Ship Re-cycling EU’s recycling strategy puts global ship safety at risk By Paul Bartlett The global recycling market is at risk because of a two-tier regulatory system, conflicting regulations, and political interference in Europe. The fundamentals of the ship recycling market are not difficult to understand. The process of dismantling end-of-life ships is labour-intensive, margins are thin, and if is not carried out with rigorous attention to safety and appropriate waste disposal arrangements, it can be dangerous. So, facilities need to meet certain standards, workers need training, safety awareness courses and good conditions, and medical facilities need to be available nearby. An economic requirement is a ready market for the end products – scrap steel in large volumes and a myriad of other components with possible shoreside applications. So it stands to reason that countries with competitive labour rates, buoyant demand for scrap steel as a feedstock for steel mills, and a ready market in recycled products should be wellsuited to the ship recycling business. Indeed that is the established system, but it is now under threat, with serious implications for shipowners, particularly those based in Europe or whose ships fly European flags.
Inconvenience of reality The European Union (EU) would like to see ships recycled within its own boundaries and appears to be forcing owners in this direction. However, even an entry-level economics student would recognise immediately that high labour costs, virtually no market for scrap steel or recycled materials, and very few suitable facilities constitute a sound basis for establishing a ship recycling business. So far, the EU’s list of facilities within the trading bloc, approved as compliant with the EU Ship Recycling Regulation (EU SRR), include 34 small yards suitable for dismantling vessels such as fishing boats, coasters, small offshore craft and other service vessels such as tugs and dredgers. Larger facilities geared to the decommissioning of large offshore energy plant have also been approved by EU regulators. However, there are no yards suitable for recycling large or even medium-sized commercial ships on the EU’s list. And so far, there are only nine facilities located outside the trading block that have been approved under the EU SRR – nine in Turkey and one in the US. Turkish sources reveal that a total of 14 facilities have requested audits and validation under EU regulations but five have not been approved so far. There is scope to increase capacity quickly, the sources say, in the Aliaga region, north of Izmir on the Adriatic Sea where the country’s ship recycling industry is based.
No Turkish option However, the recycling sales of elderly cruise ships, now redundant as a result of the pandemic, have saturated Turkish capacity. Indeed, significant numbers of cruise vessels and other passenger ships already sold for recycling are to be seen at anchor in some of the sheltered bays of the Eastern Mediterranean, waiting for space in Turkey’s yards. This, say
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The modernised Leela ship breaking yard in India
critics, is neither environmentally safe nor economically sensible. But the cruise ship owners have no choice. No recycling yard on the Indian subcontinent – India, Bangladesh and Pakistan – has been approved under the EU SRR despite applications from about 40 yards. Experts who have watched the transformation of many facilities, notably in India, cannot understand why none has been validated by Europe’s auditors and regulators. They point out that more than 90% of the world’s end-of-life ships are dismantled on the Indian subcontinent where the sector provides gainful employment for many thousands of workers and, crucially, there is a ready market for scrap steel and other recycled products. The EU’s failure to approve any of these recycling yards does not fit well with the findings of international classification societies which have audited and approved 110 recycling facilities as meeting the requirements set out in IMO’s Hong Kong Convention on Ship Recycling. These include 92 facilities in India, one in Bangladesh, 14 in Turkey, two in China and one in the US. Observers say that this is partly because IMO’s Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ship was adopted in 2009 but has still not entered force. And it is certainly fair to say that a range of countries have dragged their feet in the ratification process. However, for many recycling facilities, the writing has been on the wall for years - new ship recycling standards were inevitable, they concluded, and made huge investments in facilities, labour, training, waste manage and other resources as a result.
Dire shortage of capacity Now, the issue is really urgent because there is a serious shortage of approved global recycling capacity that complies with EU SRR regulations. The problem is particularly serious for European owners whose ships fly the continent’s flags and who are bound to recycle their ships in facilities approved under the EU SRR. The rules also apply to ships whose final voyages to recycling facilities begin in a European port. Under the terms of the EU’s Ship Waste Regulation, linked to the Basel Convention, it is forbidden to export “waste” from an OECD nation to a non-OECD country. Therefore, the world’s principal ship recycling region – the Indian subcontinent – is immediately off limits. So, owners of large European-flagged ships have very few ship disposal options. European yards are mostly physically unsuitable and Turkish yards are full. Lawyers disagree on whether ships sold for recycling should class as ‘waste’. In legal terms, this is an extremely complex issue and, experts
