Regulation, Sustainability & ESG
Carbon Intensity Indicator (CII)
Summary
The Carbon Intensity Indicator, or CII, is an operational efficiency measure introduced by the International Maritime Organization for vessels of 5,000 gross tonnage and above. Each vessel receives an annual rating from A to E based on the ratio of its emitted CO₂ to a proxy for transport work.
Why this matters in ship finance
A vessel’s CII rating is publicly reported, feeds into port state and charter decisions and is increasingly referenced by charterers and lenders. Consistently poor ratings can affect a vessel’s employability, its value and its financing options.
The concept
CII is calculated on the basis of annual fuel consumption, distance travelled and the vessel’s capacity. The threshold values for each rating band are set by the IMO and become more demanding over time. Vessels that receive a D rating for three consecutive years, or an E rating in any year, must submit a corrective action plan.
How it is used in practice
Owners integrate CII into voyage and technical management. Charterers use it in vessel selection and contract terms. Lenders reference it in covenant packages, sustainability-linked structures and in the assessment of transition risk.
Practical issues
The metric is a proxy and not without controversy. It rewards higher utilisation and longer voyages, which can create incentives that are not always aligned with efficient logistics. Its treatment in charter parties — who bears the cost of a poor rating and how it is measured — is a live commercial issue.
How ShipFinance.ai uses this concept
The platform can compute expected CII outcomes under different operating profiles, track the ratings of vessels in a financing case and flag the credit implications of downward trajectories.
Key takeaways
The CII is an imperfect metric that nonetheless has real commercial consequences. Understanding how it is calculated, how it moves and how it is contracted for is now part of ship-finance literacy.
Primary source: IMO Resolution MEPC.336(76), as amended by MEPC.338(76) and subsequent resolutions.