The Carbon Intensity Indicator (CII)
The CO2-Label for Ships.

What if your ship fails to comply due to a D or E rating?

Ships that

• Receive a D rating for three consecutive years, OR
• Receive an E rating for one year,

must adjust their Ship Energy Efficiency Management Plan (SEEMP – Part III). This plan must then contain an improvement plan to raise the CII rating. Without an approved plan, the ship will not receive a Statement of Compliance (SoC) and may potentially not be allowed to sail.

The CII compels shipowners to modernize their ships faster, for example by optimizing speed, saving fuel, or switching to cleaner fuels.

What are the repercussions for non-compliance?

The CII is an operational measure whereby every ship above 5,000 GT receives an annual score, ranging from A (best) to E (worst). Ships with a rating of C or better are considered compliant.

The sanctions for achieving a poor score are primarily corrective measures rather than direct financial penalties (as is the case with the EU’s FuelEU Maritime regulation). However, this does not negate the fact that there will likely also be negative financial consequences arising from the market.

Mandatory Corrective Actions from the IMO

If a ship achieves a score that is too low, the following mandatory steps come into effect:

• E-rating (one year): The ship must immediately draw up an action plan with corrective measures.
• D-rating (three consecutive years): The ship must also draw up an action plan with corrective measures.

This action plan must be included in Part III of the Ship Energy Efficiency Management Plan (SEEMP) and must demonstrate how the ship intends to achieve the required C-rating (or better). This updated SEEMP must be verified before the ship’s Statement of Compliance (SoC) can be issued.

• The ultimate consequence: If a ship fails to have the required SEEMP Part III (including the corrective action plan), the validity of the SoC (Statement of Compliance) may be compromised. A ship without a valid SoC theoretically risks being detained by Port State Control, which prevents it from sailing.

Commercial and Financial Consequences from the Market

These are the most direct and severe consequences of a poor CII rating:

• Chartering Decisions: Charterers committed to sustainability will avoid ships with a D or E rating and will favor ships with an A or B rating. This can lead to a market with “tiered” rates (more expensive A/B ships, cheaper D/E ships) and fewer assignments for less efficient vessels.
• Ship Value: A poor CII rating can affect the market value of the ship upon sale or purchase.
• Financing and Insurance: Banks and insurers may charge higher costs or offer more favorable terms to ships with a better rating (A or B), as these are considered a lower risk.

In short, although the IMO primarily enforces improvement through documentation and planning, the commercial market and partners enforce compliance through economic pressure.