European Commission Report Recommends ‘Ship Recycling License’

Shipbreaking at Alang, India.
Shipbreaking at Alang, India.

A new report by the European Commission recommends the introduction of a ship recycling license for all ships calling at EU ports as a form of financial incentive aimed at preventing the practice of re-flagging end-of-life vessels so that they can be disposed of at substandard shipbreaking yards. 

The recommendation was quickly rejected by the European Community Shipowners Association (ECSA) and the International Chamber of Shipping, which claim the license would undermine efforts by the International Maritime Organization (IMO) to improve working and environmental conditions in developing nations, where most ship recycling yards are located.  

The report was written by Ecorys, classification society DNV-GL and the Erasmus University School of Law and published Wednesday.

Under the model recommended, a ship recycling license would serve as the basis for the accumulation of capital over the operating life of a ship, with the aim of covering the revenue gap between using substandard versus sustainable ship recycling facilities for end of life ships. In other words, the capital amount accumulated during the operational life of each vessel would be set aside in an EU fund and only paid back to the last owner of the vessel as a premium if the ship is recycled in a sustainable facility approved by the EU.

The 2013 EU Ship Recycling Regulation requires all vessels sailing under an EU flag to use an EU list of approved ship recycling facilities. However, NGOs argue that a major shortcoming of the regulation is that shipowners can circumvent the law by re-flagging a vessel to a non-EU flag, i.e. flag of convenience, in order to sell the vessels to a substandard yards in South Asia that are otherwise banned under the law.

The mechanism recommended in the Commission’s report would be connected to the ship rather than its owner, in order to allow ownership changes during its operating life.

“EU shipping companies should not circumvent EU environmental laws and not utilise practices that would never be allowed in Europe. EU flag-neutral measures which apply equally to all ships calling at EU ports are necessary to increase environmental protection” says Sotiris Raptis, shipping and aviation officer at Transport and Environment.

An important thing to note is that the report was simply published by the European Commission and does not necessarily reflect the opinion of the Commission.

“We call on the European Commission to follow-up this report with a legislative proposal,” says Stephane Arditi, Products & Waste Policy Manager of the European Environmental Bureau. “The effective implementation of European environmental policies has been dependent on making the ‘polluter pay’. If the EU is serious about its commitment to sustainable ship recycling, all ship owners trading in Europe need to be held financially liable.”

But shipowners don’t see it that way and remain committed to the implementation of the IMO Hong Kong Convention.

“As well as being unduly complex, widely impractical and very difficult for the EU to administer, the establishment of such a Fund will be an affront to the international community which has adopted the Hong Kong Convention on ship recycling, whose standards have already been incorporated into a similar EU Regulation” said ECSA Secretary General, Patrick Verhoeven.
 
ICS Secretary General, Peter Hinchliffe added “Such a draconian unilateral measure, especially if applied to non-EU ships, is likely to be seen by EU trading partners as anti-competitive interference into the conduct of international shipping.  There is a real danger that other nations would apply retaliatory measures.”