In the last twenty years there have been considerable changes in contracting practices for dealing with a vessel’s end of life. This partly reflects growing sensitivity to corporate responsibility issues and concerns about attracting adverse publicity, but also the domestic and international measures being implemented to regulate the industry.
European ship owners are said to own about 35% of the world fleet and, until recently, a large proportion of these vessels were being dismantled in South Asia under conditions often harmful to both workers’ health and the environment. However, this is no longer possible for EU-flagged vessels, which must now be dismantled in EU-listed yards. Through this initiative, the EU is leading the way to improve social and environmental conditions under which ships are operated and recycled.
Within this bulletin, Justin Turner and I take a look at two key adjustments to current EU ship recycling regulations, firstly in response to the Covid-19 pandemic and secondly, to ease pressure on the limited number of recycling yards authorised to scrap EU-flagged vessels.
Ships sent for disposal are very likely to be treated as “waste” within the regime established by the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their Disposal (the “Basel Convention”). The Basel Convention was adopted in 1989 following widespread outcry at the dumping of toxic waste at sea.
However, in future, control of ship recycling will fall under the ship specific international scheme of the International Maritime Organisation’s Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the “Hong Kong Convention”). This takes a wider approach to the issue of ship recycling and is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risk to human health and safety or to the environment. The Hong Kong Convention has not, however, yet entered into force.
In the meantime, the EU has implemented its own measures in relation to ship recycling by bringing into force (from 30 December 2013) Regulation (EU) No 1257/2013 and amending prior Regulation (EC) 1013/2006 and Directive 2009/16/EC’ (the “EU Ship Recycling Regulation”), thereby ensuring early implementation of Hong Kong Convention principles for ships flying the flag of an EU Member State.
One such requirement introduced by the EU Ship Recycling Regulation was the obligation for vessels to carry an Inventory of Hazardous Materials (“IHM”) on board. The IHM gives insight into the presence of hazardous materials on board a ship (such as mercury, asbestos and radioactive substances) with the aim of minimising risks to the health of employees and the environment.
Further, under the EU Ship Recycling Regulation and since the end of 2018, all large sea-going vessels sailing under an EU Member State flag are also required to use an approved ship recycling facility included in the European List of Authorised Ship Recycling Facilities (the “European List”). To be included in the European List, any ship recycling facility irrespective of its location must comply with a number of safety and environmental requirements.
Highlight: IHM deadline extended to 30 June 2021.
As of 31 December 2020, the EU Ship Recycling Regulation requires all existing EU flagged ships (and non-EU flagged ships calling to an EU port or anchorage) to carry on-board an IHM, with a certificate or statement of compliance, as appropriate.
The primary responsibility regarding compliance with the IHM-related obligations remains with the ship owner. However, the European Commission has recognised that it may be necessary to take into account the exceptional circumstances linked to the Covid-19 crisis in the enforcement of those obligations by Member States, where those circumstances create situations where the compliance with these obligations is temporarily not possible, or excessively difficult.
For many vessels, the on-board surveys that should have been undertaken to support the IHM could not be carried out due to the restrictions on inspecting vessels that were in place during the Covid-19 pandemic. In all such cases, where the failure to carry a valid IHM and/or the necessary certificate is involved, there is a burden of proof on the owner/master, who needs to provide evidence that all possible measures were taken to undertake the work and obtain the certification required.
As a result of the disruption caused by Covid-19, the deadline date of 31 December 2020, by which all existing EU flagged ships and non-EU flagged ships calling to an EU port or anchorage are to carry on-board an IHM, has been extended by six months to 30 June 2021.
Highlight: Changes to the European List for Ship Recycling.
Last month, the European Commission published the 7th edition of the European List of ship recycling facilities, which saw the inclusion of several new yards on the European List. Notably, these include two yards in Turkey, which have capacity to recycle larger, “panamax” sized ships. Leading London brokers have heralded this as “extremely important” due to the already-busy Turkish yards currently being close to full capacity. Indeed, it is possible that Turkey may emerge as owners’ preferred choice for EU recycling (the UK government has been sending larger decommissioned warships to Turkish yards for recycling for some years now).
With the new update, the European List of ship recycling facilities now contains 43 yards, including 34 yards in Europe, 8 yards in Turkey and 1 yard in the USA. However, BIMCO Secretary General David Loosley has remarked: “It is positive that the EU list of approved recycling facilities has been expanded, but the fundamental problem persists: the capacity required for the large EU-flagged fleet simply isn’t there.”
Yards from the Indian sub-continent are still missing from the European List because the EU authorities consider that the majority of shipbreaking facilities in South Asia do not meet the safety and environmental requirements to be included. However, conditions are said to be improving in the region and it appears that whilst one facility in India has now been declared acceptable to the European Commission auditors, the local infrastructure surrounding the yard is not.
With the new update, the European Commission has also extended the date of inclusion of some existing yards and has removed some European yards that are no longer involved in ship recycling activities or have not had their authorisations to conduct ship recycling renewed. Unfortunately, the UK facilities appear to have been essentially removed from the European List due to Brexit, forcing British yards to apply for re-inclusion. In the meantime, a significant amount of potential capacity has been removed.
The aim of this revision to the European List was, in part, to ensure that ship owners of EU-flagged vessels have a wider range of choices to get their vessels dismantled in the future. However, many in the ship recycling industry do not consider that the European Commission has gone far enough. Unless the EU authorities address this evident lack of capacity in the near future, there must be a serious risk that ship owners may consider selling ships out of their fleets, with the real prospect of some vessels slipping through the net to be disposed of at facilities which do not maintain the environmental, health and safety standards provided by compliant yards on the European List.