Grieg Green: It’s time to shed our focus on workers’ rights at ship recycling facilities

Doing ship recycling in a sustainable way has a cost, Mrs Meling notes and suggests to show willingness to pay that cost and take action, driven by increasing transparency and ESG focus. Moving forward to sustainable recycling, industry stakeholders need to ensure competent onsite supervision at the yard and request full transparency of the recycling process.

SAFETY4SEA: What are your top priorities in the agenda taking the helm as Managing Director of Grieg Green?

Pia Meling: We want to push sustainable ship recycling higher on the agenda for shipowners, charterers, banks, capital markets and insurance providers.  And, of course, we plan to grow and expand on Grieg Green’s service offering.

S4S: What are the key industry’s challenges with regards to ship recycling up to 2030 from your perspective?

P.M.: Number one is insufficient regulation. The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (adopted in 2009) needs to be ratified by IMO and its provisions are inadequate. EU implemented its Ship Recycling Regulation in 2018. It states that EU-flagged commercial vessels must be recycled in safe and environmentally sound ship recycling facilities that are included on the European List of approved ship recycling facilities. However, this list currently contains no ship recycling facilities in Asia (only in EU, a few in Türkiye and one in the US). Still, most of the world’s tonnage is recycled in India, Pakistan, and Bangladesh. It is doubtful that there will be sufficient recycling capacity at the EU-listed facilities when many vessels, rigs and platforms reach their end of life over the next years.

Ship recycling is an important industry for India, Pakistan, and Bangladesh, creating jobs and providing scrap steel that these countries need as a resource in other sectors. Therefore, the willingness to pay for vessel recycling in southern Asia is higher than in Türkiye, and the EU and the shipowner make more money on the transaction when selling the vessel for decommissioning. Few shipowners are willing to go for the lower price obtained in Türkiye (or the much lower price obtained in the EU) unless required to do so. The key challenge for the shipping industry is to ensure safe and environmentally sound ship recycling for the large number of end-of-life assets up to 2030. The industry needs adequate recycling facilities located both in Asia and in Europe – and the facilities must follow the regulations, and the intention behind the regulations, every day and in all situations.

S4S: Which are the key barriers towards sustainable ship recycling and how could the industry overcome them?

P.M.: Doing ship recycling in a sustainable way has a cost. There is, however, little willingness to pay for a higher ship recycling standard amongst most shipowners today, and the regulations are easily evaded. EU-flagged vessels can change flag as they approach end of life or be sold to non-EU-flagged owners in the secondhand market. A tighter and more enforced regulation is required. The willingness to pay can also be accelerated by charterers, banks, and capital markets if sustainable ship recycling is part of the term sheet when awarding contracts and funding. A joint industry action, driven by increasing transparency and ESG focus, will help overcome the key barrier of willingness to pay for safe and environmentally sound ship recycling. Long term, more automated recycling processes will help increase safety and reduce cost, making European ship recycling facilities more competitive.

S4S: How would you describe the overall situation at shipbreaking yards? What needs to be done immediately for an improvement?

P.M.: The quality of the individual recycling facilities varies greatly – both in India, Pakistan, Bangladesh, within the EU and Türkiye. The best facilities in India are better than many facilities in Türkiye but are still not on the EU list, mainly due to lacking shared infrastructure like a nearby hospital with sufficient capacity and approved national waste management facilities. Many yards in India, Pakistan, and Bangladesh need to invest in better infrastructure and improved processes like management and monitoring systems, emergency preparedness and response, occupational safety, health management etc. This naturally comes at a cost. If some of the recycling facilities in India that have invested heavily in infrastructure and improvements are accepted on the EU list it would signal that such investments pay off, and that would be a first step in the right direction.

S4S: What are the key factors in better protecting worker’s human, labor and social rights at ship breaking yards?

P.M.: Workers organizing in a local labor union is helpful. Still, shipowners requiring transparency on the “S” in the ESG is a prerequisite for improvements. Suppose the steel mills (buyers of scrap steel) would start asking about the conditions under which the steel has been cut and dismantled. In that case, we could start an industry movement towards better working conditions. As elaborated in the next question, Grieg Green has trained onsite supervisors who ensure the yards recycle the ship in accordance with the pre-approved ship recycling plan, which includes workers’ rights and safety.

S4S: How likely is that the current situation in the existing shipbreaking yards will change? What does your organization do towards that issue?

P.M.: I believe the situation is gradually improving, and Grieg Green’s purpose is to accelerate that improvement. Drawing on more than a decade of experience, we visit and audit ship recycling facilities at our own cost and advise our customer (ship/rig owner) on where to recycle their assets. We assist with regulatory guidance, contract management, IHM and asbestos surveys/removal. Most importantly, we have trained site supervisors present at the facility during the entire recycling process.  They have the authority to stop work if they observe unsafe practices.  The supervisors train and guide the yard crew in safety measures and environmental protection, they document and photograph everything from the start until the project is finalized, and the hazardous materials are disposed of correctly. Our supervised projects are mainly taking place in India, Türkiye and in the EU. We see that being present at the site is invaluable and our presence has prevented many accidents and incidents.

S4S: What should be the top industry’s priorities in relation to ESG performance and Sustainable Shipping?

P.M.: The whole shipping industry is scrambling for decarbonization solutions, and the entire focus appears to be on cutting CO2 emissions during vessel operations. Upcoming regulations like CII (Carbon Intensity Indicator), Annual Efficiency Ratio (AER) and Energy Efficiency Operational Index (EEOI) will accelerate a two-tier market where the oldest and most polluting vessels will struggle to find employment in the market. We need to minimize the footprint of these vessels as they end their life. There is potential for a higher degree of recycling and perhaps even upcycling, repurposing or re-use of parts and equipment onboard these vessels. Green steel, produced at steel plants using renewable energy sources, will be a sought-after input to many products, and green recycled steel should be even more attractive from an environmental point of view.  Now it’s time to think about our entire shipping footprint – not only ship operation but also shipbuilding, repair, and recycling.  Also, the “S” in ESG must be brought more into the light. The social effects of our industry are often hidden. During Covid, we thankfully opened our eyes towards seafarer wellbeing and rights. There was a global movement to recognize seafarers as key workers and give them priority access to Covid-19 vaccines. The workers at the ship recycling facilities also deserve our attention. Their working conditions are often much worse than for those onboard the ship.

S4S: In your view, has the industry been successful in addressing ship recycling issues? What should be the next steps?

P.M.: Ship recycling is still a “dark side” of shipping. We need to shed light on this industry and create joint industry actions to improve. The key is a willingness to pay for safer and more environmentally friendly recycling.

S4S: If you could change one thing across the industry from your perspective, what this would be and why?

P.M.: Increased transparency! Both ship operators, scrap steel buyers and recycling facilities should be transparent about their practices. That would gradually lead to a change for the better.

S4S: What is your key message to ship operators for ensuring the safe and sustainable ship recycling activities?

P.M.: You need to have competent onsite supervision at the yard and request full transparency of the recycling process if you want to ensure safe and sustainable ship recycling activities. No shipowner has newbuild, repair or drydocking projects without site supervision. You also need to care for and monitor your recycling projects.

The views presented hereabove are only those of the author and do not necessarily reflect those of  SAFETY4SEA and are for information sharing and discussion  purposes only.