HKC has not entered into force yet, even though some more ratifications can be expected in near future, and as such it legally doesn´t exist. However, it provides the right way forward for all stakeholders. EU-SRR has entered into force in 2013 and is to be applied by the end of this year for new ships. Existing ships being EU-flagged or any other ship above 500GT visiting an EU port are obliged to have a IHM onboard from end of 2020.
SAFETY4SEA: What are currently industry’s biggest challenges with respect to ship recycling?
Henning Gramann: The biggest challenge I see is sufficient recycling capacity able to handle the big demand in a responsible manner. It has to be noted that China is closing down at the end of this year and Turkey is having troubles like free-falling Lira against US Dollar and steel mills hardly buying any scrap steel from recyclers. These two final destinations are the “expensive side” of ship recycling anyway and only few owners are willing to bear the costs.
On the other side, economically viable options are available in the Indian Sub-Continent which withholds the by far biggest capacity to recycle ships. What urgently has to be noted is that very different standards are offered and exist from one to the other facility within the same country. The method or country specific prejudices are not applicable anymore.
That makes the selection process and planning of last voyage a key challenge for any owner who wants to act in a socially and economically responsible manner. Only in case of an end of life ship flying an EU-flag the options are even more limited as a recycler from the EU-List has to be selected. Till date no approvals for yards from outside EU have been granted and only EU-yards are listed without further checks. In Brussels the processing of applications received from 3rd countries is far beyond schedule. The result is that for EU-ships not only monetary disadvantages exist, also the ships simply might not fit into EU-yards as these can only accommodate smaller units. As such a lack of sufficient European and EU-approved ship recycling capacity is evident and either todays recycling candidates are small enough, wait for future listings or change their flag and with that get rid of these practical limitations. Also circumventing EU-SRR does not necessarily mean to decide in favor of sub-standard recycling, it´s only for having more competition amongst potential buyers and still best practice recycling can be chosen. Obviously not what Brussels wanted to achieve with EU-SRR but this is a victim to method-specific lobbyism.
When speaking about the methods I would like to stress out that both, HKC and EU-SRR standards can be complied with by any ship recycling method. Key to compliance is awareness, training, organization, responsibilities and control of the entire recycling process. Any campaign which declares a specific method to be incapable of being compliant has not understood practicalities, technicalities or risk management practices.
S4S: EU Ship Recycling Regulation (EU-SRR) vs Hong Kong Convention (HKC) and IHM: What operators should consider from your perspective?
H.G.: Requirements for IHMs are identical for both except that EU-SRR requires two more hazardous substances to be investigated for the IHM. My suggestion is that all ships follow the EU-requirements as it comes at a low additional cost and won´t create hassles in case of changing to an EU-flag in future. The key challenge is the huge number of ships falling under EU-SRR. I estimate that out of the ~30.000 ships only 50% will get an IHM in time. What will happen to the rest remains to be seen.
Currently a lot of new “IHM-Experts” appear in the market and as this task requires a lot of experience and cross-education, I´m worried about the quality of IHMs produced by the newbies but also some companies which are active since some time. As IHMs are technical files they potentially create huge risks for the owners if prepared by unexperienced “experts” or at such low costs that only very few samples can by analyzed as the laboratory costs are playing an important role in the overall costs of preparing an IHM.
Also many “IHM-Experts” are not using properly accredited laboratories as specified by HKC and their IHMs are formally incompliant even though more attractive in the market as they come at a lower cost. The required overview of hazardous material present onboard ships can´t be correct or withstand a critical check and additionally unnecessary risks for recycling and operation of ships are created.
S4S: How likely is that the current situation in the existing shipbreaking yards will change following the HK Convention implementation?
H.G.: The situation has tremendously changed in India already. As mentioned before, HKC-compliant yards do exist in greater numbers than many think of. My company has finished 30 projects in India of which 20 have received their HKC-certificates already, 10 are awaiting the audits. Momentarily, we´re working with 10 more yards there with the same goal. Their difficulty is the reputation of India as these yards sometimes have neighbors who are working as like 10 or 20 years before. As such any country or method specific judgement is not appropriate anymore. Also we´ve started working in Pakistan and negotiate with yards from Bangladesh, where we´ll hopefully soon be able to repeat our success story.
