Why 2026 Is a Turning Point for CII

Since 1 January 2023, every cargo ship, RoPax and cruise vessel above 5,000 GT trading internationally has been required to calculate an annual operational Carbon Intensity Indicator and receive a rating from A to E under Regulation 28 of MARPOL Annex VI.

For the first three years, the tightening was gentle: 5% in 2023, 7% in 2024, 9% in 2025. Many ships coasted along on a C rating without changing much.

2026 is different, for three reasons:

1. The reduction factor jumps to 11%, and — critically — the IMO has now filled in the years beyond. At MEPC 83 (April 2025), the Committee adopted resolution MEPC.400(83), which for the first time set Z factors all the way through 2030. The annual step size increases from 2% to 2.625% from 2027 onwards. The “we’ll see what happens after 2026” era is over.
2. SEEMP Part III had to be re-approved. Because the new Z factors changed the required CII for 2027 and 2028, ships needed a revised SEEMP Part III implementation plan covering the 2026–2028 three-year period, approved by 31 December 2025.
3. Phase 2 of the short-term measure review began on 1 January 2026 and runs through to spring 2028. The formula, the reference lines, the correction factors and the treatment of port and idle time are all on the table. The CII you calculate today may not be calculated the same way in 2029.

This guide walks through the calculation the way a fleet manager or DPA actually has to do it — step by step, with the real tables you need, and a complete worked example for a Kamsarmax bulk carrier that ends up with a D rating and needs a plan.

1. Quick Primer: What CII Actually Measures

CII is an operational efficiency measure, not a design one. It answers a single question:

How many grams of CO₂ does this ship emit to move one tonne of its capacity one nautical mile, over a full calendar year?

That distinction matters. EEXI (Energy Efficiency Existing Ship Index) is a one-off, design-based calculation — you do it once, you pass or you fail, and it never changes unless you modify the ship. CII is recalculated every single year from real operational data, and your rating can move up or down depending on how you traded.

The metric used for almost all ship types is the AER (Annual Efficiency Ratio), which uses deadweight as the capacity term. Note that AER uses design capacity, not cargo actually carried — so a ship that sails in ballast or part-laden is penalised exactly as if it were full. This is one of the most criticised features of the framework, and one of the things Phase 2 of the review is examining.

Key consequence: speed and time at sea dominate your result. Two sister ships with identical machinery can land two grades apart purely because of trade patterns, waiting time and charterer instructions.

2. Does CII Apply to Your Ship?

CII under MARPOL Annex VI Reg. 28 applies to ships of 5,000 GT and above engaged in international voyages, in the following categories:

If a ship type has no reference line defined in the guidelines, it has no required CII and therefore no rating — though it may still be subject to IMO DCS reporting.

3. The Regulatory Toolkit: Which Guideline Does What

Before calculating anything, know which document governs which step. Auditors will ask.

A note on “underway”: MEPC.401(83) amended the SEEMP guidelines so that “underway” is defined as the period between Full Away on Passage (FAOP) and End of Sea Passage (EOSP). Make sure your noon reporting and voyage logging systems use this definition consistently — mismatched definitions between your onboard software and your verifier’s is one of the most common sources of rejected submissions.

4. The Formula

The attained annual operational CII is:

                    Σ (FCⱼ × C_Fⱼ)
Attained CII  =  ─────────────────────
                  Capacity × Distance

Where:

• FCⱼ = mass of fuel type j consumed over the calendar year, in grams
• C_Fⱼ = CO₂ emission conversion factor for fuel type j, in gCO₂ per g fuel
• Capacity = deadweight (DWT) for most ship types; gross tonnage (GT) for cruise ships, ro-ro passenger ships and ro-ro cargo ships
• Distance = total distance travelled over ground during the calendar year, in nautical miles

The result is expressed in gCO₂ per DWT·nm (or gCO₂ per GT·nm).

