PartnerShip MaritimeReview – Junk for some, gold for others

(Written by Patrizia Heidegger)

1 August 2013 – While the European Union was discussing a solution for clean and safe ship recycling between March 2012 and June 2013, at least 945 end-of-life vessels were run ashore on tidal beaches in India, Bangladesh and Pakistan. None of these ships was recycled in a safe and sustainable way. More than one third of these ships – 355 according to our figures – belonged to shipping companies based in the European Union. Bulgarian shipping companies sold ten ships to breaking beaches in this period. While Romania did not send ships, at least 168 ships were sold by Greek companies alone during this time.

Interestingly, eight out of the ten Bulgarian ships belonged to the government. In 2008, the state-owned shipping company “Navigation Maritime Bulgare” underwent a privatization process whereby 70% of the company was sold to a Bulgarian-German consortium, KG Maritime Shipping. One of the demands put forward by the Bulgarian government was for the consortium to reduce the average age of the fleet to less than 20 years – a more attractive investment for foreign banks. All eight ships sold for breaking to South Asia were older than 20 years. The Government of Bulgaria should have ensured that their old vessels were recycled in a clean and safe way, without putting workers and the environment in South Asia in danger. The sale of the Bulgarian vessels was in contradiction to the EU Waste Shipment Regulation, which prohibits any export of hazardous wastes to developing countries, and clearly defines end-of-life vessels as falling under its scope.

Shipbreaking: no safety for workers

In the South Asian shipbreaking countries, authorities do not strictly enforce existing environmental and safety rules. Only after campaigns by non-governmental organisations (NGOs) in Europe, North America and South Asia, did the responsible governments start to seek regulation for the yards, for instance in Bangladesh, where the industry had operated without being acknowledged by the authorities. Still, the day labourers who cut down the ships are usually unskilled and often not trained to properly use personal protective equipment (PPE). With regards to hazardous materials, not enough care is given to the protection of workers’ health and safety. In short, due to the lack of heavy lifting equipment, poor training of workers and foremen, inadequate security measures against falling from heights and the disregard for PPEs, accidents and the exposure to hazardous substances are a major threat to workers in the shipbreaking yards.

Although there is no official documentation of injuries and fatalities in the yards and access to information is restricted, our local contact in Bangladesh counted at least 21 deaths last year caused by accidents in which workers fell from great heights, were crushed under metal plates or killed in explosions. Taking into consideration that the Chittagong shipbreaking yards in Bangladesh directly employ a maximum of 20.000 workers and that even more workers die in unrecorded accidents and as a result of occupational diseases, the death toll makes shipbreaking one of the most dangerous jobs in Bangladesh.

Off the beach!

We and our member organisations in South Asia argue that shipbreaking should not take place directly on beaches. As long as shipbreaking is practiced on sandy or muddy beaches, full containment of pollutants and the adequate management of hazardous wastes are not possible. Moreover, the beaches prevent the use of heavy lifting gear in order to make work safer and less laborious for the workers. Finally, the beaching method does not allow for adequate emergency response by ambulances or fire fighters in cases of accidents as no vehicle can reach a vessel stuck in the mud or the sand. Therefore, we have been promoting a transition towards cleaner and safer methods. The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, especially in its Guidelines on ship dismantling, has proposed to discard beach-breaking for stable structures. Nearly all major ship owning countries as well as the shipbreaking countries in South Asia have ratified the Basel treaty. However, even if some minor improvements haven been achieved, we do not see any structural change in South Asian yards so far.

Already today, there are other, cleaner and safer methods, for ship recycling. Turkey practices the landing method, where ships are partly pulled ashore and then dismantled both with floating and land-based cranes. Smaller metal pieces are cut down on an impermeable floor in order to avoid the leakage of pollutants into the water and the sediments. A second method practiced in China, by European recyclers for example in the UK, Denmark or Belgium, as well as in North America, is the pier-side method. The vessel is moored along a quay and dismantled by cranes from top to bottom. Once only the lower part of the hull is left, it is pulled onto a slipway, which can be closed off from the waterside in order to prevent spills. This method is used by most of the modern yards. Finally, there is the possibility to use a dry dock for ship recycling. Chinese or British facilities, for instance, offer this method, which is obviously the safest and cleanest. However, ship owners mainly choose the most lucrative methods in order to retrieve the biggest possible profit from the sale of their end-of-life vessel: beaching.

