Reduction Factor

The reduction factor (the Z factor) is the annual percentage by which a ship’s required Carbon Intensity Indicator tightens against the 2019 reference line, set in MARPOL Annex VI under MEPC.328(76) and the reduction-factor guidelines MEPC.338(76). The Z values run from 1% in 2020 up to 11% in 2026, with the 2027 to 2030 trajectory to be set at a later review. Each year the required CII falls by the cumulative reduction factor, so a ship must keep improving its attained CII to hold its A to E rating band. The factor operationalizes the 2030 carbon-intensity target in the IMO GHG Strategy.