Why IMO compliance demands a new approach

Why IMO compliance demands a new approach

October 2, 2023
Time to read: 8 minutes
Kongsberg Digital

The revised 2023 IMO GHG Strategy adopted in July aims for net zero by 2050. But a checkpoint for a 30-40% decrease in GHG emissions is already coming soon in 2030. The Carbon Intensity Index (CII) is here and will only get tougher with each passing year. Signals are also being sent by the IMO that higher fuel standards and pricing for GHG emissions are in the works. All of this means the costs and consequences of non-compliance are sure to increase. Now is the time for a new approach that can secure your fleet’s compliance and improve competitiveness and profitability in the long term.

Don’t underestimate CII

Bearing put out a stark warning that a larger number of vessels would receive failing Carbon Intensity Indicator (CII) grades in 2023 than even the IMO itself expects. And if you thought this first year with CII is challenging, it’s only going to get tougher as the reduction factor increases by about 2% per year.

Failing CII grades can sink your profitability and competitiveness with:

1. Decreased commercial attractiveness:
Charterers may prefer vessels with better ratings.

2. Increased insurance premiums:
The costs of insurance for vessels with failing CII ratings may increase.

3. Lower priority for port slots:
Vessels with poor CII ratings may be passed over for preferred port slots around the world, and port fees may be increased for these vessels.

As a shipowner or operator, how can you ensure compliance while remaining competitive? Start with facing the present and future CII challenges with an open mind for new ways of working.

Navigate the uncharted waters of the latest IMO regulations

The revised IMO GHG Strategy for 2023 hints that the consequences of failing to reduce energy efficiency will soon increase – and already next year, shipping will be included in the European Union’s Emission Trading Scheme (EU ETS). In practice, this means you will need to purchase and use EU ETS emissions allowances for each tonne of reported CO2 or CO2 equivalent emissions that fall in the scope of the system.

The development of the 2023 IMO GHG strategy basket of candidates specifies mid- to long-term goals of a new maritime fuel standard that will surely place new demands on fuel efficiency. A pricing mechanism for GHG emissions also appears likely, which would increase the costs of not reducing emissions, alongside rising costs for carbon-neutral fuels.

The old way won’t save you from a tidal wave of regulations

Cutting fuel consumption is often hailed as the greatest factor in reducing maritime GHG emissions because the combustion of fossil fuels – in particular, heavy fuels like bunker oil – is the primary source of emissions in the industry. Until now, you may have been getting by with some marginal improvements using traditional methods. But with a tidal wave of tougher regulations forming on the horizon, how much longer can you expect to stay afloat?

The only viable way to ensure passing CII grades and avoid costly IMO non-compliance penalties is to break with the past and consider a new approach: digitalisation. Digital tools open up revolutionary ways to cut fuel consumption, decrease carbon intensity and streamline CII reporting. By improving fuel efficiency and reducing consumption, ships can emit fewer greenhouse gases per unit of cargo transported or distance travelled.

See IMO compliance as an opportunity instead of a challenge

Without digitalisation, IMO compliance would require scaling back operations and, in a worst-case scenario, might eventually push owners and operators to literally abandon ship. Paired with a tough regulatory environment and this pressure to either change or fade away, significant changes to the way you work today may cause concern. But, in reality, you have so much to gain from embracing digitalisation:

- Radically and continuously improve your fleet’s energy efficiency.

- Maintain and even improve delivery levels with features like route optimization and weather indications.

- Reduce operating costs and emissions in parallel.

Aside from simply avoiding non-compliance costs, just imagine how much more competitive, profitable and sustainable your fleet can be when digital tools enable you to cut costs without having to cut revenue. Not only can you reduce fuel costs sustainably for the long term, but you can also improve and optimise maintenance and other workflows.

Learn how to embrace change and start digitalising

Are you ready to embrace change and take a closer look at how you can start digitalising your fleet? Learn more about the possibilities and digital solutions available in maritime digitalisation.

Are you worried about how to get started, and how much it might cost to digitalise your fleet? Discover a brave new world of automated and standardised CII reporting and digital tools to help you optimise fuel consumption, hull trimming, routing, and weather indications in the guide "The imperative of maritime digitalisation and how to move forward". This hands-on guide also shares insider insights on the best ways to take your first steps into digitalisation so you can master IMO compliance, cut costs and future-proof your fleet.

About the author

Why IMO compliance demands a new approach

Kongsberg Digital

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