European Regulation on Ship Recycling THESIS

Transcription

1 European Regulation on Ship Recycling THESIS.

2 L.L.M. Maritime and Transport Law Natasja van Niejenhuis-Rensen Student number: Rotterdam, 6 June With special thanks to my supervisor: Mr. T. van der Valk

3 Table of Content Table of Content... 1 Abbreviations and Glossary... 3 (1) Introduction Background Problem statement Methodology and outline... 9 (2) Shipbreaking Industry The life cycle of a ship Shipbreaking in action South Asia China Turkey European Union It s a risky business Health and safety issues Environmental issues Improvements Resume (3) A summary of the international legal framework UNCLOS IMO ILO ICS Basel Convention European Waste Shipment Regulation The Hong Kong Convention Resume (4) EU Ship Recycling Regulation Scope Objectives Ships Hazardous materials Survey Port State Control

4 Ready for recycling certificate Recycling Yards European list of recycling yards Ship recycling plan Member State Obligations Report information Penalties Financial Incentives Enforcement EU Flag State Jurisdiction EU Port State Jurisdiction Non-EU Flag State Jurisdiction Non-EU Ship Recycling Facilities Resume (5) Opportunities and Pitfalls Ratification of the Hong Kong Convention Shipowners bypassing the regulation Reflagging Sale of Ships prior to recycling Information system List end-of-life ships Ship Recycling capacity Strengthening EU Ship Recycling Capacity Financial instruments Financial Incentives Resume (6) Conclusion Bibliography Legislation Case Law Websites

5 Abbreviations and Glossary Beaching Sailing an end-of-life vessel on a beach at high tide. Demolition The process of taking a ship apart, including beaching. Dismantle The physical process of taking the ship apart, not including beaching. Term preferred by the Basel Convention and used in their guideline. DWT Dead Weight Tonnage is the lifting or carrying capacity of a ship when fully loaded. The deadweight is the difference, in tonnes, between the displacement of the vessel and the weight including cargo, bunker, water, stores, passengers and crew. DWT is used to define the capacity of a fleet. ECSA The European Community Shipowners Associations is the trade association representing the national shipowners associations of the EU and Norway. EMSA The European Maritime Safety Agency is a European Union agency charged with reducing the risk of maritime accidents, marine pollution from ships and maritime security. Flag of Convenience A substandard flag of a country under which a ship is registered in order to avoid financial charges or restrictive regulations in the owner s country. Registration is often possible without visual inspection of the vessel. Flagstate The country whose flag a ship is entitled to fly. It is responsible for the enforcement of the relevant regulatory requirements, such as issuing the statutory certificates that ships need to trade. Green Recycling Ship recycling under controlled and acceptable conditions regarding workers safety and environment. 3

6 GT Gross Tonnage is the measure of the volume inside a vessel, defined by The International Convention on Tonnage Measurement of Ships (1969). It is calculated by applying a mathematical formula to the measured ship's volume, from keel to funnel and to the outside of the hull framing. Hazardous Material Any material or substance which is liable to create hazards to human health and/or the environment. ICS The international trade association for merchant ship operators. ILO The International Labour Organization is the United Nations specialized agency dealing with labour issues, particularly international labour standards and decent work for all. IMO The International Maritime Organization is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships. ISRA The International Ship Recycling Association is an international membership organization for recycling facilities which places emphasis on responsible practices. LDT Light displacement tonnes is the weight of a ship in tonnes without cargo, fuel, lubricating oil in storage tanks, ballast water, fresh water, feed-water, consumable stores, passengers and crew and their effects. It is the sum of the weight of the hull, structure, machinery, equipment and fitting of the ship. LDT is used when vessels are negotiated at scrap value. LIFE Financial instrument supporting sustainable projects throughout the EU. MEPC The Marine Environment Protection Committee is IMO's senior technical body on marine pollution related matters. 4

7 NGO Shipbreaking Platform The NGO Platform on Shipbreaking is the principal environmental pressure group involved in ship recycling. It is a coalition of several human rights organizations such as Greenpeace and the Basel Action Network. OECD The Convention on the Organization for Economic Co-operation and Development. Party to the convention are: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, The United Kingdom and The United States of America. Operational Waste Waste water, residues and other waste generated by the operation of ships. Scrapping The process of taking a ship apart without considering the procedures used. Term preferred in the US EPA guideline and often used in the reused metal business. Ship breaking The process of taking a ship apart. Includes the removing of all gears and equipment up to cutting down the ship s infrastructure. Term preferred by the ILO and EU. Ship recycling The process of taking a ship apart. Term preferred by the shipping industry and IMO. Ship Vessel of any type whatsoever operating or having operated in the marine environment, and includes submersibles, floating craft, floating platforms, self-elevating platforms, Floating Storage Units and Floating Production Storage and Offloading Units, as well as a vessel stripped of equipment or being towed. Definition used at the EU Ship Recycling Regulation. Vessel For the purpose of this thesis used as a synonym of ship. 5

