A global standard for ship recycling

From the magazine – From June 2025, the Hong Kong Convention (HKC) will rule worldwide ship recycling activities. The HKC is expected to have a significant impact on ship recycling practices worldwide, and a step towards one unified global standard.

This article was written by ir Martijn van Wijngaarden (pictured on the right), independent marine consultant and SWZ|Maritime guest editor, consultant@vineyardseurope.nl. It was originally published in SWZ|Maritime’s November 2023 issue.

Shipowners and recycling yards need to prepare for its implementation deadline. The European Union is considering alignment of its own ship recycling regime with the upcoming mandatory international HKC legislation. Voluntary adoption of HKC minimum standards is already happening in India. In Bangladesh, it is progressing.

In 2009, IMO set the regulatory framework for ship recycling and adopted a legally binding instrument: The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC). The HKC covers both international shipping and local ship recycling facilities. Its main aim is to ensure that the end-of-life recycling of ships is done in such a way that risks to human life and the environment are minimised.

For years, the number of IMO member states ratifying the Convention remained insufficient. But in June 2023, the HKC was ratified by Bangladesh, a major recycling state, and Liberia, a major flag state. A very welcome development at last. The HKC will now enter into force 24 months after the ratification conditions were met, which will be 26 June 2025.

Also read: Hong Kong Convention on ship recycling to enter into force

Why it took so long

The first cause of the extreme long period of HKC recognition by IMO member states lies in the hybrid nature of the ratification requirements set out by the Hong Kong Conference itself. It raised ratification thresholds for parties contributing both shipping tonnage and recycling tonnage, and these are administered by entirely different countries.

Within potential ratifying countries, the domains of shipping, metal processing industries, labour conditions, and environmental protection are usually covered by different ministries and government services. Hence their inherent reluctance to appoint one national competent authority as required by the HKC. On the legal side, there is perceived uncertainty on how acceding to the HKC would relate to the Basel Convention being already adopted by many countries and having become binding international and EU law.

Across borders, there is a wide spectrum of stakeholders in ship recycling. All with different roles, perspectives, interests, powers and cultures. For society at large, a diversity of opinions may be inspiring a continued debate. But this way, the chances of timely international consensus on a practical and enforceable regime for ship recycling are not growing.

In the public domain, one should not underestimate the power of social media. Nowadays, anybody in the vicinity of a ship recycling facility can operate a mobile phone camera or fly a drone camera. Should a shipowner or recycling yard violate its public pledge to use only sound recycling standards and practices, then this contradiction gets easily and rapidly exposed by pictures broadcasted on the internet.

HKC impact on ships

All ships above 500 GT shall have a certified Inventory of Hazardous Materials (IHM) on board (part I only). Most shipyards already offer IHM preparation for newbuilds, so the additional impact of the HKC on newbuilds is not expected to be large.

Ships in service shall comply with this requirement by 26 June 2030 or before going to recycling (with IHM parts II and III also completed) if this is earlier. About half the world’s current fleet is already carrying an IHM Certificate or Statement of Compliance. Still, a large number of existing vessels will need to be equipped with a certified IHM over the coming seven years.

The maintenance of the IHM in case of any changes to the ship’s structure or equipment will become more important with the entry into force of the HKC, as Port State Control is expected to focus on IHM inspections globally.

HKC impact on recycling yards

The impact on Ship Recycling Facilities (SRFs) is expected to be significant. Each party to the HKC shall establish a mechanism for authorising SRFs to ensure that they meet the requirements of the HKC. Such an authorisation is called a Document of Authorisation Ship Recycling (DASR) and will be valid for a maximum of five years. Authorised SRFs shall only accept ships that comply with the HKC, which they are authorised to recycle.

Each SRF shall prepare a Ship Recycling Facility Plan (SRFP) that includes a system for ensuring implementation of the HKC requirements, such as:

• A policy for ensuring safety and protection of the environment.
• A training programme for the safe and environmentally sound operation of the SRF.
• An emergency preparedness and response plan.
• A record-keeping system.
• A system for reporting emissions, accidents, incidents, occupational diseases and other adverse effects to workers’ safety and the environment.

