Rohit Agarwal, Partner at GSR Sentinels LLP, provides his opinion on EU’s regulation for ship recycling (EU SRR). Mr. Agarwal believes that there will be no European VLCCs or large ocean going ship that will be scrapped in Europe in 2019. This will come despite EU efforts to make European shipowners recycle their vessels in the continent.
As shipowners become more conscious on how and where their vessels are recycled – and come under increasing pressure from shareholders, NGOs and the media to act responsibly – we also see increasing number of responsible ship recycling facilities coming up around the world.
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In Alang, India – which is a top destination for ship recycling – 24 yards have now acquired and more in the process of acquiring a Statement of Compliance (SoC) according to the Hong Kong Convention (HKC) for the Safe and Environmentally Sound Recycling of Ships (2009) from ClassNK.
These yards, for offering green ship recycling, need to make significant investments in heavy machinery, equipment and training. The introduction of concrete surfaces for cutting in India with a separate water collection system, where ships are usually cut directly on the beach, prevents waste in the form of oil and paint chips to get into the environment through surface run-off or due to the permeability of soil.
Shipowners using these yards may receive lower returns when selling their ships compared to non-improved yards. But shipowners are increasingly opting for green recycling as they realise the value of recycling their ships in a responsible manner as part of their overall CSR approach.
After 31 December 2018, EU-flagged ships have to comply with EU SRR, as like any ship of any flag when departing to a recycling yard from an EU port, needs to select an EU-listed yard or follow Basel Convention, which indeed is a tough practice involving much paperwork but no safety standards. Furthermore, non-EU flagged ships departing EU ports for recycling in non-OECD countries is not allowed under the European Waste Shipments Regulation. The ships will be required to be recycled only in a yard that appears in the European list of approved yards, as published by the European Commission. The current list includes 23 yards located in EU countries, which did not have to undergo an approval and audit process by the European Commission. Noteworthy new additions are two yards in Turkey and one yard in the USA. The capacity of all the EU approved ship recycling yards is tiny and will decrease as soon as Brexit kicks in, as the UK’s “big capacity yards” (in EU-terms) will need to apply for being listed as yards from 3rd countries after the end of March 2019.
I confidently predict there will be no European owned VLCCs or for that matter large ocean going ship that will be scrapped in Europe in 2019, despite the best attempts of the EU forcing European shipowners to recycle their ships in Europe, because a couple of dozens of VLCCs were sold by Greek and German owners in 2018 to the South Asian ship recycling yards and hardly any is flying the flag of an EU member state. Looking at the list of the EU approved yards, there are only three capable of berthing a vessel of 300m or more, and after Brexit even less. It would only take two or three VLCCs to occupy all the available capacity. Is this the sustainable solution the EU is trying to achieve, or an indication that ageing ships are not wanted in EU-registers for achieving their climate saving goals? The fact is that support for green ship recycling globally by sending a clear signal to the industry has never happened and remains to be seen with the next EU-List.
The views expressed in this article are solely those of the author and do not necessarily represent those of SAFETY4SEA and are for information sharing and discussion purposes only.