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9 (1) Introduction In a world that is urgently stressed for sustainable industrial development the shipping industry must pull its weight. 1 At the end of a ship s life cycle the vessel is usually sent for demolition. Dismantling an end-of-life vessel is a challenging process due to the structural complexity of ships and the many environmental, safety and health-issues involved. Due to a firm environmental and human rights lobby, public and political awareness has been created resulting in the development of various legal initiatives and regulatory requirements. The latest addition being the EU regulation on dismantling and recycling of ships, that came into force 30 December Background The coming decades a large number of ships is expected to be scrapped due to age, overcapacity in tonnage and fast change of regulations with regard to construction and operation. 2 Ship recycling makes a vital contribution to sustainable development by ensuring the timely removal of outdated tonnage. 3 Unfortunately nowadays most of the ships are scrapped at South Asian beaches. These beaches are contaminated cemeteries for dying ships and a graveyard for the workers since safety and health conditions are revolting. Resembling ants that work diligently on carcasses the shipbreakers use their raw power, sledgehammers and torch cutters to rip apart the huge bellies of ships. 4 In 2008 the Pulitzer prize was awarded to Gary Cohn and Will Englund of The Baltimore Sun for their compelling series on the international shipbreaking industry, that revealed the dangers posed to workers and the environment when end-of-life vessels are dismantled. 5 These imaginative articles triggered the international community to pay attention to the pressing need to address the negative impacts linked to the recycling of ships. 1 The United Nations Agenda 21, the most comprehensive statement on international environmental policy has called on states to, inter alia, monitor marine pollutions from ships (UN Doc A/Conf.151/26). In 2012, at the UN Conference on Sustainable Development the members reaffirmed their commitment to Agenda 21 in their outcome document called "The Future We Want" (UN Doc A/RES/66/288). 2 See Bhattacharjee (2009), p , World Bank (2010), p.2, COM (2012), p.2, ECSA (2014), p IMO (2004), art , p.5, Puthucherril (2010), p Putchucherril (2010), p.2. 5 Attracted from: accesed on 21 May

10 Various initiatives are explored at global and regional level by international organizations and mechanism, such as the secretariat of the Basel Convention, EU, ICS, IMO, ILO, ISRA, EMSA, Greenpeace, NGO Platform on Shipbreaking and UNEP. On global level this has resulted in the Hong Kong Convention, for the Safe and Environmentally Sound Recycling of Ships, which was adopted at a Diplomatic Conference in May The Hong Kong Convention aims to ensure an efficient and effective solution to unsafe and unsound ship recycling practices and deals with all matters of ship recycling, taking into account the full life cycle of a vessel. The Convention addresses concerns about poor working conditions and disturbing environmental conditions in the ship recycling business. On 30 December 2013 the EU has adopted a new Ship Recycling Regulation. 6 This regulation must account for the gaps in the forthcoming of the international regime and the possible delay until The Hong Kong Convention becomes effective. 7 For the bigger part this Regulation is a transposition of the Hong Kong Convention. It should enable an early ratification of the Hong Kong Convention by the EU Member States. 8 The objective of the EU Ship Recycling Regulation is: to reduce the negative impacts linked to the recycling of EU flagged ships, especially in South Asia, without creating unnecessary economic burdens Problem statement This thesis will analyze the EU Ship Recycling Regulation and highlights the opportunities and pitfalls of the regime reflecting the objective to reduce the implied negative impacts of the ship recycling industry. I have my defined my research question as following: Will the new EU Ship Recycling Regulation reduce the negative impacts linked to the recycling of EU flagged ships. 6 EU/1257/ COM (2007), p.3. 8 EU/1257/2013, intr COM (2012), par. 1.2, p.5. 8

11 The sub questions that support my research question are: Will reflagging subvert the purpose of the EU regulation. Is a financial incentive essential to stimulate sound recycling Methodology and outline The ship recycling industry interacts between no less than technological development, economic prospects, physical conditions, social science, organizational challenges and behavior-changes. These socio-legal factors must be determined and analyzed since they influence the willingness and ability to comply with regulatory requirements. The thesis starts with a brief overview of the historical and current developments of the ship recycling industry. Attention will be paid to the life-cycle of a ship, the recycling market, scrapping areas and the hazards of ship demolition. The second part of the thesis will focus on the inventory, comparison and analysis of the historical and current legal framework. Within the scope of this study the new EU Ship Recycling will be analyzed and the opportunities and pitfalls that effect the negative impacts linked to the recycling of EU flagged ships will be determined. Each chapter concludes with a brief summary of the findings resulting in a substantiated answer to the research questions. The inventory, assessment and comparison of the relevant socio-legal factors and legislation is based on deskresearch, text-analyses and case-studies. 9

