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IMO's EEXI regulations

Updated: Apr 2, 2022

During the recently concluded Marine Environment Protection Committee (MEPC 75) meeting in November, IMO has duly approved the amendments to Marpol Annex VI. On a larger context, it is not sure how international shipping will fare out in addressing the global concerns related to the Green House Gas (GHG) emission of the world when marine transportation accounts for just over 2% of the world’s GHG emission!

Even though other points were discussed in the meeting, I am particularly interested to discuss the new ambitious targets about carbon intensity from international shipping. The new term which has come into being during the discussion is EEXI. It stands for Energy Efficiency Existing Ship Index. While Energy Efficiency Design Index(EEDI) for the new ships has been in force since 2013, IMO has taken a big leap by planning to enforce the existing EEDI concept on all the ships from the year 2023 onwards. It is important to note that an additional emission reduction factor of up to 50%(depending on the ship type and size) from the existing EEDI ref. value is also being applied, which makes the target highly ambitious. Especially for the vessels which were built before 2013 and the pre-EEDI era.

In some cases, it is going to affect even the newer vessels because of the stringent requirements by the apex body. It is to be seen how ship operators with existing older tonnage are going to comply with the impending regulation. The maximum impact will be seen on the big fuel consumers like container vessels and lower on Ro-Ro & Ro-Pax ones. IMO has aimed to reduce the carbon intensity of international shipping by 40% in 2030 compared to 2008 intensity levels. With EEDI in place, there was an advanced option offered to the ship owners to buy/build the vessels in line with the expectations laid out by IMO.

The newly approved amendments at MEPC 75 have taken away that option from the shipowners now. Either ship will have to comply with the difficult targets or get recycled. On another note, it might modify the supply-demand dynamics in the shipping market and can have a significant detrimental effect on the small owners who might not have the adequate purchasing power to procure new ships and recycle older ones to achieve the EEXI targets. According to the earlier EEDI plan for NEW SHIPS(not existing), there was a step-wise reduction of 10% in EEDI ref. value every 5 years. Below is the stepwise table for reference.

EEDI Ref Value and EEXI required values are calculated using the below formulae:

* Up to 0.5 for big container ships(old and new) and 0.05 for Ro-Ro & Ro-Pax vessels

Let’s evaluate the impact using an example of a 39000 DWT bulk carrier.

EEDI Ref Value = 961.79 X (39000)^-0.477

  • Ship Type Constant 1 for the bulk carrier: 961.79 (set by IMO)

  • Ship Type Constant 2 for the bulk carrier: 0.477(set by IMO)

EEDI Ref Value = 20.8 gms- CO2 per tonne-mile

Required EEXI(from 2023) = (1 - 0.2**) X 20.8

**Reduction Factor for bulk carrier up to 40000 DWT: 0.2(set by IMO)

Required EEXI(from 2023) = 16.6 gms-CO2 per tonne-mile

It implies that bulk carriers of 39000 DWT will be permitted to emit no more than 16.6 gm CO2 per tonne-mile when carrying out the business. This will be valid for all the vessels whether built before or after 2013. New vessels may or may not achieve the targets but older vessels will likely face a tough challenge in meeting the requirements. Vessels that were built in an era when a legally binding climate change treaty on EEDI was not even in existence, this is not going to be a comfortable onward journey.

What does it mean to tonnage suppliers?

Come 2023, besides other factors, there may be three important aspects related to the EEXI element of Marpol Annex VI for owners to consider:

  1. Where attained EEXI/EEDI is equal or below required EEXI value – It will be business as usual without much to worry about this regulation. Operators/owners with a younger fleet will most likely be in this situation.

  2. Where attained EEXI/EEDI is above the required EEXI value by a small margin – Depending on the age, operating profile, and appropriate business case applicability, owners will have the opportunity to better the emission performance using different techniques like limiting power on the main engine, de-rating, using alternate fuel like LNG, installing energy-saving devices to improve the operational efficiency of the vessels.

  3. Where attained EEXI/EEDI is above the required EEXI value by a considerable margin – Again, depending on the age, operating profile, and appropriate business case applicability, the owner will have to consider recycling the inefficient tonnage to meet the EEXI target in 2023.


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