Stolt questions CII viability

BACK TO REALITY

EMISSIONS • IMO’S EMISSIONS REDUCTION STRATEGY TAKES ANOTHER STEP THIS MONTH BUT SOME SHIPOWNERS FEEL THAT THE CII RATING IS A BLUNT INSTRUMENT THAT COULD BACKFIRE

THE INTERNATIONAL MARITIME Organisation (IMO), as an agency of the UN, is committed to pursuing policies that will help deliver on the UN’s Sustainable Development Goals (SDGs). For the maritime industry, that has meant a steady stream of new regulation that aims to reduce emissions from shipboard sources, improve fuel efficiency and reduce the impact on the marine environment.

While all this comes at great expense to industry, responsible shipowners recognise their duty to protect the environment – while also running their vessels efficiently and keeping their shareholders happy. That has included reducing sulfur oxide emissions through the use of exhaust scrubbers and ultra-low sulfur conventional fuels, designing new ships with optimised hull forms, and investigating the use of alternative fuels such as biofuels, LNG, ammonia, hydrogen and methanol. Industry appreciates the global approach taken by IMO, which helps create a level playing field and gives operators a single set of targets to achieve.

IMO’s latest tool to tackle emissions is the Carbon Intensity Indicator (CII), introduced this month to give a measure of overall ship efficiency during operations. From 1 January 2023 it is mandatory for all ships to calculate their attained Energy Efficiency Existing Ship Index (EEXI) to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational CII and CII rating.

In simple terms, every ship receives an energy rating based on its efficiency ratio, which measures the distance travelled, its speed as well as the intensity of the use of the vessel. Ratings are given on a scale of A to E, under which D and E ships are considered non-compliant and are only allowed to operate for a short period (three years for D or one year for E), before they must be corrected to a midpoint C rating.

On the face of it, this seems a fine ambition. However, by taking a ‘one-size fits all’ approach, some owners believe IMO is placing an undue burden on some sectors of the maritime industry. Stolt Tankers, for example, says CII will cause headaches for chemical tanker operators and could even be counter-productive in terms of reducing carbon emissions.

DIFFERENT STROKES In basic terms, travelling more miles in load for less fuel consumed will improve a ship’s CII rating. “This seems to be fairly straightforward and works for most of the main ship types,” says Maren Schroeder, managing director of Stolt Tankers. “However, the sailing pattern of a chemical parcel tanker is far more complex compared to product or oil tankers, and this has not been accounted for in the current CII regulations.”

Gabriel Poritz, business partner sustainability and decarbonisation at Stolt Tankers, adds: “It’s important to note that the CII rating is not about absolute emissions or efficiency; it relates to the nautical miles sailed and varies with the operating and trade pattern of each ship. So, ballast voyages, sailing time, slow speed and optimising hull, propeller and engine conditions all help achieve a good rating, whereas long port stays have a negative effect.”

Chemical tankers spend a disproportionate amount of time in port – up to 55 per cent of their operating days in some cases. The nature of the parcel trades is that tankers may carry, on average 10 or 12 different cargoes and, while in port, will need to shift from terminal to terminal in order to discharge and load these various products. By comparison, product tankers usually carry out a full load or discharge at one terminal, which takes a much shorter period of time.

“Even within our own fleet, if we compare the same size and specification of ships, the CII rating may vary,” says Schroeder. “A ship that sails in the acid trade, for example (which has similar trade patterns to product tankers), will get a B rating, whereas its ‘twin’ that sails in the parcel trade, with multiple port transitions, will get a D rating.” REAL-WORLD PROBLEMS The second issue with the CII regulations is that, in their current form, they do not include adjustments to data for events that are outside of an owners’ control, such as inclement weather or a force majeure. “Closure of the Suez Canal in 2021 affected global shipping lanes for a week, and the resulting port congestion issues continued for months afterwards,” explains Poritz. “The Port of Houston regularly shuts down its shipping channel due to dense fog and ships are still being quarantined due to Covid, especially in China. In all these cases, ship operators and owners can do nothing to prevent their CII ratings plummeting.”

Schroeder believes the options for achieving compliance in the chemical tanker sector will remain limited. “We can create unnecessary additional GHG emissions by swapping out our B and D rated ships annually and adding a ballast leg. Or we can use newer, more energy-efficient ships in trades with long port stays and older ones in trades with long voyages and ballast legs. We do the opposite now to reduce emissions.

“Stolt Tankers is committed to our own decarbonisation ambitions to reduce carbon intensity by 50 per cent by 2030, relative to 2008 levels, and to achieve carbon neutrality by 2050. And we welcome and do everything to support industry-wide carbon reduction measures and targets,” Schroeder adds. “But it cannot be right that, to comply with the proposed CII regulations, we are forced to consume more fuel and emit more CO2.”

WAYS TO IMPROVE Stolt Tankers thinks there are three things IMO can do to improve the accuracy and effectiveness of the CII regulations. Firstly, IMO should clarify if biofuels can be used and how their emissions should be measured – direct emissions from the ship or a well-towake approach. This could affect whether or not shipowners calculate that retrofitting their ships to use such fuels is economically viable.

Secondly, for those ships that have low ratings, such as chemical tankers, IMO should give more consideration to corrective actions for each market segment to take account of different trading patterns. Allowing flag states some discretion to apply real-world solutions that make sense in their segment, and offer the most benefit to the environment, will help to move the whole industry towards our collective aim of reducing global emissions as soon as possible.

Finally, IMO should agree a definition for force majeure and other events that are outside the control of operations and define a process for any ship affected by such events to submit a request for an element of its reported period to be omitted from the calculation of its CII rating.

IMO and its member states are actively engaged in a revision of the Initial IMO Strategy on Reduction of Greenhouse Gas (GHG) Emissions from Ships, first agreed in 2018, and anticipate adopting a revised Strategy in mid-2023. There is, then, some possibility that the requirements will be amended, though IMO is firm in its target of phasing out GHG emissions from shipping by the middle of this century. www.stolt-nielsen.com

CHEMICAL PARCEL TANKERS HAVE AN INBUILT

DISADVANTAGE WHEN IT COMES TO CALCULATING CII