The required annual operational CII is:

Required CII  =  CII_ref × (1 − Z/100)

where  CII_ref  =  a × Capacity^(−c)

And the rating is determined by the ratio:

Rating ratio  =  Attained CII / Required CII

Lower is better. A ratio of exactly 1.00 sits comfortably inside band C.

5. Step-by-Step Calculation

Step 1 — Fix your ship type, capacity and applicable size band

Sounds trivial; it isn’t. Errors here invalidate everything downstream.

• Use the ship type as defined in MARPOL Annex VI Reg. 2, not your commercial description.
• Use design deadweight at summer load line draught for DWT-based types — not scantling deadweight, and not current deadweight.
• Check the size band. A bulk carrier of 279,000 DWT and above uses a capped Capacity value of 279,000 in the reference line formula, even though the actual DWT is higher. Gas carriers, LNG carriers, general cargo ships and vehicle carriers all have similar band breaks.

Step 2 — Assemble your DCS data

You are not creating new data; you are reusing what you already report under the IMO Data Collection System. You need, for the full calendar year:

• Fuel consumption per fuel type, in metric tonnes (bunker delivery notes, tank soundings, flowmeters)
• Distance travelled over ground, in nautical miles
• Hours underway
• Ship particulars (IMO number, type, GT, DWT, EEDI/EEXI where applicable)

Include everything. Fuel burned at anchor, in port, while waiting for a berth, during drifting, and while shifting all counts toward the numerator. Only distance over ground counts toward the denominator — so 20 days at anchor off a congested port is pure CII damage with zero offsetting transport work. This is the single largest hidden risk in the framework, and it is why Phase 2 of the review is specifically examining port and idle emissions.

Fuel consumed by shore-supplied electricity is not counted, since it is not consumed by the ship.

Step 3 — Convert fuel to CO₂

Multiply each fuel’s annual consumption by its C_F factor from G1:

Important: these are tank-to-wake factors based on carbon content. They are not well-to-wake, and biofuels are not automatically zero-rated here — treatment of alternative fuels for CII purposes follows separate IMO guidance and typically requires certification. Do not confuse these factors with the life-cycle factors under the proposed Net-Zero Framework or with the well-to-wake intensities used under FuelEU Maritime. Three different regimes, three different numbers.

Sum across all fuel types to get total annual CO₂ in grams.

Step 4 — Apply correction factors and voyage adjustments (if eligible)

G5 (MEPC.355(78)) permits certain fuel consumption to be deducted. These are interim guidelines and are being reviewed, but as of 2026 the main categories are:

Correction factors (deduct fuel used for a specific non-propulsion purpose):

• Electrical power for reefer containers on container ships
• Cargo heating and cargo discharge via boiler on tankers
• Standalone engine-driven cargo pumps during discharge on tankers
• Ship-to-ship (STS) transfer operations on tankers
• Dynamic positioning on shuttle tankers
• Cargo cooling and reliquefaction on gas carriers
• Ice-class ships operating in ice conditions

Voyage adjustments (deduct fuel consumed during specific voyage periods):

• Voyages for the purpose of ensuring the safety of the ship or saving life at sea
• Voyages related to escaping from or avoiding severe weather, where documented
• Certain other situations set out in G5

Two rules that catch people out:

1. Several corrections are mutually exclusive. If you apply the shuttle tanker DP factor, you cannot also apply the electrical, boiler, others, or STS corrections.
2. Everything must be contemporaneously logged. Reconstructing an ice-navigation correction from memory in February will not survive verification. Record voyages under different operational conditions in separate rows in your data collection plan so each correction can be independently verified.

If none apply — which is the case for most dry bulk operators — skip this step. Your uncorrected figure is your attained CII.

Step 5 — Calculate the attained CII

Divide corrected total CO₂ (grams) by (Capacity × Distance). Watch the units: the numerator must be in grams, so multiply tonnes of CO₂ by 10⁶.

Step 6 — Calculate the required CII

6a. Find the 2019 reference line. Look up a and c from G2:

* Vehicle carriers have a further break at 30,000 GT. Always verify the exact band against the current text of MEPC.353(78) as amended, since the reference lines are within scope of the ongoing review.

