BIMCO secretary general and chief executive officer, Angus Frew, explains his concern over the impact and implications of the newly introduced EU regulation on ship recycling
I strongly advocate global regulations for the global shipping industry and I believe that we should all vehemently oppose regional regulations when they override existing global regulations developed by IMO. The EU regulation on ship recycling that entered into force in 2019 is an example of how regional bureaucrats can create rules that make life difficult and uncompetitive for shipowners.
But before I go further, let me point out that you need to be aware of the EU regulations when recycling a ship. Even if you do not have EU-flagged ships in your fleet, the rules can still impact you – personally – and your company.
On the one hand the EU wants more ships under EU flag, but on the other, they require that all EU-flagged ships be recycled at an EU-approved facility where the shipowner is likely only to receive a fraction of the price that they would have achieved from a recycling facility in, for example, India or Pakistan.
The goal of the rules is – at least in part – to make sure ships are recycled in an environmentally friendly and safe manner. I fully approve of that goal, and so does BIMCO. But the way the EU regulation has been implemented to date is detrimental to EU-flagged ships and appears to heavily favour European recycling facilities at the expense of those Asian facilities that currently recycle 98% of world tonnage.
"Only nine of the 26 approved facilities are realistically open for ship recycling, and only three of those are able to recycle a Panamax size ship (or larger)"
BIMCO employed a consultancy* to investigate the list published in December 2018 of EU-approved recycling facilities. It turns out that only nine of the 26 approved facilities are realistically open for ship recycling, and only three of those are able to recycle a Panamax size ship (or larger).
If you are a facility located inside the EU, you can apply to the European Commission for automatic inclusion on the EU list. Late last year, I personally rang one of the ‘facilities’ on the EU list and they told me that they had not started building the facility at that point, but were intending to start sometime in 2019. Laughable though it may seem, I would have thought it should be a minimum criteria that EU approved yards should be open for business!
If you own a shipyard outside the EU, you must apply to get on the EU list, your facility must be physically inspected as part of the process, and you must prove on-going compliance. As of December 2018, 27 facilities outside of the EU had submitted applications but only three had been approved (two in Turkey and one in the US). Currently, over 90% of recycling is performed in facilities in Asia (excluding Turkey); 17 of the applications were facilities from that region but only two had been inspected, or inspections were underway.
It is important that both the people working at the recycling facilities and the environment be protected. If the EU is interested in improving conditions at non-EU facilities, it should at least provide relevant assistance and guidance to the applicants and could even help the facilities achieve full compliance.
In summary, the EU rules are a sub-optimal solution. Ratification of IMO’s Hong Kong International Convention on Safe and Environmentally Sound Recycling of Ships is the best way forward. This will retain a level playing field for both shipowners and ship recycling facilities, at the same time ensuring that ships are recycled in a safer and more environmentally friendly manner.
*BIMCO commissioned a study from Marprof Environmental in February 2019. The result of the study “Report on the European List of Ship Recycling Facilities” is available on the BIMCO website