Governments in South Asia would have to trigger long-term financial investments in the yards, in built structures, impermeable floors, machinery, asbestos removal facilities, waste storage and systems to manage hazardous wastes. We have been asking the developed, ship owning states to assist the shipbreaking countries on their way to real structural change. So far, neither the South Asian governments nor the ship owning countries have sought to make a big step forwards. There are currently a couple of development projects seeking to improve the conditions, however, none of them aims at fundamentally changing the current situation.

Why old ships are hazardous waste

The ships’ structures contain toxics such as asbestos, heavy metals, organotins, such as the extremely toxic organic tin compound tributyltin (TBT) used in anti-fouling paints, polychlorinated organic compounds (PCBs), by-products of combustion such as polycyclic aromatic hydrocarbons (PAHs), dioxins and furans. Moreover, a lot of these hazardous substances are released into the environment and contaminate seawater, the sediments and the air. A 2010 World Bank report titled “The Ship Breaking and Recycling Industry in Bangladesh and Pakistan” described widespread soil contamination in Bangladesh and Pakistan with deposits of cadmium, chromium, lead, and mercury. The lead and oil concentrations were a major concern of the World Bank report as well. Especially asbestos would remain a significant long-term problem and PCBs would still occur in older vessels and naval vessels, the report argued. It found that heavy metals in paints pollute the work environment and that large volumes of oil and oily water would have to be properly managed.

Apart from the contamination, shipbreaking causes further environmental damage. In Bangladesh, ten thousand of mangrove trees – planted with the help of the international community in order to protect the coast from cyclones – were cut down illegally to make space for the yards. Studies have shown that the biodiversity in fish and crustacean has decreased sharply along the Chittagong coast in Bangladesh, endangering fishermen’s livelihoods.

Moreover, the World Bank report estimated that Bangladesh would pile up millions of tons of hazardous waste from shipbreaking in the years 2010-2013 alone: 79.000t of asbestos, 240.000t of PCBs mainly in cables, 210.000t of ozone-depleting substances, 69.200t of paints containing heavy metals, TBT and PCBs, 678t of heavy metals, nearly 2 million cubic meters of liquid organic waste and a million ton of other hazardous wastes, mainly sewage.

Circumvention of international waste law

In international environmental law, especially under the waste law regime of the Basel Convention, end-of-life vessels are considered as hazardous waste. Their transboundary movement therefore falls under the obligation of Prior Informed Consent (PIC) and should be reduced to a minimum between developed and developing countries. The European Union (EU) has even transposed the Basel Ban Amendment, which prohibits any export to developing countries, into community law. As a consequence, no end-of-life vessels from Europe should reach a beach in South Asia. However, ship owners circumvent the law by not informing authorities in the EU about their intent to sell a vessel, but by handing it over once they are outside the EU or already on the high seas. In some cases, even if ships are directly exported from a European port, the concerned authorities do not intervene to stop the illegal export. Ships owned by the Bulgarian Government are also regularly sent to beaching facilities in breach of the EU Waste Shipment Regulation (WSR).

As the Basel Convention and the laws derived from it are regularly circumvented by ship owners, the state parties to the Convention asked the International Maritime Organisation (IMO) to develop a new international treaty focusing on ship recycling only. States adopted the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships in 2009, which will be a legally binding treaty once it enters into force. The IMO has developed further guiding texts such as the 2012 Guidelines for ship recycling facilities. However, the Convention has not yet entered into force, as it has not been ratified by the required number of States, and will most probably not do so in the next decade. Therefore, the Convention does little to change the situation in a reasonable time span. Even worse, ship owners use it as a fig leaf to shy away from their responsibilities today. When being criticised for their malpractice, they can easily refer to a future treaty, which does not put any obligation on them neither today nor tomorrow.