12 (2) Shipbreaking Industry During WWII the shipbreaking industry developed in the USA, UK and Japan because of an urgent demand for steel. Many ships were damaged in combat and needed to be repaired. In the 1970 s the shipbreaking industry expanded to less industrialized countries at or nearby Europe such as Spain, Italy and Turkey. In 1960 the MD Alpine, a ship flying the Greek flag, was beached at Bangladesh after a severe cyclone. She could not be refloated and in 1965 the Chittagong Steel House bought the ship and scrapped her on the beach. Herewith the shipbreaking industry was introduced in South Asia. 10 About 20 years later, due to the increase of labour cost and environmental regulations in the USA and EU, the biggest part of the shipbreaking activities moved to Asia. First end-of-life vessels were scrapped at the docksides in Taiwan and South Korea. Hereafter end-of-life vessels simply were beached in India, Bangladesh and Pakistan. 11 In 2012 the ship recycling industry reached the highest level of annual demolition ever. Approximately vessels, with a total volume of 58.1 million DWT, were scrapped. In 2013 about 44,6 million DWT was recycled. Part of the increase of scrapping volume is probably due to the accelerating of the phase out of single hull tankers. 12 Scrapping activities seem to slow down in 2013 and 2014 though still the second highest level of annual demolition is marked Puthucherril (2010), p Stopford (2009), p , Kojima (2011) p , Lloyds (2011), p COM (2008), p. 4, COM (2010), p. 2, In response to the environmental disasters caused by the grounding and rupture of the single-hull oil-tankers Exxon Valdez, Erika and the Prestige, the phase out of the use of single-hull tankers was regulated by Marpol (73/78, 7/93, 9/02, 4/05), the USA (OPA 1990) and the EU (1726/2004). See IMO-phase out plan, available at: /blast/mainframe.asp?topic_id=758&doc_id=3341, accessed 24 May Information available at: =Demolition%3A+A+Quick+Break+Down, accesed 24 May

13 2.1 The life cycle of a ship Illustrating the life cycle of a ship four different stages can be distinguished: ship building, freight or transport, sale & purchase and recycling. All four stages represent a market. The building market trades new vessels; the freight market trades sea transport services; the sale & purchase market trades second hand vessels and the recycling market trades end-of-life vessels. 14 A ship has reached the end of its life cycle when the age or market conditions make it less profitable to operate the vessel. Given the considerable value of steel and equipment, an end-of-life ship will be sold to a scrap yard and completely taken apart. Steel will be reprocessed, generators are reused ashore, batteries find their way into the local economy and oil products can be used as fuel. 15 The demand and supply in each market are closely interconnected. More specifically the recycling market is influenced by: the future earning potential of a vessel: If the general market conditions in the freight markets improve, high earnings will encourage shipowners to prolong the operation of a vessel. As a consequence a scrapyard must pay a higher price to obtain an end-of-life vessel; the cost of keeping a vessel in operation: If the operational cost of a vessel increase a shipowner will be motivated more easily to sell the vessel. Operational cost increase due to higher bunker cost, repair or survey. In general the earning potential declines and the operational cost increase exponential with the age of the vessel; 16 the running cost of the scrap yard such as labour costs, infrastructural investments, capital cost and taxes; 17 the demand of steel and reusable items. Scrap-steel is an important source of raw materials in South-Asia 18 ; currency; The price of steel strongly interacts with USD-rates, while the running costs are often paid in local currency s; Stopford (2009), p Stopford (2009), p.649, World Bank (2010), p.13, Mikelis (2013), p Stopford (2009), p , Mikelis (2013), p Stopford (2009), p COM (2007a), p.2., World Bank (2010), p.1 & 16-17, Kojma (2011), p , Mikelis (2103), p COWI (2004), p.41-45, Knapp (2008) p.2-3, Stopford (2009), p

14 regulations: The increase of regulatory requirements that enhance maritime safety will most stimulate recycling of outdated vessels. An example in this regard is the already mentioned phase out regulation of single hull tankers; social factors such as the environmental and human health lobby. The global volume of scrapping is related to the overall size of the world fleet. A sincere increase in the size of the world fleet over the years has resulted in an overcapacity in DWT. Furthermore freight rates have been under severe pressure for some years now. Therefore for the coming 5 till 10 years it is to be expected that a large number of ships are sent for dismantling. 20 End-of-life ships are sold per LDT. 21 A demolition contract is usually concluded through a broker, operation from a maritime hub like London, Hamburg, Dubai or Singapore. 22 The current rates, at the second semester of 2014, are USD 310 up to USD 480 per ton. Often these brokers trade an end-of-live vessel to a cash buyer. This is a trader that buys a vessel cash from the last operation ship owner and resells the ship to a scrap 20 Bhattacharjee (2009), p , World Bank (2010), p.2., COM (201), p.2, ECSA (2014), p Stopford (2009), p.648, Mikelis (2013), p Stopford (2009), p

15 yard. The last operating owner of the ship gets a lower price for the vessel but in return it he is cleared from liabilities. This route can facilitate a bypass of regulation Shipbreaking in action Today most vessels are scrapped in Bangladesh, India and Pakistan. Vessels are sailed on the beach at high tide and stripped from its equipment. The steel hull is sliced with welding torches. Workers process the steel with their bare hands without any containment or protection. Materials that can neither be recycled nor sold are usually dumped or burned on the spot. 24 A more sound way of recycling is handled by use of a slipway, for example practiced in Turkey. A vessel is run against the shore or on a concrete slipway. In general there are no tidal movements, therefore it is possible to contain accidental spillage of hazardous materials. Pieces of the vessel are removed from the ship by mobile cranes, working from the shore. 25 Most of the recycling in China and the EU is carried out by way of pier-breaking, also known as alongside recycling, where the ship is fixed to a quayside or moored along the sheltered waters of a river. Cranes remove the parts of the vessel top down. Pollution can be monitored, contained and disposed. 26 Dry dismantling, with the utilization of a dry-dock, is probably the safest and environmental most sound way to recycle ships. Yards use cutting areas, fixed crane installations and appropriate waste disposal methods South Asia The increasing dominance of developing countries like India, Bangladesh and Pakistan in the global ship-breaking industry illustrates the paradoxical nature of economic globalization. 28 In South Asia are thriving ship breaking locations due to their suitable coast line, their access to cheap labour and the lack of 23 Lloyds (2011), p. 18, for more information about cash-buyers see Mikilis (2013b). 24 About beaching see COM(2007) p.8. and Lloyds (2011), p About slipway recycling see COWI (2007), p.7 and Lloyds (2011), p About alongside recycling see Lloyds (2011), p About drydock recycling, ibidem. 28 Bhattacharjee (2009), p

