Cruise is a sector apart from the rest of the shipping industry, and it wants the International Maritime Organization to acknowledge that.

The sector is seeking changes to the pending carbon intensity rules to reflect the fact that its ships operate very differently from cargo vessels.

Cruise ships spend much longer in ports and generally have much shorter journeys between them.

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This puts them at a disadvantage as the IMO’s Carbon Intensity Indicator parameter for the cruise sector drafted in 2021 relies on a formula that divides carbon dioxide output by gross tonnes multiplied by distance travelled.

The Cruise Lines International Association (CLIA) argues that the distance variable falsely indicates very high carbon intensity that would put cruise ships beyond allowed limits because they spend almost one-third of their voyage time in port and take much shorter trips compared with cargo vessels.

The CLIA has asked for a change to the rules so that port times for cruise ships that spend more than 20% of their time in port are excluded.

In April 2022, it requested that the IMO insert this port time correction factor (PTCF) within the proposed CII guideline, to be implemented in 2024 and tightened in 2026.

The association said the PTCF would remove the “perverse incentive” for cruise ships to travel further to improve CII results.

However, the IMO’s Marine Environment Protection Committee’s correspondence group rejected the proposed condition in July.

The sector supports the IMO’s efforts to eventually eliminate greenhouse gas (GHG) emissions, but insiders describe the proposed CII regulation as “counter” to its goal to reduce absolute GHG emissions.

“CII was designed for the bulk of the shipping industry that does long-haul transits. The cruise industry does not operate in this manner,” one source tells TW+.

“Although during a port visit the absolute carbon is much lower than the carbon generated while transiting, the carbon intensity is much higher because the distance being travelled in port is zero.”

The CLIA wrote in a document to the IMO: “The PTCF presents a reasonable solution to address the identified perverse incentive for cruise passenger ships while maintaining the intent of the existing CII measure.

“The PTCF mitigates the identified issues while incentivising efficient operation both underway and in port.”

In response to the MEPC’s rejection of the proposed PTCF, the CLIA says it will work with experts and IMO member states to draft a cruise CII metric that it hopes can be accepted at the MEPC’s 79th session in 2023.

“Our goal is to develop a metric which stays true to the intention of the IMO [GHG] strategy without the perverse incentives associated with the existing CII cruise calculation method,” the association says.

Cruise operators have little to say publicly about the pending CII regulations or the rejection of the PTCF.

Royal Caribbean, which owns 64 ships, tells TW+ it is preparing to meet the CII regulations when they go into effect. “To do so, we have been closely working with our marine and deployment teams to optimise our routes for maximum efficiency and continuing our energy-efficiency programme.”

Carnival Corp and Norwegian Cruise Line Holdings, which together own more than 120 ships, declined to comment, but Norwegian referred to the CII regulation in its 2021 environmental, social and governance report.

“We are currently working through the implications of CII and EEXI [Energy Efficiency Existing Ship Index],” the report said. “The requirements are still evolving and [we] have engaged third-party advisors to assist us in this process.”

Norwegian says it has committed to buying enough carbon credits from 2021 to the end of 2023 to offset 3m tonnes of CO2 emissions. It also improved fleet efficiency by 17% from 2008 to the end of 2019.

The cruise sector understands that the PTCF is not a perfect solution, but rather a stopgap proposal to address distortions in the current CII definition.

How EEXI and CII work

The Energy Efficiency Existing Ship Index applies technical standards to cut carbon dioxide emissions by ships from 1 January 2023 based on the Energy Efficiency Design Index adopted by the IMO for newbuildings in 2020.

The Carbon Intensity Indicator (CII) will regulate existing ships above 5,000 gt from an operational perspective. It is worked out by taking a ship’s annual emissions from fuel used and dividing that by its capacity (deadweight or gross tonnage), multiplied by annual distance travelled in nautical miles.

The CII will be implemented via a new Part III of the Ship Energy Efficiency Management Plan (SEEMP) containing targets and an implementation plan that details measures to be applied.

From 2024, CII ratings will be assigned for the previous year ranging from the highest A to lowest C pass grades, while D and E results may be considered non-compliant.

Operators of ships rated D for three consecutive years or E for a single year will have to develop an approved plan of corrective actions to bring a vessel into compliance by the end of the next year.

The CII is based on 5% reduction in carbon intensity in 2023 relative to a 2019 base level. Its requirements will get stricter by 2% per year until 2026. The IMO has yet to decide on further levels.

Source: Paul Berrill/Edwin Pang