NATHAN MILLS MARINE FUEL DESK OVERVIEW

As of January 2024, the EU ETS has been extended to cover CO2 emissions from all large ships (of 5000 gross tonnage and above) entering EU ports, regardless of the flag they fly.

The system covers:

• 50% of emissions from voyages starting or ending outside of the EU (allowing the third country to decide on appropriate action for the remaining share of emissions);
• 100% of emissions that occur between two EU ports and when ships are within EU ports.

The EU ETS covers CO2 (carbon dioxide), CH4 (methane) and N2O (nitrous oxide) emissions, but the two latter only as from 2026.

Emissions from maritime transport are included in the overall ETS cap, which defines the maximum amount of greenhouse gases that can be emitted under the system. The cap is reduced over time to ensure that all ETS sectors contribute to the EU’s climate objectives. This will incentivise energy efficiency, low-carbon solutions, and reductions of the price difference between alternative fuels and traditional maritime fuels. [Reducing emissions from the shipping sector - European Commission (europa.eu) 23/01/2024]

The EEOI is the total carbon emissions in a given time period per unit of revenue tonne-miles. Variations in the index are mainly caused by three factors: the technical efficiency of the ship, the amount of cargo transported per unit of time, and variations in speed. [Energy efficiency study on EEOI (safety4sea.com) 23/01/2024]

The CII determines the annual reduction factor needed to ensure continuous improvement of a ship's operational carbon intensity within a specific rating level. The actual annual operational CII achieved must be documented and verified against the required annual operational CII. This enables the operational carbon intensity rating to be determined. [EEXI and CII - ship carbon intensity and rating system (imo.org) 23/01/2024]

A ship's attained EEXI indicates its energy efficiency compared to a baseline. The attained EEXI will then be compared to a required Energy Efficiency Existing Ship Index based on an applicable reduction factor expressed as a percentage relative to the Energy Efficiency Design Index (EEDI) baseline. It must be calculated for ships of 400 gt and above, in accordance with the different values set for ship types and size categories. The calculated attained EEXI value for each individual ship must be below the required EEXI, to ensure the ship meets a minimum energy efficiency standard. [EEXI and CII - ship carbon intensity and rating system (imo.org) 23/01/2024]