16 compliance with regulatory requirements with regard to a safe work environment and hazardous waste treatment. 29 The shipbreaking industry provides scrap-steel at low prices and therefore is an important source of raw materials in South Asia. Recycling reduces the need to import steel and therefore avoids foreign exchange rate losses. For example Bangladesh has no iron ore sources or mines and relies strongly on ship recycling with regard to its steel production. It derives 80-90% of its steel from end-of-life ships. 30 Ironically one could consider ship recycling in South Asia from a narrow economic point of view as sustainable. 31 A large number of locals find employment at a dismantling site. Approximately people work at the yards, this varies per country, with a spinoff of at least 0.2 million people working in related sectors. 32 Industry related taxes such as import duties and yard tax contribute substantially to the governmental income. These factors add to the economic development of these countries. Shipbreaking therefore is a powerful industry. 33 Unfortunately the working conditions are poor and cause great concern about the health and the safety of the workers. 34 They break down the enormous ships only by use of blow-torchers, simple tools, rope and their bear hands. There is no safety gear available nor are there measures in place to protect against hazardous substances such as lead and asbestos. 35 Furthermore the environmental consequences are severe. Hazardous materials are processed without proper caution. The ships are simply sailed on the shore at high tide. There are no safe-guards that prevent oil and other residues to leak into the ocean. 29 YPSA (2006), p.5-6, Lloyds (2010), p.10, Alam (2014) p COM (2007a), p.2, World Bank (2010), p.1 & 16-17, Kojma (2011), p , Mikelis (2103), p From a narrow economic point of view as it ignores environmental and social sustainability, see IMO (2004), art. 1.4, p.5,com (2007), p.2, SDW (2012), p.9 and Engels (2013), p World Bank (2010), p.1 & 24-25, NGO (2013), p For example in Pakistan the industry pays approximately PKR 5 billion (about 4.7 million USD) of taxes annually, see NGO (2013a), p.8 & 10, also see YPSA (2006), p FIDH (2008), p YPSA (2006), p.3 & 12, Puthcherril (2010), p.34, SDW (2012), p

17 These cases illustrate a brief overview of the developments in the ship recycling industry and show that in the end in South Asia economic prospects prevail over social and environmental concerns. The Clemenceau The Clemenceau, a French vessel built in 1957, was laid-off in Toulon since In 2003 the vessel was sold to a Spanish scrapping yard in Bilbao however she was shipped off to Turkey. Both Turkey and later on Greece denied the vessel access to their water on the grounds that she contained hazardous materials. France had no other choice than to tow the vessel back to Toulon. In 2005 the Clemenceau left the French port to be dismantled in Alang, India. On 6 January 2006 the Supreme Court of India denied the vessel access, again on the grounds that she contained hazardous materials. 36 President Jacques Chirac ordered the Clemenceau to return to French waters following the ruling by the Conseil d'etat. 37 Eventually the Clemenceau was recycled in 2010 at the UK by the Teesside Environmental Reclamation & Recycling Centre. 38 In response to the Clemencau case the Indian Supreme Court constituted a Committee of technical experts the assess the Alang demolition yard. 39 The SS Norway alias The Blue Lady The Indian dismantling industry deals with fierce competition of Bangladesh and Pakistan. The return of the Clemenceau had a negative economic impact on the industry of India. The highly controversial decision of the Indian Supreme Court to allow the dismantling of the Blue Lady gave the Indian industry however a boost. 40 The Blue Lady, former SS Norway, was towed from Germany to Bangladesh to be dismantled. Due to the large amounts of hazardous waste on board the vessel was not allowed to enter Bangladesh waters. The Supreme Court of India denied 36 Indian Supreme Court Order of 6 January 2006 Court of India in Writ Petition (Civil) No. 657/ French Conseil d Etat, decision of 15 February 2006, No Lloyds (2011), p Indian Supreme Court Order of 6 September 2007 in Writ Petition (Civil), No. 657/ Pelsy (2008), p

