. The yearly CII is calculated based on the reported DCS data, and ships are then given a rating on this basis. Towards 2030, it will be increasingly more difficult to achieve each rating.

SEEMP and Enhanced SEEMP

The Ship Energy Efficiency Management Plan (SEEMP) is an existing ship-specific tool that must be kept on board the ship. With the SEEMP, it is possible to reduce GHG emissions from ships, and improve efficiency and decrease fuel consumption. The SEEMP is mandatory for all ships of 400 GT and above. SEEMP is supposed to encourage the shipowner to incorporate new technology and ensure energy-efficient ship operation.

To achieve the 2030 and 2050 goals, a strengthening of the SEEMP has been introduced as a new measurement. The enhanced SEEMP includes mandatory content, such as an implementation plan on how to achieve the CII targets. This will only be relevant for ships of 5,000 GT or above that are subject to CII.                                                        

Medium and long-term measurements

The medium and long-term measurements are yet to be agreed upon, and they are most likely to require a lot of innovation and new technology. It is estimated that these measurements will account for at least 50 per cent of the change that needs to occur in order to achieve the 2050 goals.