EU regulation on ship recycling: long negotiations – little impact?

Despite the international law in place, most end-of-life vessels still end up in substandard facilities. The EU has long recognized its responsibility to contribute to change. Former Environment Commissioner Stavros Dimas announced in April 2006 that the EU had an important role to play in finding solutions for responsible ship recycling. The European Commission (EC) published a promising Green Paper and a Strategy and the European Parliament urged the Commission to act. In March 2012, the EC finally published a proposal for a new regulation on ship recycling. The regulation seeks to implement the Hong Kong Convention and to add several higher standards for EU-flagged vessels. Recycling facilities that intend to take in EU-flagged vessels have to be listed by the EU as being compliant with the regulation.

The Platform sharply criticised the draft as it did not introduce any economic incentive to encourage ship owners to choose for responsible ship recycling. Without any financial mechanism, the regulation will have little impact. The Platform welcomed the decision by the European Parliament’s rapporteur on the issue, Carl Schlyter, to introduce the ship recycling fund. Despite a clear majority in the Environment Committee, the Parliament voted down the fund in plenary after heavy lobbying both from the ship owners associations as well as the European ports. Instead of including the mechanism in the regulation, the Parliament only asked the Commission to develop a financial model to internalise costs for clean and safe ship recycling. This means that there will be a further delay of several years.

The regulation will only put obligations on EU-flagged end-of-life ships – only a small percentage of all EU-owned ships. Most European ships fly flags of convenience (FOC) during their last voyage. NGOs are afraid that the regulation will be a further motivation for ship owners to flag out to FOCs such as St Kitts Nevis or Tuvalu in order not to fall under the scope of the regulation. Just as they have circumvented the export ban before, they can easily avoid the new obligation to use listed facilities only.

However, the new regulation is a clear signal to ship owners that beaching is not acceptable and that they will be held responsible for clean and safe ship recycling. Moreover, the new regulation will demand an Inventory of Hazardous Materials (IHM) on board of every ship calling at an EU port in the future. IHMs are the basic tool to allow for safe and clean ship recycling. So far the vast majority of end-of-life vessels do not have an inventory – the regulation will change this.

An economic incentive for real change

The NGOs have been promoting a mandatory economic incentive for clean and safe ship recycling for many years in order to internalize the costs for proper ship recycling and the management of hazardous wastes, to discourage the reflagging of end-of-life vessels to avoid European regulations and to implement an individual ship owner responsibility scheme which encourages the shipping industry to procure green ship design and pre-clean ships during operational use.

The Polluter-Pays Principle or cost internalization is at the core of environmental policies on waste management of the EU, the Organisation for Economic Cooperation and Development (OECD) and the United Nations Environment Programme (UNEP). Under a financial mechanism the costs of proper management of hazardous wastes will be borne by those profiting from ships during their lifecycle instead of externalizing them to vulnerable countries. Even if the EU needs to take further measures to prevent the out-flagging of European-owned ships, a financial mechanism for proper ship recycling covering all ships calling at EU ports will discourage re-flagging shortly before breaking. A study published in January this year by the Dutch economic consultancy Profundo argued that different models for such a mechanism were economically and legally feasible.

The ship recycling fund

The European Parliament has mainly discussed the model of a ship recycling fund. All ships calling at EU ports would need to pay a fee into the fund, which would then disburse premiums for safe and sound ship recycling in carefully vetted EU-listed facilities. The fund should eliminate the price gap to substandard facilities located on beaches in developing countries where shipowners obtain the highest prices for their end-of-life ships. The model also foresaw annual fees for ships with regular port calls such as ferries or feeder ships.

European lawmakers were reluctant to already implement such a mechanism and, as already mentioned, were strongly pressurized by the maritime sector to vote the idea down. Now all eyes are on the European Commission, who has received the task from both the European Parliament and the Council to develop a more detailed model for a financial mechanism to address the externalisation of costs in the ship recycling sector and promote clean and safe ship recycling.