18 access to the Indian waters as well, however due to bad weather conditions the vessel was forced to anchor at a port nearby Alang. Cloaking the owners identity, by renaming the vessel and numerous third-party sales, the Blue lady, was in the end sold through a cash buyer and bought by Priya Blue Industries that submitted a Ship Specific Dismantlin plan to the Indian Court in order to obtain permission for the recycling of the ship. Following the recommandation of the Indian Committee of Technical Experts the Court allowed the dismantling at the Alang beach. 41 This outcome was highly criticized by the NGO Shipbreaking Platform and they urged the German authorities to call the vessel back to Germany, with reference to illegal trafic under article 9.1 of the Basel Convention. 42 However no due action was taken by the German authorities. The Exxon Valdez The Exxon Valdez is notorious being the source of one of the largest oil spills in history when she ran aground in 1989 and lost 11 million gallons of oil nearby Alaska. The ship was sold for approximately 16 million USD to M/v Best Oasis and beached at Alang on 2 August Environmentalists made use of the vessels prominence and draw attention to the ship breaking industry by filing a lawsuit at India's Supreme Court to block the import of the vessel. The court pointed out that the yard must take responsibity for disposing any toxic material found in the ship and allowed the dismantling of the vessel. 44 However it is unreasanable to assume that beaching the vessel wil provide for a environmentally sound manner of recycling China China is accelerating its capacity in green ship recycling. Beaching is banned and ship recycling is undertaken alongside quaysides. Yards are relatively strongly 41 Indian Supreme Court Order of 4 December 2006 in Writ Petition (Civil) No. 657/1995, I.A. No. 34 of NGO (2006). 43 See accessed 25 May Indian Supreme Court Order of 6 July 2012 in Writ Petition (Civil) No. 657/1995, I.A. No. 61 & 62 of

19 regulated by the government and local authorities. 45 The government promotes green ship recycling and aims to close sub-standards facilities. 46 Dedicated shipowners have initiated programs to develop green recycling in selected yards. The A.P. Moller - Maersk group has engaged in several partnerships with Chinese Yards. From 2000 to 2010 over 50 ships were recycled in compliance with environmental and safety standards that were upgraded through technical assistance and training. 47 In 2012 the Germanischer Lloyd, a German classification society, signed a memorandum of understanding with the China National Ship Recycling Association to work together on developing training programs, pilot projects, and research practices that will allow the Chinese ship recycling industry to comply with incoming international regulations, in advance of their entry into force dates. 48 In theory China could comply with the requirements of the Hong Kong Convention at China faces fierce competition from ship breaking yards in India, Pakistan and Bangladesh since they cannot offer the same scrap prices and have higher costs at their facilities. 50 In general the yards have been updated to acceptable standards and workers have adequate equipment to put to use, however the working conditions often are still very poor Turkey Turkey belongs to the top five of the largest shipbreaking countries in the world. Through a regulatory framework, improved worker conditions and mechanization of the yards it offers acceptable recycling standards. Turkey is an OECD Member 45 Lloyds (2011), p COM (2012), p COM (2007), p.67, see accessed 25 May 2014, and accessed 25 May See accessed at 24 May See accessed at 24 May COM (2007), p See YPSA, Shipbreaking around the world at %20the%20world.html, accessed 24 May

20 State and is a good geographical alternative within the EU region since it can be easily accessed. 52 Most of the recycling is done on a slipway. There is a considerable draught near the coast and even large vessels of over DWT can be run on the slipway. Vehicles and cranes can operate close to the vessel on the shore or on barges. The total recycling capacity is approximately LDT per year. 53 Environmental and labour groups pressure the Turkish shipbreaking yards to take health and environmental issues serious. This last decade Turkey has implemented new national regulation on shipbreaking with regard to a certification system for the yards, the installation of cement flooring, drainage systems and oil booms, asbestos removal and the establishment of a waste management center. End of 2013 two workers died during the demolition of the Love Boat, the MV Discovery. They were exposed to toxic gases at the vessel. Nine other people were injured. Just some days before a similar accident had happened at another vessel. Despite of improvements of the occupational health and safety conditions both in shipbuilding and shipbreaking industry, the workers still must take into account that they work in a dangerous business European Union As a consequence of market developments, the dismantling capacity in the EU has been reduced in the last 20 years to a marginal level. In most EU countries there are typically small yards engaged in scrapping of fishing vessels and other small vessels. There are recycling facilities for larger ships mainly in Belgium, the Netherlands, The United Kingdom, Italy, Denmark and Spain with a combined capacity of about 250,000 LDT per year. 55 For example Scheepssloperij Nederland BV is a technologically advanced, dismantling facility that has recycled a significant 52 Knap(2008), p.14, Puthucherril (2009), p.42-43, Taylan (2013), p COWI (2007), p.63, Lloyds (2011), p See accessed at 20 May COM (2007), p. 6, SWD (2012), p

