In its recently published report on the feasibility of a financial instrument for safe ship recycling, the European Commission acknowledges the benefits of such step, however, it has decided to wait with its introduction.
NGO Shipbreaking Platform urges the EU to take action now, “as it is well documented that ship owners will with ease be able to circumvent the EU Ship Recycling Regulation by simply swapping the flag of their vessel to that of a non-EU State.”
According to the NGO, the proposed instrument in the EU study is in the form of a licence which each ship, regardless of its flag, needs to acquire in order to enter EU ports. This licence can be bought monthly, yearly, or every 5 years, depending on the trading requirements, and will be ship-specific. At the end of the ship’s life, the money spent on buying the licences will have been put aside and can be paid back to the last owner of that ship once it is recycled at a facility which is approved, according to the EU Ship Recycling Regulation.
“Such an incentive will offset the higher profits made when selling to substandard shipbreaking yards and ensure the proper recycling of EU-trading ships regardless of their flags,” notes NGO Shipbreaking Platform.
In the report published on 8 August, the European Commission sees this system of the Ship Recycling Licence as a workable solution if it is demonstrated that there are many ships that will flag out to circumvent the EU Ship Recycling Regulation, thereby weakening its effectiveness. All EU-flagged vessels will have to be recycled in an EU-approved facility starting from the end of 2018 at the latest.
“Only once it is clear what the effects of the EU List are on the recycling choices of shipowners, will the Commission consider whether to go ahead with introducing the Ship Recycling Licence. Therefore, if shipowners choose to recycle their vessels responsibly in a facility on the EU List and do not flag out in order to circumvent the Ship Recycling Regulation, the Commission believes that it will not be necessary to introduce a financial mechanism.”
However, flagging out at end-of-life is a practice which is already widespread. Most shipowners sell their obsolete vessels to so-called cash buyers. The scrap-dealers become the new owners of the ships and both re-name and re-flag the vessels for their last voyage to the beaching yards in South Asia.
The motivation for doing so is that dirty and dangerous shipbreaking brings higher profits due to the lack of investments in infrastructure, illicit handling of hazardous wastes and extremely poor working conditions.
“For these reasons the NGO Shipbreaking Platform urges the EU Commission to not wait for the effects of the EU List, but instead show that it intends to take all measures possible to change the current deplorable shipping practices and commit now to making a legislative proposal to introduce a financial incentive.”
“The huge benefit of this licence scheme is that it will also apply to non-EU flagged ships, meaning that the scope of the EU Ship Recycling Regulation will be much wider and will truly be a driving force for change in the shipping industry”, says Ingvild Jenssen, Director of the NGO Shipbreaking Platform. “Those shipowners that are already taking responsibility for their end-of-life fleet should be supportive of the Ship Recycling Licence as it will create a level playing field ensuring that also their competitors pay the price of clean and safe ship recycling,” she adds.