BIMCO pushes IMO to harmonise ship recycling conventions 

by Jamey Bergman

Global shipping trade association BIMCO, along with the governments of Bangladesh, India, Norway, Pakistan and the International Chamber of Shipping (ICS), has submitted a paper ahead of International Maritime Organization’s (IMO) 81st Marine Environment Protection Committee (MEPC) meeting on 18-22 March 2024.

In the submission, BIMCO and its co-signatories are asking the MEPC for more legal certainty. The petitioners want clarification and assurance that shipowners and parties operating in compliance with the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships – due to enter into force on 26 June 2025 – will not be sanctioned for violating the terms of another UN convention, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal.

“The ratification of the Hong Kong Convention marks the beginning of a new era for the ship recycling industry. We must make sure that legal obstacles and conflicts between the two conventions governing the safe and sound recycling of ships do not limit the scope of this historic opportunity,” BIMCO secretary general David Loosley said.

According to BIMCO, already in some jurisdictions, contravention of the Basel Convention, as applied to ship recycling, has resulted in sanctions against shipowners and masters.
“One of the inconsistencies the paper asks the IMO to consider is related to hazardous waste,” BIMCO said. “Once a ship has received an International Ready for Recycling Certificate (IRRC) under the Hong Kong Convention, it may at the same time be considered as hazardous waste under the provisions of the Basel Convention and during the entire validity period of the IRRC (up to three months), and the ship could therefore risk being arrested for breach of the Basel Convention requirements while trading.

Adopted in 2009, IMO’s Hong Kong International Convention for Safe and Environmentally Sound Recycling of Ships, better known as the Hong Kong Convention or the HKC, had seen almost imperceptible movement until a surprise announcement in May 2023 that Bangladesh – one of the world’s major ship recycling nations – would soon ratify the convention.

The country followed through on its ratification in June and later the same month, IMO announced that Liberia – one of the world’s largest flag states by tonnage – had confirmed its ratification of the HKC.

The combination of the two countries’ ship recycling capacity and total controlled gross tonnage pushed the HKC above the threshold criteria required to trigger the convention’s entry into force.

The threshold criteria within the convention’s terms required ratification by no fewer than 15 states comprising no less than 40.00% of the world’s merchant shipping gross tonnage with a ship recycling capacity of no less than 3.00% of the gross tonnage within the states who have ratified the treaty.

Bangladesh and Liberia were the 21st and 22nd states to ratify the treaty, bringing the total numbers at the time to approximately 45.81% of the gross tonnage of the world’s merchant shipping fleet with a combined annual ship recycling volume during the preceding 10 years of 23.8M gross tonnes, equivalent to 3.31% of the recycling volume of the ratifying countries.

Pakistan later became the 23rd state to ratify, in late 2023, and the Marshall Islands became the latest nation to accede to the HKC in January 2024.

The HKC will enter into force on 26 June 2025.

The Hong Kong Convention now has the following contracting parties: Bangladesh, Belgium, Republic of the Congo, Croatia, Denmark, Estonia, France, Germany, Ghana, India, Japan, Liberia, Luxembourg, Malta, Marshall Islands, the Netherlands, Norway, Pakistan, Panama, Portugal, São Tomé and Príncipe, Serbia, Spain, and Turkey. 

BIMCO, the world’s largest shipping association, which played a part in Bangladesh’s ratification of the Hong Kong Convention, has said it is “essential” for the European Union and its member states and the states that are party to the United Nations Environment Programme’s Basel Convention to align their rules and regulations covering ship recycling and disposal of hazardous materials with those of the Hong Kong Convention.

“It would be unjust to prohibit ships from being recycled at yards that meet the HKC standards, especially considering the vast improvements made over recent years and the need for steel in these developing economies,” BIMCO said.

According to the European Union’s (EU) Ship Recycling Regulations (EU-SRR), yards must be on the EU’s so-called whitelist of ship recycling facilities for EU-flagged vessels to legally break the vessels apart and sell the scrap.

Ships that are sold for recycling at the end of their lifetime contain hazardous materials such as asbestos and mercury along with oil, fuel, ballast water and sludge, which constitute a risk both to human health and the environment if they are not managed and disposed of properly, and the EU has not yet accepted any south Asian yards on its whitelist, in large part due to the so-called ’Ban Amendment’ in the Basel Convention. Currently, the Basel Convention effectively prohibits the export of hazardous wastes from EU member states to countries outside of the EU, Organisation for Economic Cooperation and Development countries and Liechtenstein.

However, a recent agreement on exports of hazardous waste between the European Parliament and European Council could offer a pathway to harmonising the complex set of international rules that affect where vessels go for recycling.

Under a proposed amendment to the EU Waste Shipment Regulation, the European Parliament and EU Council have agreed to allow exports of hazardous waste, including that contained in ships, to non-OECD countries, provided the receiving facilities can document sustainable management and disposal of this waste in line with EU regulations. The documentation would then enable the receiving facility to be included on the EU-approved whitelist.

Trilogue negotiations concluded with a provisional agreement between EU’s Council, Parliament and Commission representatives on 17 November 2023. An amendment text was voted on and adopted in the EU Parliament’s plenary session on 17 January 2023. The matter was referred back to the ENVI Committee for negotiations with the Council, and a vote in the ENVI Committee is expected in January 2024. The agreement now requires formal adoption by the Parliament and the Council.

According to Singapore-based ship recycling consultancy Sea Sentinels, there are as many as 32 recycling yards in non-OECD countries – including 27 in India and one in Bahrain – that have applied for EU approval, and some have had preliminary audits for compliance under the EU-SRR, joining eight yards in Turkey and one in the US.

While these non-OECD yards have upgraded their facilities to meet EU standards, their applications have been stymied by the Basel Ban that currently bars their inclusion on the EU whitelist made up of 48 approved yards.

Sea Sentinels believes the pending Brussels directive would only apply to EU-flagged ships trading in non-EU waters when the decision to recycle is made but would help to level the competitive playing field.

More sustainable shipbreaking capacity is expected to be needed to cope with an expected flood of older tonnage due for recycling over the next decade.

BIMCO last year predicted that the 10 years from 2023-2032, will see some 15,000 vessels scrapped, doubling numbers as compared with the prior 10-year period. This is a virtual certainty given the number of ageing vessels in the global fleet and increasingly stringent environmental regulations facing shipping giving rise to increased newbuilding orders.

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