6b. Apply the reduction factor Z. From MEPC.400(83):

The 21.5% endpoint for 2030 was chosen to align with the 2023 IMO GHG Strategy target of cutting CO₂ per transport work by at least 40% by 2030 compared with 2008, which is why the annual increment rises from 2% to 2.625%.

Step 7 — Determine the rating

Compute Attained / Required, then compare against the dd vectors from G4:

Reading the bands:

Step 8 — Report, verify, and get your Statement of Compliance

Within three months of the end of the calendar year (i.e. by 31 March), report the attained annual operational CII and the resulting rating to your flag Administration or an authorised RO, electronically, using the standardised format in MEPC.395(82). Once verified, the rating is recorded and a Statement of Compliance is issued. The ratings for the previous three years must be recorded in SEEMP Part III and kept onboard.

6. Worked Example: 82,000 DWT Kamsarmax Bulk Carrier, Calendar Year 2026

The inputs

Step A — Convert fuel to CO₂

HFO:  4,600 t × 3.114  =  14,324.4 t CO₂
MGO:    320 t × 3.206  =   1,025.9 t CO₂
                          ─────────────
Total                   =  15,350.3 t CO₂
                        =  1.53503 × 10¹⁰ g CO₂

Step B — Calculate transport work

Capacity × Distance  =  82,000 DWT × 45,000 nm
                     =  3.69 × 10⁹ DWT·nm

Step C — Attained CII

Attained CII  =  1.53503 × 10¹⁰  /  3.69 × 10⁹
              =  4.160 gCO₂ / DWT·nm

Step D — Reference line

Bulk carrier, below 279,000 DWT → a = 4,745, c = 0.622, Capacity = 82,000

CII_ref  =  4,745 × 82,000^(−0.622)
         =  4,745 / 1,138.66
         =  4.167 gCO₂ / DWT·nm

Step E — Required CII for 2026

Z = 11%

Required CII  =  4.167 × (1 − 0.11)
              =  3.709 gCO₂ / DWT·nm

Step F — Rating

Ratio  =  4.160 / 3.709  =  1.122

Bulk carrier dd vectors: 0.86 / 0.94 / 1.06 / 1.18. A ratio of 1.122 falls between exp(d3) = 1.06 and exp(d4) = 1.18.

Result: Rating D

Expressed as absolute boundaries for this ship in 2026:

Step G — How far off is C?

To reach the top of band C, attained CII must come down to 3.931, which means:

Required improvement  =  (4.160 − 3.931) / 4.160  =  5.5%

In absolute terms, that is roughly 844 tonnes of CO₂, or about 271 tonnes of HFO over the year — assuming the same distance sailed.

What does 5.5% look like operationally? Because fuel consumption scales roughly with the cube of speed, fuel per nautical mile scales roughly with the square. A 5.5% cut in fuel per mile therefore needs only about a 2.8% speed reduction — from, say, 12.5 knots down to 12.15 knots. About 0.35 of a knot. That is the good news.

Step H — The bad news: what happens if nothing changes

Hold attained CII flat at 4.160 and let the Z factor do its work:

Three consecutive D ratings (2026–2028) would already trigger a corrective action plan requirement. But in this trajectory the ship hits E in 2028 anyway — and a single E triggers the requirement immediately.

This is the core lesson of the worked example: a D rating in 2026 is not a stable position. Under the MEPC.400(83) trajectory, standing still means sliding down a grade roughly every two years.

7. What Happens If You Get a D or an E

Under Reg. 28 of MARPOL Annex VI, corrective action is mandatory if a ship is:

• rated D for three consecutive years, or
• rated E for one year

In either case, the company must develop a plan of corrective actions showing how the required index rating of C or above will be achieved, and include it in a revised SEEMP Part III, which must be submitted to and approved by the Administration or RO before 1 April of the following year.

