Understanding the Impact of the Carbon Intensity Indicator Regulation on the Maritime Industry

On January 1, 2023, a quiet but significant shift took place across the global shipping industry. For the first time, vessels were no longer judged solely on how they were built, but on how they actually operate. The Carbon Intensity Indicator, known as CII, came into force under MARPOL Annex VI, marking a new chapter in the IMO's push to decarbonize international shipping. For fleet operators, charterers, and financiers, understanding what this regulation demands and where it is heading is no longer optional.

What the CII Regulation Actually Measures

CII is an operational efficiency metric. It calculates how many grams of CO2 a ship emits per unit of transport work, typically expressed as CO2 per deadweight-tonne-mile (or gross-tonne-mile for passenger vessels). That calculation is run annually, drawing on fuel consumption data, distance traveled, and the vessel's carrying capacity.

The result is a rating from A to E:

• A and B indicate performance that exceeds the required standard. These vessels are increasingly favored by charterers and eligible for green financing programs.

• C is the minimum passing grade. Ships here are compliant but have little margin for error as targets tighten each year.

• D and E signal underperformance. A single E rating or three consecutive D ratings triggers a mandatory corrective action plan within the Ship Energy Efficiency Management Plan (SEEMP Part III).

The regulation applies to all vessels of 5,000 gross tonnage and above engaged in international voyages. That covers the bulk of commercial shipping, from container ships and bulk carriers to tankers, gas carriers, and cruise ships.

From Design to Operation: Why the Shift Matters

To appreciate what CII represents, it helps to compare it with its regulatory sibling, the Energy Efficiency Existing Ship Index (EEXI). Both entered into force on the same date, but they measure fundamentally different things.

EEXI is a one-time technical assessment. It evaluates whether a vessel's design meets a specified efficiency baseline. Once a ship passes its EEXI certification, typically at the first applicable survey after January 1, 2023, the obligation is met. The certificate does not change with how the ship is actually run.

CII works the other way. It does not care what a vessel was designed to achieve. It cares what the vessel achieved. Every year, the actual emissions data is assessed, a rating is issued, and that rating carries real commercial and regulatory consequences. A ship with an excellent EEXI score can still receive a D or E rating under CII if it is operated inefficiently.

This distinction is not a technicality. It represents a fundamental regulatory philosophy: the IMO has decided that paper compliance is not enough. Performance in the water is what counts.

The Tightening Reduction Targets

CII is not a static benchmark. The required carbon intensity is tightened every year relative to a 2019 reference line, with reduction factors increasing progressively through 2030. Following the IMO's MEPC 83 review in April 2025, the full trajectory was confirmed:

The 2027 to 2030 phase is where the pressure becomes substantial. Moving from 11% in 2026 to 21.5% by 2030 is not a gradual step, it is a near-doubling of the required improvement in just four years. Ships that are managing a C rating today, through operational adjustments like slow steaming or route optimization, may find that approach insufficient as targets escalate.

The broader IMO ambition is a 40% reduction in carbon intensity across international shipping by 2030 compared to 2008 levels. CII is the mechanism through which that goal is enforced at the individual vessel level.

Operational Challenges in Practice

Achieving and maintaining a strong CII rating is more complex than it might appear from the outside. Several factors make this a genuine operational challenge rather than a compliance checkbox.

Cargo variability. A vessel that sails partially laden for part of the year will consume fuel relative to a lower actual load, which can distort its efficiency ratio. Operators have limited control over cargo availability, yet the CII calculation applies regardless of loading conditions.

Port time and waiting periods. Hours spent at anchor or waiting for berths still consume fuel. These periods do not contribute to transport work but do contribute to CO2 emissions, pushing ratings downward. Port congestion, which plagued global supply chains in recent years, can meaningfully damage a fleet's annual CII performance.

Technical maintenance. Hull fouling increases drag and fuel consumption significantly. As the regulation moves into its second phase from 2026 onward, the IMO and classification societies are placing greater emphasis on technical measures, including hull coatings, propeller polishing, and engine efficiency upgrades, rather than purely operational workarounds.

Data quality and reporting. CII ratings depend on verified fuel consumption data reported through the IMO Data Collection System. Inaccurate reporting, even if unintentional, can lead to compliance problems. Many operators are investing in fleet management software to ensure data accuracy ahead of each March 31 reporting deadline.

Commercial Consequences Are Already Playing Out

CII is no longer just a regulatory concept. It is shaping real commercial decisions. Charterers are increasingly factoring vessel ratings into fixture negotiations. A D or E-rated ship can face reduced earning potential, higher insurance premiums, and greater scrutiny during Port State Control inspections.

On the financing side, green lending frameworks used by major banks now reference CII ratings as part of their environmental criteria. Vessels with strong ratings have better access to sustainability-linked loans at preferential rates. Those with poor ratings face a narrowing pool of available capital as lenders apply stricter environmental thresholds.

Asset values are shifting too. The second-hand market is beginning to price in CII trajectories. Older, less efficient vessels that are likely to struggle under tightening reduction factors are attracting lower valuations, while newer, efficient tonnage commands a premium.

What Operators Should Be Doing Now

For fleets currently holding a C rating, the comfortable middle ground will not hold for long. The 2027 to 2030 reduction schedule leaves little room for passive management. Operators who are not actively planning for the 21.5% reduction target by 2030 are likely to find themselves in corrective action territory within a few years.

The most effective strategies combine near-term operational adjustments with longer-term technical investment. Speed optimization and voyage planning remain the most immediately accessible tools. But as the reduction factors climb, technical upgrades, including alternative fuels, energy-saving devices, and hull optimization, will become unavoidable for a large portion of the global fleet.

The SEEMP Part III, which every applicable vessel must maintain, should be treated as a live strategic document, not a compliance formality. It should reflect realistic targets, defined improvement actions, and honest progress assessments.

A Regulation That Raises the Floor Each Year

What makes CII different from most regulatory frameworks is that compliance today does not guarantee compliance tomorrow. The floor rises every year. A ship that earns a B rating in 2025 using the same operational profile will earn a lower rating in 2028 because the benchmark against which it is measured has moved.

This built-in escalation is intentional. The IMO designed CII to compel continuous improvement, not a one-time adjustment. For the maritime industry, that means decarbonization is no longer a future consideration. It is an active and accelerating operational reality, measured annually, rated publicly, and felt commercially.

The fleets that treat CII as a strategic priority now, rather than a reporting burden, will be better positioned as targets tighten and the commercial consequences of poor ratings become harder to absorb.