21 number of nuclear fuel carriers. The yard was also involved in the recycling of the MSC Napoli. 56 The Galloo Gent in Belgium is active in shipbreaking since 1927 and has recycled some major UK warships such as the Fearless, the Rame Head and the Brambleleaf. 57 In Italy Simont S.p.a. is situated at the port of Naples. The company performs pier breaking with breaking of the keel in a floating dock or a dry dock. The annual recycling capacity of this yard LDT. However in this region are known problems with waste management capacity that could restrict possible import end-of-life ships. 58 The wreck of the cruise ship Costa Concordia that sunk before the coast of Italy in January 2012 is also expected to be recycled in Italy, probably at the coast of Genoa. 59 Overall the EU has high standards of occupational safety and environmental protection but is a minor player in the global ship recycling industry taking up less than 1% of the global recycling capacity It s a risky business As said dismantling of ships is sustainable from a narrow point of view. 60 However endof-life ships recycled at substandard dismantling facilities impose big risks on human health, safety and the environment Health and safety issues Considering the working environment there are big concerns for the health and safety of the workers. Life and limps are lost and severe illnesses occur due to inhalation of toxic fumes and particulars. Workers are confronted with ulcer, spinal disorders and asthma. 62 One in six of the workers at Alang is suffering from asbestosis. 63 With an average of almost one a week, in Bangladesh over 1200 ship-breaking workers died the last thirty years. 64 Just recently in April 2014 four workers died 56 Lloyds (2011), p Ibidem. 58 COWI (2007), p accessed 31 May See par p World Bank (2010), p.9, SWD (2012), p Bhattacharjee 2009, p.199, Taylan (2013), p.8 63 COM (2007), p.8, Puthucherril, p YPSA (2006), p.1, COM (2007), p.2. World Bank (2010), p

22 and three were severely injured when a gas cylinder exploded in Bangladesh. 65 However there is no official registry of workers, and companies don t report incidents since they feel they are not obligated to. 66 Probably the number of injuries and fatalities has increased significantly since a lot of unexperienced labourers are recruited to deal with the increasing demand of ship demolition capacity. The workers face hazardous working activities such as entrance into confined, enclosed, and other dangerous atmospheres, paint removal, oil and fuel removal, tank cleaning containing unknown residue, heavy lifting, working on elevated surfaces etc. Most of the time they work barefoot, without proper personal protective equipment, inadequate fire protection measures, lack of appropriate first-aid nor emergency response and without any job training. 67 Within these circumstances also child labour is not unknown. Children and teenagers who lack physical strength work in the same hazardous conditions. Paid much lower wages, they represent a cheap workforce. 68 The absence or non-implementation of elementary rules on safety at work is strongly linked with structural poverty and other social and legal problems. Take for example the weakness of enforcement authorities, and the existence of bad governance practices Environmental issues Hazardous materials on board end-of-life ships involve great threats for the local and regional environment. For example a major issue with dismantling ships on tidal mudflats, using the beaching method, is that any spills of oil or cargo remaining on board are likely to be swept out to sea at the next tide. 70 End-of-life ships are hardly ever pre-cleaned before being beached. Traditionally a number 65 See accesed at 8 May SDW (2012), p YPSA (2006), p FIDH (2008), p COM (2007) p Lloyds (2011), p

23 of holes are drilled into the hull in order to have the high tide clean away oil sludge and empty the tanks. 71 In general ships contain highly toxic chemicals such as: beryllium, cadmium, lead, arsenic, mercury and asbestos; dioxin and dioxin-like compounds such as PCB s 72, PCN s 73, PBB s 74 ; explosive chemicals such as acetylene, propane and butane; lubricants such as oil and greases; battery s and radioactive materials. 75 These chemicals remain intact in the environment for long periods and are widely distributed through the food web since they accumulate through living organisms. 76 One must not underestimate to what kind of destructive damage oil-polluting and heavy metal contamination leads. As steel, including machinery and other equipment count for about 80-90% of a ship s total weight, the other 10-20% includes these hazardous materials. 77 It is expected that at the year 2015 the amount of asbestos generated from future ship recycling will amount to 17,360 tons, the environmentally harmful paints amount up to 114,576 tons and oil sludge will add up to 7,221,760 (over 7 million!) tons Improvements In 2000 the Gujarat Maritime Board introduced regulations covering safety measures for beaching of vessels in India. The Alang ship scrapping industry responded by calling a major strike, which lead to the postponement of the regulation. Yet in 2006 the regulations were implemented. 79 The Indian Supreme Court ordered in 2003 the state pollution control board to ensure that ships are properly decontaminated before scrapping. The same year the board issued a closure notice to a ship breaking yard for not following the regulation on control 71 Puthucherril (2010, p.33, SWD (2012), p PCB is a synthetic chemical, used in electrical insulators and cooling fluids. 73 PCN is a synthetic chemical, used as mothproofing. 74 PBB is a synthetic chemicals, used as a flame retardenat in plastic foam. 75 YPSA (2006), p.12 & 15, COM (2008), p.4,emsa (2008), p.78-80, SWD (2012), p YPSA (2006),p COWI (2004), p Ibidem, p accessed 25 May

