In order to enable shipping to meet its emissions reduction targets, the IMO has set various energy efficiency standards which will need to be met by all ships, new and old, in the coming years:
The Energy Efficiency Design Index (EEDI)
All new ships must comply with the EEDI efficiency standard. There is a graded level by reference to a percentage improvement in efficiency. Currently, ships have to be 20% more efficient than those built in 2012.
From 2025 (or 2022 for some ships, including LNG carriers) a 30% increase in efficiency will be required.
The Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII)
All existing ships will need to meet these efficiency standards by 2023 (or earlier for some ship types).
The EEXI deals with efficiency by technological means and will necessitate technical upgrades to many ships, such as hull and rudder improvements.
The CII, meanwhile, focuses on operational aspects and seeks to ensure improvement of the ship’s operational carbon intensity. Ships will be rated A-D, and if a ship’s rating falls below C it will not be allowed to trade until corrective action is carried out. Ships will need to consider operational measures such as slow steaming and “just-in-time arrival” to address this, in the short term, and for longer term alternative fuels will need to be considered.
Read more about these schemes here.
The need for compliance with these schemes is likely to give rise to a number of contractual implications, which we will consider in more detail as 2023 approaches. Meanwhile, our overview of the green transition foreshadows some of the potential contractual considerations.