AER, CII, HNY
There is yet more criticism in store for maritime regulators at the end of a year that has seen industry and NGOs alike rail at the IMO’s failure to make a ‘zero emissions’ ambition statement at the recent MEPC meeting.
This time, Roar Adland, shipping professor at the Norwegian School of Economics, has considered the shortcomings of the Annual Efficiency Ratio (AER), the key measure used to define how ships perform when the Carbon Efficiency Indicator (CII) starts in just over a year.
The AER was developed by green ship finance initiative the Poseidon Principles and adopted by the IMO, which will use it to apply energy ratings from A to E to all ships from January 1 2023.
Applicable to ships above 5,000 gt the CII measures the operational carbon intensity of a vessel, translating into carbon emissions per unit of transport work or the mileage covered per year.
A vessel’s carbon intensity can be calculated using either the AER or the voluntary Energy Efficiency Operational Indicator (EEOI). The AER calculates a vessel’s operational carbon intensity by dividing a vessel’s annual carbon emissions by its total annual deadweight distance, irrespective of whether the vessel is sailing laden or in ballast.
In a post on LinkedIn reported by news website Splash 247, Dr Adland asked readers to consider two identical sister vessels operating at the same speed. One has no cargo onboard and sails in a circle outside Singapore for a year. The other one crosses the North Atlantic for a year and is laden for at least half the time.
“The vessel that produces zero transportation work may end up having the lower AER and the highest corresponding CII, merely because it sails in benign waters (though the effect of lower ballast draft may offset this, so the outcome is not certain),” Adland wrote, pointing out that the IMO Data Collection System does not collect the cargo data necessary to calculate the true emissions per tonne mile.
Adland’s point is that the emissions from a vessel are to a large extent a function of its sailing environment and commercial decisions outside the control of the shipowner. “Differences in emissions due to technology are secondary,” he added.
He went on to wonder whether the AER could in fact be worse than having no regulation in the first place. “Any environmental legislation that neither encourages operational efficiency nor controls for sailing conditions is a bad piece of legislation,” he wrote. “It could even make things worse by allowing the industry to point to such meaningless measures and say ‘Look, we are doing something!’ and proceed to rest on its laurels.”
This is not the first time the CII has come in for a kicking. A paper entitled ‘Paradox of international maritime organization’s Carbon Intensity Indicator’ written by academics Harilaos Psaraftis from the Technical University of Denmark and Shuaian Wang and Jingwen Qi from Hong Kong Polytechnic University, concludes that the CII requirements may increase carbon emissions of some ships in some situations.
Georgi Yorgakiev, in house legal counsel for K Line Bulk Shipping in the UK agrees that the AER could actually increase emissions. In choosing a carbon intensity indicator based on AER rather than one which measures carbon intensity based on actual cargo carried per tonne/mile, IMO has created a paradox, where an owner will be credited for deviating from the shortest route on a ballast voyage, to increase distance sailed, or by short loading cargo, he said.
A note on the website of marine engine maker Wartsila said: “This method typically underestimates carbon intensity because ships are not always fully utilized in terms of capacity and many ships (tankers, bulkers) operate on ballast legs for several voyages a year without cargo onboard.”
As so often, the origins of the compromise lie in the IMO’s need to enact global regulation using incomplete data and still preserve the commercial confidentiality on which shipping depends. Without more accurate trade and emissions data, the ability to improve energy efficiency is partial at best.
Mike Konstantinidis, CEO of Greece’s METIS Cyberspace Technology, argued that a carbon efficiency measure should take into account the cargo carried. “It is more important than ever to accurately report emissions per voyage, based on actual measurement signals from the vessels,” he said. “Fragmentary data by noon reports are of totally lesser quality and importance.”
As to whether the IMO might backtrack and change its stance on the AER, Adland was doubtful, telling Splash: “I do not think the IMO is an organisation that has ever walked back any piece of regulation, so I doubt they will see the light and try to do better.”