Brussels is preparing to toughen up its ship-recycling rules in 2023 and is ready to consider a tax paid by owners through a licensing scheme.
The review of the Ship Recycling Regulation (SRR) was revealed in the European Commission’s recently released road map to a “sustainable blue economy”.
The EC wants to “extend the scope and reinforce the existing regulation” five years after the SRR entered into force.
The SRR requires that all end-of-life Europe-flag vessels be dismantled at EC-approved shipyards that are mostly located in Europe.
However, many shipowners with Europe-flag vessels have been able to dodge the SRR by flagging out, or selling the vessels to a third party, prior to demolition.
Closing this loophole is top of the EC’s priorities in reforming the SRR.
One proposal is the revival of an idea for a finance scheme to encourage owners to recycle ships only at EC-approved yards.
Brussels turned down the idea in 2017, but promised to reconsider if European owners continued to avoid the SRR by flagging out.
The leading proposal is for ships of any flag to be required to buy a recycling licence to trade to Europe.
The licence fee would be refunded to the shipowner when the vessel is being sold for demolition.
The funds would compensate the owners for the lower sale value received when recycling ships at EC-approved yards, compared with beaching yards in South Asia. The licence scheme would also extend the scope of the SRR to flags of any nationality trading to Europe.
Driving force for change
NGO Shipbreaking Platform, the ship-recycling lobby group, is a strong supporter of the licence scheme.
Executive director Ingvild Jenssen told TradeWinds that the organisation would continue to push for such a scheme to be adopted at the upcoming review.
“The huge benefit of this licence scheme is that it will also apply to non-EU-flag ships, meaning that the scope of the EU SRR will be much wider and will truly be a driving force for change in the shipping industry,” she said.
“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.”
Another idea that could be on the table is to extend the scope of the regulation to include beneficial owners located within the European Union.
At the moment, European owners can avoid the SRR by owning vessels through special-purpose companies registered abroad.
AP Moller-Maersk is under investigation in Denmark for recycling four containerships — which were registered and traded outside the EU — at Alang in India.
There have also been industry calls for the EC to include India’s leading recycling yards, which have invested heavily in improving environmental and safety standards, in its list of approved yards.
Many Indian yards have statements of compliance with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships.
Recycling broker Ed McIlvaney recently told TradeWinds: “I am a firm believer that the standards of the green recycling yards in India are at a higher standard than the EU SRR...”
