Tradewinds – Ship scrapping steels itself for an era of change

(Written by Geoff Garfield)

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14 March 2014 - New regulations seek to clean up ship recycling but progress is slow — with beaching still at the eye of the storm

A decade of effort has gone into reshaping the face of ship recycling but the wheels move slowly and the eventual outcome remains anyone’s guess.

Some things have changed with an International Maritime Organsisation (IMO) convention setting out a blueprint to make the industry safer for workers and the environment.

But it remains possibly several years from ratification and, in the meantime, the European Commission (EC) has sought to fast-track change with a new regulation — but one that is based on vague terminology.

Efforts are being made by Brussels to listen to the industry as it strives to draw up the guidance needed to clarify key points of the regulation and craft a document, which could either help destroy scrapping in the Indian subcontinent or, as the IMO’s Hong Kong Convention for the Safe and Environmentally Friendly Recycling of Ships (HKC) sets out to achieve, motivate investment and improvement.

Technical requirements

At the top of the agenda in Brussels are the technical requirements that recycling yards will face if they are to be included on a list of facilities approved to scrap European Union (EU) member state-flag vessels.

The regulation, which came into force at the end of December, goes beyond the HKC by stipulating that ships must be dismantled using a “built structure” and with an impermeable floor so that leakage of hazardous waste can be contained.

This has sent shivers through India and elsewhere because a cursory interpretation of the so-called European Ship Recycling Regulation (SRR) leads to only one conclusion: the future beaching of EU-registered vessels in India, Pakistan and Bangladesh is set to be banned.

It was not surprising, therefore, that TradeWinds’ sixth annual ship-recycling forum in Singapore last week pulled in a huge number of recyclers keen to have their voices heard — 46 from India, six from Bangladesh and even 10 from Pakistan, a country that has been slow to join in the broader recycling debate of recent years.

They were among a record 190 delegates registered for the forum and who, during the course of discussion, covered every shade of one of the most controversial issues in shipping.

Among them were shipowners’ representative John Stawpert of the International Chamber of Shipping (ICS), ship-recycling representatives Nitin Kanakiya and Captain Mohammed Anam Chowdhury from India and Bangladesh, respectively, and green ship recyclers Tom Peter Blankestijn of Sea2Cradle and Henning Gramann of Green Ship Recycling Services.

Into the lion’s den also stepped delegates of environmental and humanitarian campaign groups, including Jim Puckett of Basel Action Network and Patrizia Heidegger of the NGO Shipbreaking Platform.

But the person delegates were especially keen to hear from was Emilien Gasc, the EC policy officer charged with steering through the European regulation.

Brussels astutely consulted stakeholders and others recently via first a questionnaire and then an invitation to join a pow-wow to identify what needs clarifying in the regulation and what solutions they propose. A similar meeting with member states is planned for May.

Not surprisingly, with so much at stake for the beaching nations, responses focused especially on how the term “built structure” should be interpreted. Speaking to TradeWinds on the sidelines of the recycling forum, Gasc conceded it still needed defining.

But the man from the directorate-general for environment was keen to stress that “our position is that the regulation does not mention beaching”.

Instead, it mentions technical requirements that have to be achieved, with the door of the [SRR] still “open”, he says.

Despite previous leading figures in Brussels expressing their opposition to beaching, Gasc’s “open door” comments are being seized upon by the recyclers, including Kanakiya, honorary secretary of the Ship Recycling Industries Association (India) and a managing partner in Triveni Ship Breakers.

He says options to comply with the European regulation are being considered that, he claims, would achieve a key objective of Brussels: preventing the leaching of hazardous substances into the soil at India’s Alang, where around 140 yards operate.

Strong feelings

Gasc was left in no doubt as to the strength of feeling among Indian subcontinent delegates should Europe ban the beaching of community-flag vessels. A succession of comments from the floor talked about the folly in “cutting off the head” of ship recycling rather than working towards change.

Nikos Mikelis, architect at the IMO of the HKC and now a non-executive director of cash buyer GMS working on its Green Ship Recycling Programme, says he has personally witnessed improvements and the “fact the majority of the audience here are recyclers shows they are interested in change”.

Rakesh (Billu) Khetan, chief executive of cash buyer Wirana Shipping, said: “There are quite a few experts in the recycling industry, some of whom are present in this room as well, who have time and again explained that ‘green recycling’ can be done effectively, irrespective of the method — beaching or non-beaching”.

But is regulation working?

The ICS believes that the HKC, in the words of Stawpert, “represents the only realistic hope of successfully regulating ship recycling and promoting progress in safety and environmental protection within the facilities”.

But voluntary change is occurring very slowly throughout the shipping industry as the HKC awaits entry into force. A key obstacle is “uncertainty”, says Stawpert, including Inventories of Hazardous Materials (IHMs), “which should now be commonplace but are instead put in doubt by regulators and consultants alike”.

“Put very bluntly, why should a shipowner go to the effort of creating an IHM only to be told you have to do it all again or that the product will be ignored anyway?” said Stawpert. “The same situation is true for the operators of yards. There is an expectation that standards must be improved but the actual detail as to the exact form of that improvement is sorely lacking.

“As an example — and without harping on about the [SRR] too much — we find ourselves sidelined with debates as to what a built structure is in the context of ship recycling, rather than concentrating on what, practically, can be done to improve behaviours even in very simple terms.

‘Continued politicisation’

“The continued politicisation of the debate and the extremism of the terms in which the debate is conducted do not incentivise stakeholders to take bold steps towards self-improvement — and this is a serious failing.”

Stawpert adds that there needs to be a “healthy dose of realism” and not to expect ship recycling to change overnight, nor be cleaner than it actually can be.

Mikelis, in his reply to the EC regulation questionnaire, warns that if the SRR banned beaching then serious consequences may follow. Not least, the EU foregoing its influence to “motivate the three South Asian countries towards safer and environmentally cleaner ship recycling”.

In fact, he claims, it would reverse the trend of the past few years where individual recyclers have invested to improve their yards in line with the requirements of the HKC.

Also, European-flag ships will still be beached in India and elsewhere because shipping is an international industry where owners have the freedom to de-register their vessels and sell to cash buyers. Only a proportion of owners will voluntarily comply by insisting that their end-of-life ships go to a yard on the EC-approved list, says Mikelis.

Potential threat to HKC

He also claims that a beaching ban could torpedo the HKC. It was promoted most strongly by countries of the EU, Norway and Japan, and if the majority of convention proponents sought to outlaw beaching then ship-recycling countries in South Asia would be dissuaded from acceding to it.

He told Brussels that the convention “simply will never enter into force” if the minimum recycling capacity conditions in Article 17 (1) (3) are not achieved.

“Without India, the HKC is forever on the shelf,” Mikelis said at the Singapore forum.

However, he adds that if the EC initially approves the four Indian yards seeking to raise standards (see main story, page 17), then it will encourage other facilities to seek approval, the European regulation will at least in part succeed and the convention still has the chance of entering into force.