The Intertanko Breakfast Briefing at the Tanker Shipping & Trade Conference concerned the forthcoming European Regulation on Ship Recycling (EU SRR), which comes into force on 31 December 2018. This crucial piece of legislation on ship recycling has gone almost unnoticed among the discussions centred around the forthcoming IMO 2020 global sulphur cap.
The Intertanko Breakfast Meeting was told that EU SRR is the latest in a series of imperfect attempts to regulate European owners’ sales of ships for recycling by the European Commission.
Meanwhile the EU continues to develop its own recycling regulation that also includes ships.
Under EU SRR, EU-flagged ships will be excluded from the scope of the WSR and must confirm to EU SRR. Therefore, after 31 December 2018, a ship of any flag departing on a voyage to a recycling yard from an EU port is subject to EU’s WSR, which forbids its export to non-OECD countries. In practical terms, this means the ship can only be recycled in Turkey.
An EU-flagged ship will be subject to EU SRR, which requires that it will be recycled only in a yard that appears in the European list of approved yards, as published by the European Commission. This is meant to force European owners to recycle ships in Europe.
The current list includes 23 yards located in EU countries, two yards in Turkey and one yard in the USA. The capacity of all the approved European ship recycling yards is tiny.
Furthermore, like the previous European attempts to regulate ship recycling, there is a huge loophole in the legislation in that a non-EU flagged ship departing on a voyage to a recycling yard from a non-EU port, or where the decision to send the ship for recycling is taken when the ship is in international waters, is not going to be subject to European legislation.
In the question and answer session that followed the briefing it became clear that a European owner could re-flag an elderly vessel to a non-European flag and continue to trade for months or years outside Europe, before selling the vessel for scrap in Asia. This would remove the vessel from being subject to EU SRR. It was suggested that some of the minor ship registries are effectively complicit in this type of operation.
However, the breakfast group was warned that there are strong forces opposed to such activities. Non-governmental organisations (NGOs) such as Greenpeace are aware of this process and will trace back the ownership of the vessel. Therefore, the EU SRR workaround carries an element of reputational risk. Ironically, the former Rainbow Warrior 2, an NGO environment campaign vessel, is being scrapped on a beach in Bangladesh.
However, Intertanko was told, there is a relatively easy solution to the problem of there being insufficient capacity in Europe to implement EU SRR on a practical level – add the recycling yards in Asia that have been given certificates of compliance with HKC by class societies to the EU list. After all, the European Commission is obliged to adopt HKC if it comes into force, but the European Commission has given indications that it may not approve yards in South Asia.
In conclusion, the feeling from the Intertanko Breakfast Briefing is that EU SRR looks like becoming another piece of EU ship recycling legislation that will fail to meet its target as it fails to include the realities of the industry.