Home Offshore Energy How a CII approach to chartering might increase emissions and cost

How a CII approach to chartering might increase emissions and cost

In an effort to demystify the CII for our customers, Siglar developed the voyage CII. When comparing the estimated CII of a specific voyage to the estimated absolute emissions of the same voyage, some unintended consequences of the CII rating become apparent. In the coming weeks we’ll present you with common voyage examples highlighting how a CII approach in chartering can increase carbon emissions and cost.

The IMO’s Carbon Intensity Indicator rating introduced a global, easy to understand reference which brings much needed attention to operational carbon efficiency in shipping. This is a large and necessary step in the right direction.

However, the CII ratings have been met with criticism from many quarters. Our experience is that the CII does not provide professionals at the cargo side nor the ship side with sufficient incentives to support carbon efficient chartering decisions. Hence, the full potential of an operational measure to improve efficiency and reduce emissions is not realised.

Leaving cargo out of the CII rating discourages carbon efficient chartering decisions

The weakness of the current CII relates to the fact that the operational efficiency is based on Annual Energy Ratio (AER) calculations which disregard whether the ship is transporting cargo or not. Two consequences of leaving cargo out of the operational efficiency equation are:

  • Long haul trades are favored over short hauls, as emissions from port stays represent a relatively larger part of total emissions on short haul voyages.
  • Ballasting is favored over sailing laden, as a laden ship has higher consumption.

In such cases the CII rating can lead to sub-optimal chartering decisions and increased overall emissions. The CII can therefore work against the IMO’s intended purpose which is to reduce shipping emissions.

How a charterer’s decisions impact the CII

The best way to understand the consequences of day to day chartering decisions is to zoom in on single voyages. So, to help our customers understand how their chartering decisions impacted the CII, we developed the Voyage CII. When comparing the CII rating of a voyage to its absolute emissions it is easy to find examples where CII rating and absolute emissions do not coincide.

The first example in this series, highlights how an MR voyage with a CII rating A can emit almost 4 times more CO2 than a voyage with rating B. Further examples are to come in the weeks to follow.

MR voyage:
Ship with CII rating A emits more carbon than ship with rating B and D
Three ships with CII rating and absolute emissions

The above example is made from a spot charterer looking to load 37000 tonnes of CPP in Rotterdam, discharging in La Coruna between 11-25 November 2022. The Siglar Ship Finder located 61 potential ships. Ranking the ships by absolute emissions resulted in the below list, where three ships are highlighted to exemplify how the CII rating does not always reflect absolute emissions.

Screenshot Ship Finder
Screenshot of the Ship Finder exemplifying the difference between voyage CII rating and absolute emissions.
Ship number 1 on absolute emissions ranking gets CII rating B

The most carbon efficient ship is a newer ship located in Rotterdam. With no ballast leg emissions included, it is expected to emit 275 tonnes of CO2 from discharge to discharge. However, the ship gets a voyage CII rating B because it is a short haul voyage with no ballast leg.

Ship number 8 on absolute emissions ranking gets CII rating D

The ship ranked as number 8 is expected to emit 377 tonnes of CO2 on the voyage. It is an older ship doing a short haul voyage with no ballast, and the voyage CII rating is D.

Ship number 29 on absolute emissions ranking gets CII rating A

Ship number 29 on the absolute emissions ranking does however get the voyage rating A. This is an older ship, but the relatively long voyage from Taranto Italy with no cargo is rewarded in the AER calculations and is why this ship gets a top CII rating.

More examples to come in the following weeks. Sign up for our newsletter to get acces to new stories‍

Why absolute emissions is the absolute measure for charterers

From the charterers’ point of view, understanding CII variations and how the cargo in question would contribute to each ship’s annual CII is useful in charter party negotiations. However, if the aim is to reduce emissions and the related carbon cost, absolute numbers,measured in tonnes of CO2, are the appropriate indicators. Measuring and estimating absolute emissions allows charterers to understand the carbon consequence of their shipping decisions and to make carbon efficient chartering decisions.

From a charterer’s perspective, the best moment to avoid unnecessary shipping emissions is when planning the voyage. Measuring in absolute emissions allows the charterer to estimate the carbon consequence of pre-fixture shipping decisions, like how the ballast leg and cargo destination impacts emissions. Understanding the emissions impact and the related carbon cost of the ballast leg and the cargo destination might trigger the use of flexibility in the chartering program. Using this flexibility leaves opportunities to slash emissions at low cost and at large scale.

Source: Siglar Carbon

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