The recycling market has already been split into “green” vs. “top dollar”. In case of entry into force of HKC we´ll certainly see an increase in the green market and it would level the playing field. Also it would ensure that all parties involved will live up to the requirements and cases where ships are sold for green recycling but the owners are not even providing an IHM will no longer be possible. Also from a legal point of view risks will significantly be reduced and court cases like the one of Seatrade in The Netherlands won´t be possible anymore.
S4S: When do you foresee the Hong Kong Convention to enter into force? Do you expect any major changes? What are your suggestions?
H.G.: That is like reading the big glass-bowl. Entry into force criteria of HKC are tough and I don´t think that it´ll enter into force soon even though quite a few countries are working on their ratifications. Unfortunately also the EU-SRR doesn´t support ratifications and it acts more like a diplomatic obstacle for recycling countries and excuse for European flag states, as they can say that all is cleared by EU-SRR and they can´t ratify a convention which is seen to be less prescriptive in some details than the legislation they have to follow already.
S4S: In December 2016, the EU adopted the first list of the ship recycling facilities that comply with safe practices featuring 18 yards which are located in the EU. Do you foresee other yards located in countries outside EU to be included in the list any time soon, i.e. within the next 5 years?
H.G.: Even though EU-SRR is widely identical with HKC, which has been implemented by many yards in India, it has some special requirements and interpretations for EU-registered ships. As of now it limits recycling options for EU-ships tremendously due to lacking authorization of recycling yards outside of EU. That will change, hopefully, when foreign yards will be inspected and added to the EU-List, but it takes some more time and the focus for approvals was on Turkey, US and China. EU-compliant recycling options are and will remain not only rare but also expensive for the owners. Another interesting aspect to note is that facilities located within the EU (including UK-based yards until Brexit, then they have to apply as well) are listed on the EU-List because of their location without undergoing the same detailed review process like non-EU yards. In some cases I doubt that all EU-yards would have made it on the list if they would have been treated similarly.
S4S: How would you describe the overall situation at EU shipbreaking yards? Has there been any improvement with regard to safety and working conditions following the EU Ship Recycling Convention?
H.G.: As said, they´re listed because of their location within the EU. No doubt some were already very good and possibly others had to upgrade due to more specific requirements coming with the EU-SRR. Obviously for bigger merchant ships EU facilities were and still are unattractive due to their size limitations and prices offered. As shipping is an international business, free positioning of especially bigger ships is daily routine and prior to recycling the last voyage can easily be planned close to the final merchant destination which is most attractive, but a few legalities are to be considered. The key market for EU-facilities are smaller and government owned ships where either re-positioning would be too costly compared to their scrap value or other political aspects don´t allow this. Except of specialized facilities, like for offshore units, I don´t see that their market share will increase greatly even though the legislators of EU-SRR seem to have tried hard.
S4S: Does the EU legislation cover human rights issues? What should industry stakeholders do towards that end?
H.G.: Except of a reference to ILO, as it is also contained in HKC, there are no more specific requirements on human rights or other social aspects. The key difference between HKC and EU-SRR is, that EU-SRR looks more into the downstream waste management and impermeable floors for various ship recycling activities.
S4S: What about US? What is currently happening to U.S. government vessels that are recycled?
H.G.: As far as I know they are all going to Brownsville – Texas. For the US it is a bit tricky to actively play a bigger role in international ship recycling as specific legislation prohibits the import of PCBs (polychlorinated bi-phenyls) above 2ppm whereas export of a concentration up to 50ppm is permissible. For import and export the owner has to proof to US-EPA that the limits are met and that can be very time-consuming and costly. However, the EU has inspected yards in US and we might find on the EU-List soon, if they can be really utilized by EU-flagged ships remains to be seen.
S4S: What should be the top priorities for the shipping industry stakeholders towards a more sustainable future for the shipping industry? What is your key message?
H.G.: That is relatively simple; seek help to investigate the good options available and only make use of properly HKC-certified recycling facilities. Currently the “green recycling yards” are not fully utilized as too many owners sell their ships to cash buyers without further restrictions on where the ships they sell shall end up or knowingly opt for top dollar. HKC-compliance comes at a very low cost and starts with getting the Inventory of Hazardous Materials (IHM) prepared. That prevents ship owners from being in the headlines because an accident happens during recycling on one of their formerly owned ships.
The views presented hereabove are only those of the author and not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.