The International Maritime Organization’s (IMO’s) Hong Kong Convention, which sets standards for more sustainable ship recycling, will enter into force on 26 June 2025. The European Union has its own Ship Recycling Regulation. Will the latter now align with the first?
Representing the Indian government was Mr Shri Rajesh Kumar Sinha, who emphasized the importance of the coming into force of the Hong Kong Convention (HKC). With an international enforceable legal instrument in place, recycling yards now have a basis to make the necessary investments to position themselves in a more competitive market.
Notwithstanding more than EUR 10 million already invested, the lives of workers – including safety measures, working conditions, medical facilities, education and training – are improving correspondingly.
The knock-on effects of the Hong Kong Convention on workers’ conditions were likewise an issue highlighted by Walton Pantland of IndustriALL Global Union. Unions have been supporting the ratification of the HKC because while it is not a panacea for all problems faced by yard workers, it is a solid foundation to institute high standards for working conditions as is already the case for several yards in India. The Convention has the potential to create a race to the top in terms of social standards.
Will Convention drive up prices?
What about pricing then? If the Hong Kong Convention drives up social standards, will it likewise drive up prices, which in turn will make companies choose non-compliant recycling yards instead?
Representing Grieg Green, Elin Beate Saltkjel thinks otherwise: In their database of recycling yards, the Hong Kong Convention forms the basic standards by which a yard is judged on how much further it has improved. Therefore, high standards are what shipowners are going for, not by region or by price.
The selection and purchasing process then gets documented in the company’s ESG report. This is especially true for companies located in some European countries which require them to recycle. This requirement will hopefully be extended to the whole EU.
In view of the positive impact of the impending entry into force of the Hong Kong Convention in standards-setting and improvement of workers and environmental conditions, is there then a need for the EU to maintain its Ship Recycling Regulation (SRR)?
Mrs Christelle Rousseau, of the Directorate-General for Environment in the European Commission pointed out two issues with the argument that the EU SRR should align with the HKC:
- First of all, some shipowners circumvent the EU SRR by changing flag before recycling. They would do the same under the HKC in order to dodge the higher standards.
- Secondly, the HKC lacks the oversight mechanism that is in place in the SRR. Achieving compliance is only the first step while enforcement should be continuous and rigorous to sustain the standards.
Instruments need to complement each other
Mrs Rousseau further explained the position of the European Commission: The EU does not see the SRR and the HKC as competing, but complementing instruments. However, with the HKC coming into force, the EU will need to review the SRR as well as to understand how the two interact with the Basel Convention.
Nevertheless, the dual instruments risk creating a legal dichotomy for the industry, which in turn would impede better planning and investment.
RBSA Managing Director Wilfried Lemmens argues that the HKC is creating a worldwide level playing field. It is the biggest first step towards a win-win situation for not just shipowners, yard owners and workers, but above all for the environment.
The same opinion is echoed by BIMCO President Nikolaus Hans Schües, who said that more than 15,000 ships worldwide are lining up to be recycled, but we are not going fast enough. As long as the SRR is not aligned with the HKC, European shipowners are forced to be out of line with the Hong Kong Convention.
EU could take leading role to improve HKC
Come this 26 June 2025, it will be a watershed moment for the shipping industry, and a watershed moment for the EU. The HKC can be further improved and the EU could take a leading role. It is up to EU policymakers to decide if they want to take up the challenge – with all EU member states being IMO members – or choose to work alone.
This question can only be answered by the next EU legislature. The European Commission is preparing a staff working document for the second quarter of 2024. Depending on the findings, an impact assessment would be launched to address the problems identified. Only after that, a potential revision of the EU SRR would then be decided upon.
Picture by IMO/Flickr.