MARPOL ANNEX VI

MARPOL was originally established to combat oil pollution and Annex VI was adopted in 2011 to address pollution due to greenhouse gases. The amendments to MARPOL Annex VI introduced in MEPC 76 aim to reduce the carbon intensity of international shipping using both technical and operational improvements to the energy efficiency of vessels. They are contained within resolution MEPC.328 (76) and come into force from 1 November 2022.

In 2013 Annex VI introduced the Energy Efficiency Design Index (EEDI) which impacted newbuilds. However, MEPC 76 aims to address the need to increase the efficiency of existing vessels by introducing the Energy Efficiency Design Index for Existing Ships (“EEXI”) and Carbon Intensity Indicator (“CII”) schemes. The EEXI is a technical measure that will come into force from 1 January 2023. The exact guidelines on the calculation and certification of EEXI are found in resolution MEPC.334/5(76). The technical EEXI is paired with the operational CII which is a representation of the greenhouse gas emissions that a vessel will produce in relation to both the quantity of cargo carried and the distance travelled.

To comply with the new EEXI shipowners may be forced to reduce engine power and speed. Further, the CII may require shipowners to reduce cargo intake and implement slow speeding measures. This results in several costs, both in terms of installing equipment onboard to increase efficiency, but also in terms of reduction of performance due to cargo shutouts and longer voyages.

The calculation and subsequent reporting of both the EEXI and CII will be completed during the year of 2023 with the first ratings being given in 2024. The energy efficiency ratings will range from A to E with the required grade being C or above. Should a ship be rated E, or D, for three consecutive years, the vessel will be required to submit a plan on how action will be taken to achieve a C grade or above. The IMO has encouraged stakeholders such as port authorities to provide incentives, advantaging ships graded at A or B. It is not yet clear whether these incentives will justify the additional financial expense to classify the vessel as grade A or B as opposed to the minimum grade of C.

BIMCO has begun to prepare charter party clauses that may be used to assist Owners and Charterers to comply with the amendments to MARPOL Annex VI. The carbon levies associated with the amendments may be viewed as a tax and, therefore, covered by existing charter parties but it is likely that a specific clause will be required to provide a more prescriptive approach. The Club will provide comments on this clause once it is published by BIMCO. 

MARPOL Annex VI has 100 Contracting States which are responsible for 96.65% of world merchant shipping, by reference to tonnage. These new amendments will have a far-reaching impact on the carbon intensity of the industry in the years to come.