IMO has published Guidelines for SRFs and their operational Health, Safety, and Environment (HSE) systems. On the basis of a successful audit against these HKC Guidelines, a Statement of Compliance (SOC) can be issued to a recycling yard by a classification society. ClassNK, RINA, the Indian Register of Shipping (IRS), Lloyd’s Register (LR), Bureau Veritas (BV) and DNV are active in this service. This class SOC is, however, not the same as the DASR.

Shipowners, who operate under the regimes set by their flag states, have to collaborate with recycling facilities, who operate under licence from their recycling states. Ship recycler and shipowner have to prepare the Ship-specific Recycling Plan (SRP) jointly.

Ship recycling legislative complexities

The Hong Kong Convention has an EU equivalent with slightly stricter requirements and geographical restrictions already in force. Moreover, we also have the Basel Convention and the Basel Ban Amendment, which are UN directives. The Basel Ban is applicable to all ships becoming waste in OECD territories. The Organisation for Economic Co-operation and Development (OECD) has 38 member countries around the world, the majority of which are in Europe.

The Basel regulations, which have been agreed by 191 countries, were designed to reduce the movement of hazardous waste between nations, specifically from developed to less developed countries. One stipulation is that a ship operating in an OECD country cannot go to a recycling facility outside of the OECD. Basel is solely concerned with the environment. The Basel Convention does not address worker safety in ship recycling, nor does it concern itself with the practicalities of ships, shipping, or ship recycling.

It’s not surprising that it is often unclear which of the many overlapping regulations apply. In addition to this, some countries don’t have a framework in place for managing compliance with the administrative requirements of the Basel Convention and Ban Amendment, making it difficult to adhere to the regulations from a practical perspective.

The resulting confusion is reflected in the maritime press, amongst regulators and even in the judiciary world. An increasing number of shipping companies and their directors are being prosecuted for not recycling ships in EU yards, for infringements of the EU Waste Shipment Regulation (WSR), or for not having the right papers in place as stipulated under the Basel Convention.

This confusion about regulatory complexities should by no means provide an excuse for not recycling a ship responsibly. But it would be far better if Basel, IMO and the EU recognise each other’s regulatory regimes as equivalent, and jointly establish one undisputable global standard for ship recycling that cannot be bypassed.

EU-SRR requires more than HKC

The long time needed for ratification of the HKC has caused the EU to take timely action, resulting in the EU Ship Recycling Regulation (EU-SRR 1257/2013), which has fully been in force since 2020.

The EU-SRR closely follows the HKC’s structure, concepts and definitions. However, the Regulation also sets out a number of additional requirements that go beyond those set in the HKC. The SRR has different timelines for the application of the requirements, depending on specific ship stage, EU or non-EU flagged, etc. And the SRR sets additional requirements for approved ship recycling facilities to:

• Control any leakage, in particular in intertidal zones.
• Handle hazardous material (HazMat) and waste only on impermeable floors with effective drainage systems.
• Operate from built structures.
• Implement standards for downstream waste management.

As soon under the HKC, the mandatory IHM is already the cornerstone of the EU ship recycling regime. All ships flying an EU flag and any other ships entering an EU port must have an up-to-date and verified IHM on board.

Although the EU-SRR is only applicable in the EU shipping and recycling domain, it has prepared the industry for compliance with the HKC requirements.

Also read: SWZ|Maritime’s July/August 2021 issue: Responsible ship recycling

The EU List of recycling facilities

The other major requirement for recycling of EU-flagged ships is anchored in the obligation to go only to EU white-listed recycling facilities. EU competent authorities audit prospective recycling yards and when found acceptable, they are incorporated in the official EU List of recycling facilities. The List is updated and published on the EU website with an interactive map.

In the latest version of July 2023, there are 48 yards on the current list, 47 of which are in greater Europe (EU, Turkey, UK and Norway) and one is in the US. The five EU-listed recycling yards in the Netherlands are Decom Amsterdam, Damen Verolme Rotterdam, Hoondert Nieuwdorp, Sagro Nieuwdorp, and SSN ‘s-Gravendeel.

Also read: In pictures: Bulk carrier OS 35 leaves Amsterdam port in small pieces

On paper, the EU-listed yards have more than enough recycling capacity. However, when taking a closer look, some of these yards are not dedicated recycling yards, but ship repair yards. And – although they could theoretically do the job – repair yards have no interest in occupying their premises with ships for recycling.

