Six Shipping Industry Groups Come Out Swinging Calling for CII Reforms

 

Six of the major shipping industry trade groups representing everything from bulk cargo to containers, tankers, and passenger shipping, have joined together to highlight the shortcomings of the International Organization’s Carbon Intensity Indicator (CII).  While there has been broad talk of the issues within the structure of the CII which became effective on January 1, the six groups have joined together to highlight the perceived “inadequacies” of the program.

CII applies to ships of 5,000 gross tonnage and above and according to the IMO it was designed to aid ship owners and operators by determining “the annual reduction factor needed to ensure continuous improvement of a ship's operational carbon intensity.” Based on 2023 data, the first rating for each ship is being issued and many have warned that it could impact the economic livelihood of ships garnering the lowest rankings. Further, the program requires a ship rated D for three consecutive years, or E for one year, to submit a corrective action plan to show how it will achieve a C or higher rating.

“To achieve the IMO’s intent, the CII scheme must reflect the true efficiency rating for each ship.,” the policy statement by the six organizations declares. “A one-size-fits-all instrument, as the CII is currently designed, has inherent flaws that works against its intended purpose of supporting our collective objective of reducing GHG emissions across the maritime industry.”

The groups which include BIMCO, CLIA, Intercargo, InterManager, the International Chamber of Commerce, and Intertanko are calling on the IMO to amend the current CII system to avoid unintended consequences that are contradictory to reducing overall GHG emissions. At the same time, they are also calling for public administrations, flag states, ports, and destinations to acknowledge that the current CII system has inherent shortcomings recognized by the IMO and may not accurately reflect the true environmental performance of ships.

The IMO has acknowledged “significant concerns” raised about the program. Marine Environment Protection Committee (MEPC) in March 2024 noted that possibly inaccurate or misleading CII ratings could result in unintended adverse consequences for some ships, particularly for business-critical decisions made by the finance, insurance, chartering, brokering, and port sectors. Recognizing “shortcomings and unintended consequences of the CII mechanism,” MEPC said the issues should be addressed in the CII review, but under the IMO rules the review only must completed by 2026.

In calling for immediate actions to reform the CII system, the groups highlight that the IMO has already received 78 proposals submitted by every sector of shipping all calling for amendments to the CII. Representing the shipping industry, the six groups declared they will be part of the solution and will engage with the MEPC as the review commences in September. 

The groups are promising to propose revisions to the current CII methodology and formula that will provide a better indicator of a ship’s actual efficiency. In addition, they are also calling for those who are considering the CII rating as a potential for decision-making in the future to work closely with shipowners and flag administrators to determine whether the CII rating accurately reflects a ship’s environmental performance before making decisions.