European Commission report recommends the introduction of a Ship Recycling License
Brussels, 6 July 2016 – Ships regardless of their flag should not be allowed to call at any EU port without a ship recycling license to incentivise sustainable ship recycling, a European Commission report recommends.
The report written by Ecorys, classification society DNV-GL and the Erasmus University School of Law and published yesterday, looks into the possibility of introducing a financial incentive to enhance safe and environmentally sound ship recycling . Ship recycling license fees would be earmarked to cover the cost-gap between substandard and sustainable end-of-life ship management. The capital amount accumulated during the operational life of the vessel would be set aside for the ship and only paid back to the last owner of the vessel as a premium if the ship is recycled in a sustainable facility approved by the EU.
“We call on the European Commission to follow-up this report with a legislative proposal. The effective implementation of European environmental policies has been dependent on making the ‘polluter pay’. If the EU is serious about its commitment to sustainable ship recycling, all ship owners trading in Europe need to be held financially liable, ” says Stephane Arditi, Products & Waste Policy Manager of the European Environmental Bureau.
The 2013 EU Ship Recycling Regulation requires all vessels sailing under an EU flag to use an approved ship recycling facility . A major shortcoming of the Regulation, however, is that shipowners can circumvent the law by simply flagging out to a non-EU flag. At end-of-life, cash-buyers act as intermediaries and sell the vessels to substandard yards in South Asia often using flags of convenience which are grey- or black-listed by European governments under the Paris Memorandum of Understanding. Last year, Bangladesh, where human rights abuses and pollution caused by shipbreaking activities are known to be the worst, was the preferred destination for end-of-life ships. EU owners account for around one third of the end-of-life tonnage beached in substandard yards in Bangladesh, India and Pakistan. Thus, the EU is the single largest market sending end-of-life ships for dirty and dangerous shipbreaking and has a particular responsibility to regulate ship recycling . “EU shipping companies should not circumvent EU environmental laws and not utilise practices that would never be allowed in Europe. EU flag-neutral measures which apply equally to all ships calling at EU ports are necessary to increase environmental protection” says Sotiris Raptis, shipping and aviation officer at Transport and Environment.
European ports are not opposing the ‘ship recycling license’  and SeaEurope, Europe’s ship yard and maritime equipment association, has expressed enthusiasm towards ensuring better implementation of the Ship Recycling Regulation – last month they called for support to enhance ship recycling capacity and R&D towards more cost effective solutions in Europe .
“The upcoming EU list of approved ship recycling facilities will function as an important market differentiator for yards that have already invested in proper occupational health & safety and environmental standards. The use of the EU listed facilities will however depend on the introduction of an effective financial incentive that forces irresponsible shipowners towards better practices” says Ingvild Jenssen, Policy Director at the NGO Shipbreaking Platform.
 Article 29 of the EU Ship Recycling Regulation asks the European Commission to submit a report on the feasibility of a financial instrument that would facilitate safe and sound ship recycling, and to accompany this report by a legislative proposal if deemed appropriate. For Regulation text see http://ec.europa.eu/
 A list of approved ship recycling facilities globally will be published by the end of 2016.
 Approximately 40% of the world fleet is controlled by owners based in the EU+EFTA, only 17% of the world fleet, however, sails under an EU+EFTA flag. The vast majority of EU-owned ships are sailing under the flags of states such as Panama, Liberia and the Marshall Islands during operational life. The percentage of EU flags drops to less than 8% at end-of-life.
 An earlier proposal for a ‘ship recycling fund’ was narrowly rejected by the European Parliament in 2013 with industry stakeholders, including the shipping industry and ports, strongly opposing the fund at the time. Whilst ship owners remain unwilling to bear the cost of sustainable recycling, both the public and private European port associations – ESPO and Feport – have now expressed that they are satisfied with the new license proposal. The license scheme will not be administered by the ports. It is also time-based, with the option of a monthly or yearly license, rather than based on the collection of a fee at each individual port call.
 See press release from 11 May 2016: http://www.seaeurope.eu/
For more information see our “What a difference a flag makes” report on why ship owners need to be held accountable for sustainable ship recycling beyond flag state jurisdiction.