Global shipping regulator the International Maritime Organization (IMO) and shipowners’ body the International Chamber of Shipping (ICS) are both celebrating an important milestone in scrapping old ships.

Actually, the IMO and ICS always use the term “recycling” rather than scrapping – which is much more in tune with the zeitgeist. But ship scrapping has always been about recycling – long before it became a near-religion for policymakers in the US and Europe.

I remember some 30 years ago, a very senior shipping industry figure who – after visiting a number of South Asian ship demolition (another term that often gets used) beaches – waxed lyrical about how every possible item was salvaged and stacked up for sale. He particularly noted the long neat rows of toilets placed at the side of the tracks to the beaches.

And he was quite right. The ship scrapping business was already an example of efficient recycling. However, at that time, most of us did not dwell too much on the fact that this dangerous demolition work was being carried out by people wearing slippers paddling around in puddles of oil and inhaling air full of asbestos dust.

That was deemed acceptable a long time ago but not now. But those conditions still exist. Campaign group NGO Shipbreaking Platform is of the opinion: “Just as the goods they transport, ships too become waste when they reach the end of their operational lives. Yet only a fraction is handled in a safe and clean manner. The vast majority of the world’s end-of-life fleet, full of toxic substances, is simply broken down – by hand – on three beaches in South Asia. There, unscrupulous shipping companies exploit minimal enforcement of environmental and safety rules to maximise profits.” 

Very broadly speaking, the choice is between running ships at full speed up beaches where – at least in the past – workers swarmed over them and broke them up; and taking them to dry docks where they can be dismantled under much more controlled, and arguably safer, conditions. The EU, which has plenty of dry docks, much prefers the latter option and introduced a law banning EU-owned ships from being beached. Dutch courts have fined a number of shipowners for sending ships for scrapping at non-EU approved facilities. Norway is not in the EU but follows its laws; last year, a Norwegian court jailed a shipowner for selling a ship for scrapping by beaching.

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The other side of the argument of is that the ship scrapping industry in South Asia sustains the livelihoods of more than 20,000 workers and their families. There is also the thorny issue of European politicians pronouncing what working conditions should be in other sovereign states. The Convention accepts that beaching can be carried out in an environmentally friendly and safe manner.

Last week IMO announced: “The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the Hong Kong Convention) is set to enter into force within 24 months, after Bangladesh and Liberia became contracting states to the Convention.” Bangladesh is one of the world’s largest ship recycling countries by capacity. Liberia is one of the world’s largest flag states by tonnage.

IMO explained that the Hong Kong Convention is aimed at ensuring that when ships are recycled after reaching the end of their operational lives, no unnecessary risks to human health, safety and to the environment are posed. The Convention can enter into force in two years’ time because at least 15 IMO member states representing not less than 40 per cent of the world’s merchant shipping by gross tonnage with a combined ship recycling capacity of not less than 3 per cent of the gross tonnage of the combined merchant shipping of the contracting states have now acceded to the convention. Currently, 22 member states accounting for 45.81 per cent of the world’s merchant shipping by gross tonnage have agreed, with a combined ship recycling capacity just exceeding 3 per cent.

It has taken quite a while to get to this point. The Convention was adopted at a diplomatic conference held in Hong Kong in 2009.  However, once the Convention enters into force, ships to be sent for recycling will be required to carry onboard an inventory of hazardous materials. Ship recycling facilities authorised by designated competent authorities will be required to provide a ship recycling plan, specific to each individual vessel to be recycled. Governments will be required to ensure that recycling facilities under their jurisdiction comply with the Convention.

ICS senior manager (environment and trade) John Stawpert said: “This marks a sea change for this global industry, and confirms that in the near future shipowners will be confident that their vessels will find a safe and environmentally sound destination for recycling. The importance of the Convention entering into force, and what it means for ship recycling worldwide cannot be underestimated.”

ICS noted in a statement that recycling yards now face their own “two-year journey to reach compliance, as well as the looming challenge of regional regulation in the form of the EU’s Ship Recycling Regulation”. The Convention does allow continued beaching of vessels but a compliant yard is very different from what has been the typical ship demolition site.

Mohammed Zahirul Islam, managing director at Bangladesh-based PHP, the first shipyard to become Convention compliant in 2017, told ICS that complying was a five-year, multi-stage process for his company. “We started in 2015; and by 2017, we were able to be compliant across the first half of the yard – around 100,000 tonnes in capacity,” said Zahirul. The second phase began in 2018 and was completed in January 2020, bringing total compliant capacity at PHP to 150,000 tonnes. PHP was certified as compliant by classification society ClassNK  which has issued statements of compliance to 57 yards globally, including three in Bangladesh.

According to ICS, PHP looked into complying with the EU’s Ship Recycling Regulation (EUSRR) but judged that its rules were unachievable, even for the best recycling yards in India and Pakistan. Zahirul commented that the losers in the current situation were European shipowners.

So will we end up with a truly global ship recycling regime? Stawpert told The Business Times: “The EUSRR still applies, so for the time being European-flagged ships, or ships within European jurisdiction, will not be allowed to be recycled at yards that are not on the European list. This is still a problem, as the list remains inadequate in terms of capacity, and it will remain so until Europe accepts that compliant yards exist in India and Bangladesh.”

However, he added: “The EUSRR is under review, and this process will probably be completed at the same time as the Hong Kong Convention enters into force. It is likely that a number of European states will face having to enforce two regimes in 2025 that in practice do not cohere.”

Perhaps common sense will prevail, and the EU will drop its regional approach. But if it does not, the only significant loser will be the EU’s own shipping industry.