There is no direct financial penalty from the IMO. The pressure is commercial and administrative:

• Charterers. Many major charterers now include CII clauses in time charters (BIMCO’s CII Operations Clause for Time Charter Parties is widely used). A D or E rating can put a ship outside a charterer’s acceptable pool entirely.
• Financiers. Poseidon Principles signatories report portfolio climate alignment. Weak CII performance affects refinancing terms.
• Ports and Administrations. Administrations and port authorities are encouraged to provide incentives — reduced dues, priority berthing — to A- and B-rated ships. Being at the wrong end costs money even without a fine.
• Insurance and P&I. Increasingly part of underwriting conversations.
• Certification risk. An unapproved SEEMP Part III is a deficiency, and deficiencies attract PSC attention.

Worth knowing: a rating pattern of C, C, D, D is fully compliant with no consequence defined by the IMO, because there are not three consecutive Ds. Compliance and good performance are not the same thing, and building a strategy around scraping past the trigger is a fragile plan given the Z-factor trajectory above.

8. Practical Levers to Improve CII

Ranked roughly by cost-effectiveness for a typical dry bulk or tanker operator:

Operational (low cost, fast payback)

• Speed optimisation. The single most powerful lever, as the worked example shows. Small reductions produce disproportionate gains.
• Just-In-Time arrival. Waiting at anchor burns fuel and generates zero transport work — the worst possible combination under AER. Virtual arrival agreements with terminals directly attack this.
• Weather routing. The IMO estimates weather routing can cut fuel consumption by up to around 3%.
• Trim and draught optimisation. Typically 1–3% on many hull forms, at essentially zero capital cost.
• Reducing ballast legs. Better cargo matching improves transport work per unit of fuel — though note AER does not reward higher utilisation directly, it does reward not sailing empty at all.
• Auxiliary and boiler load management. Especially in port.

Technical (capital cost, longer payback)

• Hull and propeller cleaning, advanced antifouling. Often 5–10% recoverable on a fouled hull. The cheapest technical intervention available.
• Energy Saving Devices — pre-swirl ducts, propeller boss cap fins, rudder bulbs. Typically 2–8%.
• Shaft generators and waste heat recovery.
• Engine derating and turbocharger cut-out, where the trading pattern supports a lower design speed.
• Air lubrication systems. High capex, meaningful returns on the right hull.
• Wind assistance — rotor sails, suction wings. Increasingly bankable on suitable routes.
• Shore power connection. Removes port emissions from the numerator entirely.

Fuel switching

• LNG offers roughly a 12% tank-to-wake CO₂ advantage over HFO on the C_F factor alone (2.750 vs. 3.114), before methane slip is considered — and methane slip is not currently captured in the CII C_F factor, though it is very much on the agenda for the Net-Zero Framework.
• Certified biofuels and e-fuels can improve CII, but treatment requires documentation and follows separate guidance. Do not assume a drop-in biofuel automatically improves your rating without verifying the certification pathway with your RO.

9. Six Common Calculation Mistakes

1. Using scantling deadweight instead of design deadweight. Inflates capacity, artificially improves CII, fails verification.
2. Excluding port and anchorage fuel. All fuel consumed by the ship counts, wherever it is consumed. There is no “at sea only” version of the numerator.
3. Using distance through water instead of over ground. G1 specifies distance travelled over ground. In strong currents the difference is material.
4. Applying the wrong C_F factor. Confusing tank-to-wake CII factors with well-to-wake FuelEU Maritime intensities, or with the life-cycle factors proposed under the Net-Zero Framework.
5. Claiming G5 corrections without contemporaneous evidence. Corrections must be logged as they occur, in separate rows for different operational conditions, with supporting documentation.
6. Forgetting the size-band cap. A 320,000 DWT VLOC uses 279,000 as its Capacity in the reference line formula but its actual 320,000 DWT in the attained CII denominator. Getting this backwards produces wildly wrong results.

