We reported last week that India had ratified the Hong Kong Convention (HKC), which sets global standards for safe and environmentally-sound ship recycling. At least: it will do when it enters into force.
It is more than a decade since the convention was adopted and, for most of that time, I have doubted that it would ever come into force. That is because of its unique criteria: It must be ratified by 15 states – with India, that has been achieved – that represent 40% of global gross tonnage and have together recycled a tonnage of ships in their recycling facilities of not less than 3% of their combined gross tonnage.
Although IMO’s statement announcing India’s ratification indicated that not all three parameters have yet been reached, at the time of writing, on 6 December, it has not been able to tell me what the actual percentages are. But a spokeswoman in IMO’s secretariat drew my attention to figures prepared in March this year for MPEC 74 that suggest that one of them may have been met.
That is because, when calculating the ‘recycled tonnage’ figure for each state that has ratified, the amount of tonnage it has recycled each year for the past 10 years is reviewed and the largest annual figure is selected. Those are the added up. On that basis, those March figures show that the recycled tonnage total for the states that have now ratified the convention come to 12.2Mgt, which is enough to meet the 3% of their combined fleet tonnage threshold. But that total tonnage does not meet the 40% or the world fleet requirement.
However, it would probably not help if a large flag state were to ratify to boost that proportion; if it had little or no scrapping facilities, then the 12.2Mgt recycling figure would no longer be 3% of the new combined fleet size.
Confused? To show how difficult it is to predict how different scenarios might play out, a similar assessment prepared for MEPC 67 in 2014 advised that “accession by India and Turkey would currently satisfy this recycling capacity condition.” Both states have now acceded but that has not proved sufficient.
We now need another state to ratify that can bring both fleet tonnage and scrapping capacity. That could be China. It is currently not allowing ship imports for scrap – just 344,855gt was scrapped in the country in 2018 – but at its peak in 2012 it scrapped 8,167,710gt. So if China ratified now, it would contribute that higher figure to the calculation but if it delays until 2022, that figure will fall out of the 10-year window and China’s impact on the figures will decline. In summary, then, I believe the Hong Kong Convention is still years away from entering into force.
Yet the mood in the industry is positive towards it. Take the Liberia ship register, for example. After my comments in May, David Pascoe, senior vice president for operations and standards at the register’s management company LISCR, explained that Liberia would like to see the convention enter into force but the size of its fleet “could complicate the criteria for entry into force” so it has not yet ratified it.
At the May conference, the International Chamber of Shipping (ICS) and other shipowner associations all spoke in support and following India’s ratification, ICS issued a statement reiterating its support. It quoted its secretary general Guy Platten describing India’s action as “a major step towards guaranteeing the safe and environmentally-sound management of ship recycling” and hoping that “it will spur other major recycling states, particularly China and Bangladesh, to ratify and make the convention a reality as soon as possible.”
The UK Chamber of Shipping echoed his remarks. Its policy director for safety and the environment, Anna Ziou told ShipInsight that it welcomed India’s accession to the convention because it “brings us closer to the ratification of the Hong Kong Convention which will improve the safety and environmental standards of ship recycling globally.”
Having said all that, though, there is a significant fly in the ointment: the EU Ship Recycling Regulation (EU SRR), which entered into force on 31 December 2018. Under the regulation, EU-flagged ships must be scrapped in a yard on an approved list. That list was last updated in June and currently includes 30 yards in the EU and Norway, plus three in Turkey and one in the US that have so far been approved out of 35 non-EU yards that have applied for inclusion.
Significantly, no yards in the world’s major recycling nations are included, although 19 Indian yards are on the list of applicants.
Back in May, I reported comments by Dr Nikos Mikelis, an independent consultant and a non-executive director at GMS, the world’s largest buyer of ships for recycling. He told me then that he was more concerned about the EU regulation than the Hong Kong Convention. He still is.
The EU SRR is not working, he told me when I spoke to him a few days ago. Very few ships over 5,000gt have so far been recycled in line with its terms because most reflag to non-European registers and head elsewhere, he pointed out, and “that is the acid test” of its effectiveness.
In many ways, the EU SRR is “a carbon-copy of the Hong Kong Convention,” he said, with “some vague extra requirements” that are open to interpretation by the European Commission (EC), which appears to be opposed to any form of beaching activities in tidal waters. That would rule out yards in India and south Asia, Dr Mikelis said, apart perhaps from those that have invested in cranes to avoid ship sections contacting the beach.
His fear – and I agree with him – is that Europe is “messing things up for reasons that they themselves have not understood.” It is essential to have a common global standard, otherwise yards will effectively have to choose from a menu of standards, depending on the customers they hope to attract.
But there is hope that Europe may fall into line. The EU SRR requires the EC to review it “not later than 18 months prior to the date of entry into force of the Hong Kong Convention” specifically to “consider the inclusion of ship recycling facilities authorised under the [convention] … to avoid duplication of work and administrative burden.” Having said that, I imagine that any such yards would still have to meet the full scope of the EU SRR’s requirements, so there still seems little prospect of global consistency.
Nonetheless, the EU SRR has had a positive impact. Because it has been implemented “in such a bad way”, Dr Mikelis told me, shipowners have been pressing their regulators to support the Hong Kong Convention in an effort to bring it into force “so they are not hostage to the EC.” It is certainly true that, since the EU SRR came into force, there has been a flurry of ratifications, accessions and acceptances (the terms all mean the same) this year: Turkey, The Netherlands, Serbia, Japan, Estonia, Malta, Germany, Ghana and India.
On that basis, perhaps I am being too pessimistic in my expectations for the convention. I hope I am wrong, because anything that improves safety and sets standards for ship recycling is a good thing. It would also justify the investments that many recycling yards have made and would encourage others to follow suit. Otherwise, I fear a regression back to the dirty and dangerous ways of just a few years ago.
• What do you think of the Hong Kong Convention and the European SRR? Do they go too far or not far enough? What experience do you have of working with ship recycling yards? Email me now with your views.