In an exclusive interview with SAFETY4SEA, Dr Nikos Mikelis, Non-executive Director, GMS, provides updates of the regulatory scheme surrounding ship recycling and the current situation in ship recycling yards, says an article published on safety4ses website.
What are the key industry’s challenges with regards to ship recycling up to 2030 from your perspective?
The safety of workers and the protection of the environment during the recycling of ships so far has not been regulated by international regulation, and any controls to ship recycling activities have been based on national regulation as enforced by the country where recycling yards operate.
As however the ship recycling industry is dominated just by three South Asian countries (Bangladesh, India and Pakistan) where weak enforcement and poor working conditions had often led to accidents with fatalities and to persistent pollution, international efforts in the 1990s were made to implement to the ship recycling industry the already existing and in force Basel Convention (“The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal”).
When do you foresee the Hong Kong Convention to enter into force? Do you expect any major changes? What are your suggestions?
HKC will enter into force two years after three conditions have been met. The first condition requires ratification or accession by 15 countries (the Contracting States), and this has already been met. The other two conditions are interlinked, with the second requiring that Contracting States must control at least 40% of the world fleet and the third condition requiring that the recycling capacity of these States must amount to at least 3% of their fleets’ tonnage. Presently there are 16 Contracting States whose tonnage is 30% of the world’s fleet, and whose recycling capacity is 2.5% of the 40% target.
The second and third conditions would be satisfied if China (together with Hong Kong) acceded to the Convention before the summer of 2023 (this is because ship recycling capacity is based on the maximum volume recycled in the ten most recent years and China and India’s recycling output dropped dramatically after 2012). While the Chinese government’s intentions about accession to HKC are not known, under this scenario HKC could potentially enter into force by 2024 to 2025.
Alternatively, the two conditions can be satisfied by Bangladesh’s accession together the accession of one or two large open registries. The government of Bangladesh had decided before the Covid pandemic that the country would accede to HKC in 2023. If that timetable is to remain valid, then entry into force under this scenario could take place by 2025.
Pakistan, being the other remaining major ship recycling country, does not have sufficient recycling capacity to satisfy (together with Turkey and India) the third condition. Furthermore, Pakistan’s recycling industry has yet to upgrade towards the standards of HKC.
The Hong Kong Convention, as any other international Convention, cannot be amended before it enters into force. Thereafter, any changes can only take place in accordance with HKC’s Article 18 (Amendments).
How likely is that the current situation in the existing shipbreaking yards will change following the HK Convention implementation?
Although not yet in force, the Hong Kong Convention is already being implemented on a voluntary basis by parts of the shipping and the ship recycling industries.
The delays of governments to accede or ratify the Convention; concerns over a ban to beaching by the European Regulation; the propaganda of the NGO Platform; and the decline of the Chinese ship recycling market motivated a number of quality shipping companies, first from Japan and then from Europe, to work closely with selected recycling yards in India, which agreed to upgrade their infrastructure, training and procedures so as to comply with Hong Kong Convention.
With growing demand for responsible recycling from shipowners a two-tier market developed with a price differential between normal recycling and responsible (or green) recycling. The four compliant yards enjoyed demand for their services, which was reflected in profitable contracts. Profiting from compliance with the Hong Kong Convention incentivised numerous other recyclers in Alang to start upgrading their facilities and seek Statements of Compliance for their yards.
There has been limited change in Bangladesh where only a small number of yards have addressed or are addressing their compliance, and even less improvement in Pakistan. The concern now is that India, with its higher costs of compliance, is falling behind Bangladesh and Pakistan in attracting tonnage for recycling.
As the number of shipowners who are committed to recycling their ships only in HKC compliant yards has not grown in line with the supply of compliant recycling capacity, the yard owners in Bangladesh and Pakistan are not being motivated to invest in upgrades of infrastructure, training of the workforce and systems.
How would you describe the overall situation at EU shipbreaking yards? Has there been any improvement with regards to safety and working conditions following the EU Ship Recycling Regulation?
The European Union is by far the world’s largest net exporter of scrap steel. The vast majority of the ferrous scrap exports from the European Union go to Turkey, with some quantities also being exported to Egypt, India, China and Pakistan.
Consequently, Europe has a small ship recycling industry that takes care of the recycling of small boats, inland waterway vessels, any damaged or wrecked ships, and some offshore structures. This is reflected in the official data used by the IMO which show that the EU’s combined maximum annual recycling volume (including Norway and the UK) was only 0.58% of the world’s capacity, while in 2019 the total tonnage recycled in the EU was 42,954 GT, representing just 0.35% of all tonnage recycled in the world (equivalent to a little more than a Panamax vessel).
The EU Ship Recycling Regulation applies a stricter regime for the approval of non-EU based yards involving audits by the European Commission and its consultants. Conversely, yards based in the EU are authorised by their national authorities. It is therefore very unlikely that the introduction of the EU SRR will make any difference to the technical standards under which EU based yards operate, which in any case should already have been sufficiently good.
In your view, has the industry been successful in addressing ship recycling issues? What should be the next steps?
Assuming that by “the industry” the question refers to the shipping industry, then the answer is mostly negative. With the exception of the leading Japanese shipping companies and of a number of well-known west European shipping companies, the shipping industry in the main has not confronted the challenges that have arisen with the efforts to set up an international regulatory regime for ship recycling.
Presently, for the sake of $20 to $30 per LDT, the majority of shipowners continue to sell their end-of-life ships to non-compliant yards, and thus failing to bring forward the implementation of HKC as the single global standard. Waiting for its entry-into-force is unfortunately just an excuse.
Furthermore, the shipping industry, with a few shining exceptions, has avoided challenging the European Commission’s misguided, impractical and of questionable efficacy policies. Most likely this is because to the shipping industry ship recycling is an issue of secondary importance compared to the bigger headaches (first ballast water management; then low Sulphur fuels; now emissions).
Summary
- Interview with SAFETY4SEA, Dr Nikos Mikelis, Non-executive Director, GMS, provides updates of the regulatory scheme surrounding ship recycling and the current situation in ship recycling yards.
- The safety of workers and the protection of the environment during the recycling of ships so far has not been regulated by international regulation.
- HKC will enter into force two years after three conditions have been met. The first condition requires ratification or accession by 15 countries (the Contracting States), and this has already been met.
- The Hong Kong Convention is already being implemented on a voluntary basis by parts of the shipping and the ship recycling industries.
- Presently, for the sake of $20 to $30 per LDT, the majority of shipowners continue to sell their end-of-life ships to non-compliant yards, and thus failing to bring forward the implementation of HKC as the single global standard.
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Source: safety4sea