24 of solid waste and hazardous chemical. 80 In 2008 the Central Pollution Control Board in Delhi implemented Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, including environmental guidelines for the ship scrapping industry. 81 Since 2006 shipbreaking is an official industry in Bangladesh as the Bangladesh Labour Act 2006 includes shipbreaking within the definition of establishment. A regulatory framework is established but it is fragmented, by a disparate array of government departments, including the Department of Inspection for Factories and Establishment, the Explosives Department, and the Department of Environment the ship scrapping industry. 82 Recently the Government of Bangladesh made a major commitment to improve safety and environmental standards within the ship recycling industry. IMO and Bangladesh will jointly implement a project entitled Safe and Environmentally Sound Ship Recycling in Bangladesh Phase I. 83 However earlier initiatives to improve the recycling standards proved to be vain. On 19 April 2009 the Bangladesh Supreme Court banned environmentally unsafe ship recycling at request of the Bangladesh Environmental Lawyers Association. Due to the court s decision the ship-breaking industry in Bangladesh came to a halt. Responding to the industry lobby the prime minister relaxed the regulations and got the industry back on track. 84 Only the future will of the new NGO initiative has the prospect to improve the standards and sustainability of the ship recycling industry. EU initiatives on ship recycling are discussed in the following chapters Resume This chapter has given a brief overview of the life cycle of a ship and social and economic influences on the recycling market. It is not the intention to present a complete economic analyses since that does not fall within the scope of this thesis. 80 COWI (2004), p Puthucherril (2010), p Alam (2014), p See accessed 24 May For an overview of Indian Environmental Jurisprudence see Puthucherril (2010), p

25 However basic knowledge of the recycling market will help to interpret opportunities and pitfalls of the new EU Ship Recycling Regulation. Also the recycling process and the recycling areas are described. Again this is just a brief overview of the most relevant aspect and areas. For example the recycling markets of North and South America are disregarded. 85 This thesis explicitly focusses on EU recycling facilities including Turkey and the South Asian facilities including China. South Asia seems to be trapped in a race to the bottom embracing the economic benefits of the ship breaking industry. 86 Yet the negative impacts of this industry on health, safety and the environment urge for efficient regulatory requirements. The next chapter continues with a summary of the actual international legal framework that governs ship recycling. 85 In the USA and Mexico recycling facilities are available however there seems to be some indistinctness if it is possible to export vessels from other area s to USA recycling facilities, COWI (2007), p Bhattacharjee (2009), p

26 (3) A summary of the international legal framework 3.1. UNCLOS The rights and obligations of Member States to regulate shipping to protect the marine environment are governed by the United Nations Convention on the Law of the Sea The most significant of provisions are contained in Part XII: Protection and Preservation of the Marine Environment. UNCLOS requires Flag States to ensure that their ships comply with the applicable standards of ship safety and environmental protection. 88 Apart from these general obligations, states have a specific duty to adopt laws and regulations for the prevention, reduction and control of pollution of the marine environment from vessels flying there flag. 89 This context includes the responsibility of Flag States for sound Ship Recycling to the extent that recycling can be a threat to the marine environment. However UNCLOS only provides an overarching legal framework that must be supplemented by various international treaties and instruments IMO In absence of any legally binding instrument on ship recycling the MEPC has adopted the IMO Guideline on Ship Recycling. 91 The guidelines aim to provide guidance to shipowners, ship recycling facilities, Flag and Recycling States and other involved stakeholders as to the best practice, which takes into account the ship recycling process throughout the life cycle of the ship. 92 The guidelines deal provides requirements before the ship enters the scrapping facility 93 and contains both procedures for existing ships 94 and new-builds 95. The Green Passport, is introduced, a document providing information with regard to hazardous 87 The text of the United Nations Convention on the Law of the Sea was adopted on 10 December 1982 and entered into force on 16 November UNCLOS, art. 94 (1)-(3). 89 Ibidem, art. 211 (2). 90 Engels (2013), p IMO (2004), amendments adopted by resolution A.980(24). 92 Ibidem, art. 1.5, p Ibidem, section 8, p Ibidem, section 7, p Ibidem, section 6, p

27 materials utilized in the construction of the ship and its equipment. 96 References are made to the guidelines of the Basel Convention, the International Labour Office and the International Chamber of Shipping. 97 In 2011 and 2012 new guidelines have been adopted to assist stakeholders with the implementation of the Hong Kong Convention: 2011 Guidelines for the Development of the Inventory of Hazardous Materials; Guidelines for the Development of the Ship Recycling Plan; Guidelines for Safe and Environmentally Sound Ship Recycling; Guidelines for the Authorization of Ship Recycling Facilities Guidelines for the survey and certification of ships under the Hong Kong Convention; Guidelines for the inspection of ships under the Hong Kong Convention. 103 The guidelines are voluntary and not a legally binding instrument ILO The ILO guidelines deal with the safety and occupational health aspects throughout the entire process of ship dismantling. The guidelines were endorsed at the Interregional Tripartite Meeting of Experts on Safety and Health in Shipbreaking for Selected Asian Countries and Turkey, held in Bangkok, Thailand, from 7 to 14 October 2003 and approved by the General Body in March The objective of the guidelines is to contribute to the protection of workers from workplace hazards and to the elimination of work-related injuries, bad health, diseases, incidents and death. 105 Again the guidelines are voluntary and not legally binding instrument. 96 Ibidem, section 5, p Ibidem, p MEPC (2011b). 99 MEPC (2011a). 100 MEPC (2012a). 101 MEPC (2012b). 102 MEPC (2012c). 103 MEPC (2012d). 104 ILO (2014), p.v. 105 Ibidem, p.1, Art

