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New EU proposals for ship recycling licences

Shiprepair eNews August 2016Ship Breaking Bangladesh

A European Commission report recommends that any ship over 500gt calling at an EU port would need to pay for a ship recycling licence.

Regulation (EU) No 1257/2013, also referred to as the Ship Recycling Regulation (SRR), entered into force on 30 December 2013 and required all vessels sailing under an EU flag state to use an approved ship recycling facility. There was some concern that this regulation could easily be easily be circumvented through timely re-flagging to a non-EU flag prior to scrapping the vessel. Hence the European Commission was asked produce a report on “the feasibility of a financial instrument that would facilitate safe and sound ship recycling."

 Various options have been considered for such a financial instrument in previous studies, but an earlier proposal based on these to the European Parliament was rejected. A new report written by Ecorys, DNV-GL and the Erasmus University School of Law proposed the introduction of a Ship Recycling Licence required for the entry to EU ports, connected with fees that serve capital accumulation with the aim to cover the revenue gap between sound and unsound recycling.

The basic idea is that the shipowner will be charged a fee when applying for the ship recycling licence. This fee will be made up of two parts; a small fee to cover the administration costs of issuing the licence and a levy to be contributed to the ship recycling fund.  The license validity would be time-based rather than linked to the number of calls in EU ports.

If the ship is recycled at an EU approved facility a certain amount of accrued funds from the Ship Recycling Fund would be paid to the ultimate shipowner. However, if the ship is scrapped at a non-approved facility the shipowner would forfeit the rights to this payment.

The European Community Shipowners’ Associations (ECSA) and the International Chamber of Shipping (ICS) – which represent over 80% of world merchant tonnage – insist that the concept of the ship recycling license, developed by consultants for the European Commission, must be firmly rejected.

“As well as being unduly complex, widely impractical and very difficult for the EU to administer, the establishment of such a Fund will be an affront to the international community which has adopted the Hong Kong Convention on ship recycling, whose standards have already been incorporated into a similar EU Regulation” said ECSA Secretary General, Patrick Verhoeven.

ECSA and ICS argue that the EU should concentrate its efforts on getting EU Member States to ratify the IMO Hong Kong Convention, and to recognise the efforts being made by recycling yards in Asia to gain certification in accordance with IMO standards.

Copies of the “Financial instrument to facilitate safe and sound ship recycling - Final Report - June 2016” can be downloaded from http://ec.europa.eu/environment/waste/ships/pdf/financial_instrument_ship_recycling.pdf

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