10. What’s Coming Next

Phase 2 of the short-term measure review. Phase 1 concluded at MEPC 83. Phase 2 began on 1 January 2026 and runs through intersessional and correspondence groups to spring 2028. On the table: the treatment of port and idle time (a persistent complaint, since waiting time is largely outside the shipowner’s control), possible revisions to the reference lines and the CII metric itself, the correction factors and voyage adjustments in G5 — which remain formally interim four years after adoption — and the interaction between CII and the mid-term measures.

The IMO Net-Zero Framework. The NZF’s adoption was postponed at an extraordinary session in October 2025. MEPC 84 (27 April – 1 May 2026) agreed to preserve the NZF as the primary basis for continued negotiation, with two intersessional working group meetings scheduled before MEPC 85 (30 November – 3 December 2026), followed by a resumed Extraordinary Session on 4 December 2026 at which adoption is scheduled. Support appears to have consolidated since 2025, but the outcome remains genuinely uncertain. If adopted, the NZF would introduce a global fuel standard and an economic mechanism operating alongside — not replacing — the CII framework.

IMO DCS transparency. MEPC 83 approved draft amendments to Reg. 27 of MARPOL Annex VI to make DCS data more accessible: fully non-anonymised to MARPOL Annex VI Parties, and available in anonymised form to the public. These amendments were expected to be taken up at MEPC 84. Once in force, ship-level fuel data becomes considerably harder to keep private.

Regional overlays. EU ETS (fully phased in for shipping from 2026) and FuelEU Maritime already impose separate, and differently calculated, obligations on ships calling at EEA ports. A ship can be CII-compliant and still face substantial EU ETS surrender obligations. Model all three regimes together, not sequentially.

11. Frequently Asked Questions

Is CII calculated per ship or per fleet? Per ship, per calendar year. There is no fleet averaging or pooling mechanism under the IMO framework — unlike FuelEU Maritime, which does allow pooling.

What happens if a ship changes owner mid-year? The CII is calculated for the full calendar year regardless of ownership changes. Data must be transferred at change of ownership, and a partial-period DCS report is required at the point of transfer.

Does a ship in lay-up get a rating? A ship with no voyages has no distance travelled, which makes the calculation undefined. Handling of laid-up periods and drydocking should be agreed with your flag Administration in advance rather than assumed.

Can a good CII rating offset a poor EEXI? No. They are independent requirements. EEXI is a pass/fail design threshold that must be met; CII is an annual operational rating. Failing EEXI is a certification problem, not something a good operational year can cure.

How does CII relate to the EEOI? The EEOI (Energy Efficiency Operational Indicator, MEPC.1/Circ.684) uses actual cargo carried rather than design capacity, which makes it a more honest measure of real transport efficiency. It remains voluntary. Its cargo-based logic is one of the alternatives raised in discussions about revising the CII metric.

Do I need special software? No — the calculation is arithmetic and can be done in a spreadsheet, as this guide demonstrates. What software buys you is in-year visibility: a rating you only discover in March is a rating you can no longer influence. Class societies offer platforms that project year-end CII from live DCS data, which is where the actual value lies.

Summary: The Calculation in Seven Lines

1. Confirm ship type, design capacity and size band.
2. Total annual fuel by type (grams) and distance over ground (nm) from DCS data.
3. Multiply each fuel by its C_F factor; sum for total CO₂.
4. Apply any eligible G5 corrections — with documentation.
5. Attained CII = CO₂ ÷ (Capacity × Distance).
6. Required CII = a × Capacity^(−c) × (1 − Z/100), with Z = 11% for 2026.
7. Divide attained by required, read the grade off the dd vectors, and report by 31 March.

This article is intended as general guidance and reflects the regulatory position as of July 2026. It is not legal or compliance advice. CII is an area of active regulatory development — Phase 2 of the short-term measure review runs to 2028, and the G5 correction factor guidelines remain interim. Always verify parameters against the current text of the applicable IMO resolutions and confirm your specific calculation methodology with your flag Administration or Recognized Organization before submission.