28 3.4. ICS Coordinated by the International Chamber of Shipping the Industry Working Group on Ship Recycling was first established in Members include BIMCO, IACS, INTERCARGO, INTERTANKO, IPTA, OCIMF and ITF. In 2001 they took the first concrete step to regulate Ship Recycling by adopting The Industry Code of Practice on Ship Recycling. 106 In 2009 they presented Guidelines on Transitional Measures for Shipowners Selling Ships for Recycling In Preparation for the entry into force of the IMO Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. These guidelines aim to prepare shipowners on the Hong Kong Convention, taking into account the commercial competitiveness in established markets for the sale of end-oflife ships. 107 Also the ICS guidelines are voluntary and not a legally binding instrument Basel Convention The Basel Convention 108 is a framework that controls the movement of hazardous waste across international frontiers. The overarching objective of the convention is the protection of human health and the environment against the adverse effects of hazardous waste. 109 The European Community as a whole is a party to the Basel Convention, as are all the Member States. The convention responded to the public outcry 1980 s on the dumping of toxic waste in Africa that was imported from developing countries. Eight thousand drums of chemical waste were dumped in Koko Beach, Nigeria, and ships like the Karin B sailing from port to port trying to offload their cargoes of hazardous waste. 110 Although not drawn up with the end-of-life ships in mind, the transboundary movement of waste ships falls within the scope of the convention, since case law has confirmed that a ship destined for recycling have to be qualified as waste. The Dutch Council of State ruled in 2002 the case of the Sandrien 111 that if a vessel contains 106 Rossi (2012), p ICS (2009), introduction. 108 The text of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal was adopted on 22 March 1989 and entered into force on 5 May Basel Convention, p Ibidem. 111 Dutch Council of state, decision of 19 June 2002, ECLI:NL:RVS:2002:AE

29 considerable quantities of hazardous materials, such as asbestos, must be classified as hazardous waste. This was confirmed in 2006 by the French Conseil d Etat in the case of the Clemenceau 112 and in 2007 again by the Dutch Council of State in the case of the Otapan. 113 In the next paragraph these cases are explained in more detail. The Basel Convention has become a legal instrument that puts a ban on export of waste ships to non-oecd countries. The most relevant general obligations, with regard to waste-ships are: a) Parties shall not permit the export or import of hazardous waste to or from a non-party county; 114 b) Parties may prohibit the import of hazardous or other waste for disposal including recycling and shall inform other parties hereof; 115 c) Parties shall prohibit the export of hazardous waste or other waste to parties which have prohibited the import or which do not consent in writing to the specific import; 116 d) Transboundary movement is only allowed if the export-state has no technical capacity or facilities to dispose the waste in an environmentally sound manner or the waste is required as a raw material for recycling or recovery industry. 117 The Basel Convention has also drawn up guidelines that deal with the requirements with regard to ship recycling at the scrapping facilities at the destination state and with the requirements prior to shipping of the vessel. 118 The obligations of the Basel Convention are mandatory. The guidelines are voluntary. At this moment about 181 countries are party to the convention. 119 Also non-oecd countries like China, India Bangladesh and Pakistan are party to the convention. Unfortunately the standards en requirements are not properly enforced in those countries European Waste Shipment Regulation The EU implemented the Basel Convention through the European Regulation on shipment of waste. The EU regulation makes a distinction between green listed 112 French Conseil d Etat, Court Order of 15 February 2006, No Dutch Council of State, decision of 21 February 2007, ECLI:NL:RVS:2007:AZ Basel Convention. Art.4.2 sub h Ibidem Art. 4.2 sug g jo. Art 4.1 sub a. 116 Ibidem Art. 4.1 sub b and c. 117 Ibidem Art. 4.2 sub h.9.a. 118 UNEP (2003), p

30 waste 120 versus red listed waste. A waste ship is green listed if it is properly emptied of any cargo and other materials arising from the operation of the vessel which may have been classified as a dangerous substance. However the ship is not green listed if the ship contains other materials that increases the risks of recycling and therefore the transboundary movement needs prior notification and consent or prevents the recovery in an environmentally sound manner. 121 Therefore ships are mostly not green listed waste since in general they contain hazardous substances such as asbestos, oils and other chemicals. Transboundary shipments of green listed waste ships meant for recycling within the EU and/or to OECD countries is allowed. 122 If it concerns a non-green listed waste ship than prior notification and consent is necessary. 123 Transboundary shipments of green listed waste ships to non-oecd can be allowed, depending of the procedures confirmed by the receiving country. 124 Several high-profile cases of European ships send for recycling illustrate the unfortunate problems of compliance with the EU Waste Shipment Regulation. The Sandrien The Sandrien is an Italian waste-ship build in 1974 that was detained in the port of Amsterdam following an inspection under Port State Control. Inspections showed that the vessel had serious corrosion problems. The vessel could only be allowed to leave the port after fundamental repairs. During the repairs it became apparent to the Dutch Environmental Inspectorate that the ship was supposed to set sail to be dismantled in Alang, India. The ship was prohibited to leave the port based on the violation of EEC Regulation 259/1993 on the supervision and control of the shipments of waste within, into and out of the European Community, since no prior notification and consent for transboundary movement was given. 120 EC/1013/2006, annex III. 121 Ibidem, annex III, exordium. 122 Ibidem, art. 34 sub b. 123 Ibidem, art. 38 jo. art Ibidem, art