SHIP RECYCLING

EU Ship Recycling Regulation Brief - Impact Overview

1.     Regulations

EU Ship Recycling Regulation ("EU SRR") – means Regulation (EU) No 1257/2013 of the European Parliament and of the Council of 20 November 2013 on Ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC (EU SRR).

It requires EU flagged ships to be recycled at approved yards on the EU list. EU yards are allowed on the list without fulfilling uniform criteria. In contrast, non-EU yards have to be inspected by European Commission appointed auditors according to precise criteria before inclusion on the list.

2.     Ship Recycling Facility/ Shipbreaking Facility/Yard/Scrapyards

The owners must do sufficient due diligence and follow up in connection with disposal of Ships at the end of life and sale of Ships expected to be recycled shortly. In addition, shipowners must ensure that Ships sold for recycling are recycled according to the international regulations and standards by:

•     Using a recycling yard on the European List with a compliance statement from a reputable specialist organization concerning the EU SRR

•     Preparing the Ship for responsible recycling through mapping all hazardous material, arranging necessary inspections, obtaining the required certificates, and emptying, cleaning and venting the Ship as per the EU Ship Recycling Regulation requirements.

•     Using yards that can document responsible recycling through a Ship Recycling Facility Plan and a vessel-specific Ship Recycling Plan.

•     Using yards with fixed arrangements for collecting and processing hazardous or contaminated waste and proper emergency response capabilities to document good HSE and labour policies.

•     Following up the recycling process through inspections and reporting.

•     Securing their rights to follow up, stopping work when necessary etc through the contractual agreements entered into at the sale of a vessel at the end of life.

•     Shipowners should obtain and maintain IHMs for vessels in the fleet throughout their lifetime.

              2.1  List of yards under regulations 

As of 21/01/22, the European List of Ship recycling facilities currently contains  43 yards, including 34 yards in Europe, 8 yards in Turkey and 1 yard in the USA.

The world's two biggest ship scrap yards by capacity, China's Zhoushan Changhong International Ship Recycling and Jiang Xiagang Changjiang Ship Recycling Yard, have applied to include their facilities in the future EU list Ship Recycling Facilities.

Lloyd's Register (LR) has commenced its initial verification of the yards' ship recycling facility plans (SRFP) and will help them complete their applications to the European Commission.

            2.2  List of yards outside of regulation

             Around 85 per cent of the world's shipbreaking activities occur in Bangladesh, China, Pakistan                                                 and India

3.     Cost /Earning

    3.1 Cost inside EU regulation

Cost per ton for second-hand metal from ship scraping per country as of 10.01.2022 following  EU regulation

 

Turkey

Wet - USD$ 335/345 per LDT

Dry - USD$ 325/335 per LDT

Container - USD$ 345/355 per LDT

Market Sentiment: Steady

3.2 Cost outside EU regulation

Cost per ton for second-hand metal from ship scraping per country as of 10.01.2022 not following EU regulation

             Bangladesh

Wet - USD$ 595/605 per LDT

Dry - USD$ 585/595 per LDT

Container - USD$ 605/615 per LDT

Market Sentiment: Declining

Pakistan

Wet - USD$ 585/595 per LDT

Dry - USD$ 575/585 per LDT

Container - USD$ 595/605 per LDT

Market Sentiment: Declining

India

Wet - USD$ 555/565 per LDT

Dry - USD$ 545/555 per LDT

Container - USD$ 565/575 per LDT

Market Sentiment: Declining

4.     Legal way to scrap vessel outside EU regulation

   The practice of beaching vessels for recycling is illegal for all European flagged ships. Owners who sell end of life ships to buyers knowing that such buyers are likely to dismantle the Ship in an unsafe and environmentally unsound manner, may, at the least, face reputational risk. At the worst, such sellers may be charged with violating waste shipment regulations. (Seatrade case)

5.     References:

1.   https://www.go-shipping.net/demolition-market
2.  https://www.lexology.com/library/detail.aspx?g=684cfdde-2021-41df-a27a-b60e894bc36a
3.  https://www.nortonrosefulbright.com/en/knowledge/publications/f686f825/seatrade-a-new-approach-to-violations-of-regulations-on-ship-recycling-in-the-european-union
4.  https://www.gard.no/web/updates/content/26050185/beaching-of-vessels-for-shipbreaking-legal-illegal-or-somewhere-in-between
5.  https://ec.europa.eu/environment/pdf/waste/ships/Ship%20recycling%20leaflet%20updated.pdf
6.  https://eur-lex.europa.eu/legal-content/FR/TXT/?qid=1560844195431&uri=CELEX:32019D0995
7.  https://www.best-oasis.com/green-ship-recycling

 (LDT) Light displacement tonnage is defined as the weight of the ship with all its permanent equipment, excluding the weight of cargo, fuel, water, ballast, stores, passengers, crew, but usually including the weight of permanent ballast and water used to operate steam machinery.