What Will 2017 Bring to the Ship Recycling Industry?

Significant decisions that will be made in 2017 have the potential to drastically alter the global ship recycling industry. Denmark and India have announced their intention to accede to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships in 2017, potentially heralding a breakthrough for a globally recognized standard. 

2017 will also see the European Commission announce its decision on which non-E.U. yards it will approve for recycling E.U. flagged ships. The question is whether the European Commission will approve any one of the five yards in India that have already applied and which have already proven their compliance with the Hong Kong Convention in advance of it entering into force. This will be a pivotal decision for the industry in South Asia.

Currently, three-quarters of the shipping tonnage recycled annually occurs on the beaches of Bangladesh, India and Pakistan, employing over 130,000 workers in the process. It is these yards and their workers who will either benefit most or lose out based on the decisions made in 2017. 

The upcoming year holds the opportunity to raise standards, improve workers’ health, safety and welfare, reduce environmental impact and drive widespread sustainability in recycling practices across the world. However, as shipping is an international business, this must be done on a global basis, as it cannot be limited to selected regions. 

This is the danger held within the E.U. Ship Recycling Regulation. If the European Commission does not approve South Asian Hong Kong Convention compliant yards that have met the application criteria, due to their use of the beaching method, it will create an insurmountable divide based solely on geographic location.

With three-quarters of the world’s recycling capacity located in South Asia, where beaching is prevalent, the idea that Europe should ban its ships from being recycled there in order to protect workers’ health and safety and the environment is not only irresponsible but naïve. It is not the location of the recycling process that determines its safety or sustainability, but how the process is managed and what oversight is in place. It is just as possible to implement clean and safe recycling practices on a beach as it is to conduct dangerous and polluting recycling alongside a pier.

A misjudged European decision could also threaten the further development and adoption of the Hong Kong Convention, damaging the prospects of improvements in health and safety for workers in South Asian at yards that are not currently investing in becoming Hong Kong Convention compliant. 

The global pressure for the Hong Kong Convention to enter into force is largely driven by western economies and Japan, with European nations playing a huge part. With a list of approved yards, E.U. governments could consider their work on ship recycling as “job done,” removing that international pressure in support of the Hong Kong Convention. If they were to be excluded from E.U. approved lists and with momentum lost on the Hong Kong Convention, financial and regulatory incentives to improve environmental protection and workers’ conditions in South Asia would be lost, and investments and improvements in South Asian yards could be abandoned. It’s a bleak prospect.

Conversely, if the E.U. decides to include on its approved list the leading yards in India that have met the Hong Kong Convention Statement of Compliance (SoC) standards and applied for EU approval, it could be a huge boost to the already booming investment in improving standards in Alang. 

Currently, of the 132 registered recycling yards in Alang, 17 have been awarded Statements of Compliance with the Hong Kong Convention, a further 26 are expected to receive SOCs shortly, and another 20 are expected to apply. 

Furthermore, worker health and safety is set to be boosted via a $4.4 million grant towards training, as part of the Indian Government’s Sagarmala Project. With such positive developments already in place, inclusion on the E.U. approved list would only drive a further upturn in momentum towards increased standards. 

It is high time for the officials in Brussels to understand how this industry works if they wish to regulate it in a way that is just, that is practical for the shipping industry and that is enforceable. 

The approval of Indian yards, will also demonstrate that the Hong Kong Convention and the E.U. Ship Recycling Regulation are be complementary rather than mutually exclusive, helping in this way to sustain the momentum towards the Hong Kong Convention’s entry into force. 

For Pakistan and Bangladesh, the approval of Indian yards would demonstrate the benefits that could be gained through Hong Kong Convention compliance ahead of its entry into force, paving this way the preparation of the recycling industries of the two countries for their eventual accession to the Convention. 

At the same time, this will provide a greater incentive for the two countries to secure funding for hazardous waste handling facilities to enable them to meet the standards of the Hong Kong Convention for the ship recycling industry and the requirements of the Basel Convention across all industries in the region. This will benefit all industrial workers in these countries.

Ship recycling is an essential part of the shipping industry and part of every vessel’s lifecycle, but it can easily be overlooked in the day-to-day discussion of operations. However, there is no doubt that the industry stands on a knife-edge as we head into 2017. 

GMS stands alongside the IndustriALL Union in calling on the E.U. to choose to support global improvement. We hope the rest of the industry will join us in our view that if the E.U.’s list excludes recycling yards based on their use of the beaching method, then this cannot be achieved. Indeed, this will destroy the opportunity of improving safety and welfare standards at some of the world’s unsustainable yards. 

Shipping industry leaders must now come together to call on the E.U. to accept the best Indian recycling yards on its approved list and on all IMO member States to accede to the Hong Kong Convention to speed up its entry into force. Only together can we make sustainable ship recycling the norm, rather than the exception.

Dr Nikos Mikelis is non-executive Director of GMS.