Sustainable growth report 2024

CII
The CII (Carbon Intensity Indicator) is a mandatory measure from the IMO for all vessels above 5,000GT, which started in 2023. A-C scores are satisfactory. In case a vessel scores an E once or 3 consecutive Ds, new SEEMP plans need to be submitted. CII scores of our fleet for 2024 are provided in the paragraph under emissions. We believe that the current CII regulation in its current form does not effectively reduce emissions, as intended. We promote the review of the regulations by IMO in 2025.

EEXI
To comply with the Energy Efficiency Existing Ships Index, EEXI, regulation from the IMO, we finished installing the remainder of the relevant vessels with Shaft Power Limitation (ShaPoLi) devices.

EU ETS
As of January 2024, shipping has been incorporated into the European Emission Trading System (EU ETS). For 2024, 40% of all GHG emissions regulated under this framework must be offset by surrendering EU Allowances (EUAs). This requirement will increase to 70% in 2025 and reach 100% by 2026. Additionally, methane (CH₄) and nitrous oxide (N₂O) emissions will be included from 2026, although this regulation applies solely on a tank-to-wake basis.

We believe that with the introduction of the FuelEU regulation in 2025, based on a well-to-wake approach, alongside the already-effective EEXI and EEDI standards addressing vessel fuel efficiency, the EU ETS regulations for shipping should ultimately become redundant.

FuelEU
The FuelEU, a maritime regulation set by the European Union, will officially enter into force from January 2025. The objective of the FuelEU regulation is to promote alternative energy sources in the maritime sector. It achieves this by progressively reducing the permitted greenhouse gas (GHG) intensity of the fuel on a well-to-wake basis. Starting in 2025, the allowable GHG intensity will be 2% lower compared to that of Very Low Sulphur Fuel Oil (VLSFO).

Every five years thereafter, this percentage will increase until it reaches an 80% reduction in 2050. Non-compliance results in paying a penalty. The regulation makes fossil fuels less attractive and promotes the use of biofuels, E-fuels, wind-assisted propulsion, and shore power.

Over the past year, we have delved deeper into the regulations and mapped out the scope and its implications to determine our strategy. We believe the FuelEU measure has the correct approach, being based on well-to-wake emissions of fuels and promoting shore power and wind assist.

In late 2024 there were some adjustments to the FuelEU regulation which affected our fleet as well. A final amendment to the regulation involved classifying Norway and Iceland as non-EU countries. This means that, during this period, only half of the energy consumed between a port of call in Norway or Iceland and a port of call in the EU will fall under the scope of FuelEU. Energy consumed on voyages within Norway or between Norway and non-EU countries during this period will remain outside the scope of FuelEU. While for EU ETS Norway and Iceland are considered EU countries. Most likely for 2026 they will be included in European Economic Area.

Ballast water management
Ballast water can act as a potential carrier for the transfer of marine species between ecosystems, potentially disrupting the biodiversity of destination waters. To reduce this environmental impact, regulations require ballast water to be treated before being discharged into new locations. As a result, all vessels constructed after 2013 are equipped with ballast water treatment systems (BWTS). In addition to the 23 vessels already equipped with BWTS, the remaining 3 vessels in our fleet were fitted with these systems in 2024, ensuring full compliance across our fleet.

Progress
Our target for 2025 is to have 80% of applicable regulatory requirements integrated into digital systems. For regulations on emissions, with the expansion of the NAPA Electronic Logbook to include regulatory reporting in 2024, we are on track to meet this goal by 2025.