Dry CargoEnvironmentRegulatory

Dry bulk critics of CII mount

Dry bulk critics of the impending Carbon Intensity Indicator are broadcasting their complaints in ever greater volumes weeks ahead of the start of the International Maritime Organization (IMO) ruling.

Both INTERCARGO, the sector’s main lobby group, and Oldendorff Carriers, one of the largest names in dry bulk, came out with detailed criticism of the new measure yesterday.

INTERCARGO stated that it believes that the current CII framework should not be used as a benchmark for IMO’s medium-term measures.

“CII cannot be used to achieve the desired decarbonisation goals as under real life operating conditions it will not deliver equitable, transparent and non-distorting emissions’ reductions,” INTERCARGO stated in a release, something picked up apart in detail by a study from Germany’s Oldendorff.

The CII formulas can be gamed

A number of factors can have a significant adverse impact on a vessel’s CII rating, most of which are outside the vessel’s control, INTERCARGO maintained. Examples include adverse weather, voyage distance, port waiting times, port infrastructure, and charterers orders.

“Paradoxically when considering voyage distances and port waiting times, vessels with longer travel distances can produce more emissions but have a better CII rating when compared to vessels travelling shorter distances and producing less emissions,” INTERCARGO stated.

Oldendorff, meanwhile, issued a detailed presentation making the argument that the shipping industry should not rely solely on the formulas in the CII regulation, rather shipping must take a holistic view and focus on reduction of absolute emissions.

“The CII formulas in the regulation are not holistic, can be gamed and there are many real-world instances where strict adherence and focus on the CII rating letter grades will do more damage than good,” Oldendorff stated, going on to present a variety of voyage situations where the legislation would not work properly.

For example, shipowners and operators are already trying to increase fleet productivity by reducing empty legs, so they can carry more cargoes per year. Even though a ship consumes more fuel during laden voyages, the improved utilisation decreases the emissions per ton carried, which is beneficial for the environment and should be the objective.

However, such improved efficiency is being penalised with a bad CII rating, whereas if an identical sister ship engages in inefficient trading and lower productivity, this leads to higher emissions per ton carried, but this vessel is being rewarded and encouraged by a good rating.

As the CII formula uses distance in the denominator, longer voyages are favoured and shorter round voyages are penalised, Oldendorff argued, going on to predict that the likely consequence will be that less efficient ships will trend toward long voyages, emitting more, while more efficient ships stay in the shorter trades. Meanwhile, there is no motivation to shorten trade lines in the name of reducing emissions.

Furthermore, Oldendorff argued the CII rating will be negatively affected by long waiting times or slow port operations, even though this is mostly beyond the carrier’s control. Some owners may resort to “irresponsible” steaming around in circles instead of waiting at anchor, Oldendorff suggested. This will improve their CII rating but will also increase annual GHG emissions.

Access the full Oldendorff presentation by clicking here.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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