Ships and shipping companies that perform poorly on environmental metrics, such as the International Maritime Organization’s, carbon intensity indicator, are likely to become less attractive on the charter market, says an article published on Argus Media.
According to the annual rating
Under the CII, which goes into effect on 1 January 2023, each ship will have an annual rating of A to E based on its operational carbon efficiency, with A being the most efficient.
The Energy Efficiency Existing Ship Index (EEXI) is another carbon-focused metric from the IMO but focuses on the ship’s design efficiency and is intended as a “one-off certification,” said DNV. A ship’s EEXI is to be verified no later than a ship’s first annual survey on or after 1 January 2023.
Decarbonizing supply chain
Charterers are likely to prefer using lower-carbon emitting ships, as measured by the CII or the EEXI, because of increasing pressure from investors, financial institutions, and consumers to decarbonize throughout their supply chain.
The CII-based rating will “play a role for cargo owners when selecting ships for their transport operations,” said DNV.
The ratings may even create a two-tier shipping market, said SSY, a shipbroker.
“Several charterers have already indicated their intention to only charter vessels ranking A-C, raising the prospect of discounted markets for D and E ranked vessels,” the shipbroker said earlier this month.
Transparency on emission
If recent ship operations are any indication, then a significant chunk of the global fleet will not make the cut for such charterers come 2023. Only 74pc of the bulker fleet and 77pc of the tanker fleet would receive an A-C rating, applying the 2023 CII baseline to 2019 actual operations, according to SSY.
“With increased transparency on emissions, and the establishment of a carbon-intensity rating by the IMO, we can expect that poorly performing ships and shipping companies will be less attractive on the charter market,” said DNV.
In addition to potentially creating a two-tier chartering market, the implications from the CII and EEXI could raise ship scrapping.
“Older ships that are not easily upgraded to meet carbon-intensity targets risk becoming stranded assets,” said DNV. “We may see early scrapping of ships,” By Nicholas Watt.
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