The restriction to EU-listed yards has drawn criticism from shipping and recycling parties worldwide. Only a very small portion (around five per cent annually) of the world’s ship recycling activities are actually carried out in Europe, including the UK and Norway. Insisting that only EU authorised yards have the capability to recycle correctly, is a narrow Eurocentric view of the recycling industry and not at all in keeping with the global nature of shipping.

The added value of continuing a diverging European legislation can be questioned in the light of worldwide HKC coverage. Recent European Commission proposals to augment the EU-SRR by introduction of financial incentives and widening the scope to EU beneficial ship ownership can be debated. Whereas harmonisation with the HKC to forge an equivalent standard needs to be considered with priority.

It would be a very welcome development to remove one regulation from the regulatory overlaps, not least because the EU-SRR’s requirement that EU-flagged ships must be recycled in EU-approved yards is particularly challenging. And a unified global standard, drawing upon the principles of the HKC, is crucial to provide clarity and consistency to the maritime industry.

The number of EU-listed recycling yards per country (from EU Website – July 2023):

• Belgium: 1
• Bulgaria: 1
• Denmark: 6
• Estonia: 1
• Finland: 1
• France: 4
• Italy: 1
• Latvia: 1
• Lithunia: 4
• Norway: 8
• Spain: 2
• The Netherlands: 5
• Turkey: 9
• United Kingdom: 3
• United States of America: 1

WILL THE EU’S SHIP RECYCLING REGULATION ALIGN WITH THE HONG KONG CONVENTION?

The question was in the mind of every participant at the panel discussion jointly organised by the Royal Belgian Shipowners’ Association (RBSA) and BIMCO at the European Shipping Summit held on 19-20 September 2023 in Brussels. The expert panel first considered the HKC benefits.
Then it went on to discuss the key question: 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 still a need for the EU to maintain its Ship Recycling Regulation?
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 EUSRR 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.
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.
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. A public consultation on the effectiveness of the EU-SRR and EU List has been held and many viewpoints from various stakeholders have been harvested. 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.

Source picture on the right: RBSA.

India moves ahead

In South Asia, the biggest gain is made by raising the standards of the recycling yards to the minimum of the IMO Convention. On a voluntary basis, this is already happening in India. India is a major ship recycling state. About one third of the world’s annual recycling volume, including merchant ships and offshore vessels of all types, is processed at Alang in Gujarat.

As a major recycling state, India has taken the big step of HKC ratification in 2019 with subsequent incorporation into national legislation. Operators of the many recycling yards in Alang are local entrepreneurs who are in fierce competition with each other. Many saw the benefits of early adoption of the HKC standards.

Bangladesh is runner up

Visible HKC compliance is gaining momentum in Bangladesh from early this year. Yards get outfi tted with a large impermeable floor with drainage points, activity zoning and worker protection against flame cutting hazards. The second yard has celebrated its certification for HKC compliance by ClassNK in March this year.

A third and fourth yard have also completed the process. And more are to follow soon, now that Bangladesh has ratified the Hong Kong Convention. The government already made the IHM mandatory for the acceptance of ships at all yards.

Norway and Japan have continued technical support to upgrade yard infrastructure to HKC standards. Japanese shipowners may now start sending their ships for recycling to Bangladesh.

Inherently, the better South Asian yards are moving away from the traditional haphazard gravity method of scrapping a ship’s hull on a tidal beach. Planning and execution is now done as a project. Improving the labour conditions and HSE standards in the process. Downstream waste management is, however, still a concern in these countries.

Roadmap towards sustainable ship recycling

Nowadays, there is a genuine drive towards better standards. And an increasing collaboration amongst industry stakeholders to share sound ship recycling policies and best practices. Pro-active shipowners will need a place to go to in order to recycle their vessels responsibly. These places can become available in South Asia, where yards are visibly upgrading their facilities including protection of workers and the environment.

The HKC coming into effect is good news for a level playing field in the international ship recycling business. And for labour conditions, health, safety and environment at recycling yards worldwide. The HKC will have a significant global impact on ship recycling once fully enforced. But unravelling the regulatory mishmash by amalgamation into a single unified worldwide ship recycling standard would really pave an efficient road for sustainable ship recycling.

Picture (top): Secondary cutting area of first HKC compliant yard at Alang, India (source: Priya Blue Industries).