India’s Ship Recycling Credit Note Scheme Gains Global Praise for Promoting Sustainability and Growth
The Indian government’s proposed Ship Recycling Credit Note Scheme has received widespread acclaim. It could reshape the global maritime industry and bolster India’s shipbuilding sector. Among its most vocal supporters is Nikolaus Schues, President of BIMCO, one of the world’s foremost shipowners’ associations. Schues hailed the initiative as “a fantastic idea,” highlighting its potential to serve as a model for circular economy practices while advancing environmental goals and fostering economic growth.
A Bold Initiative for a Sustainable Future
The Ship Recycling Credit Note Scheme is a groundbreaking initiative designed to encourage shipowners to recycle their vessels in India. Under the scheme, fleet owners who recycle their ships at Indian yards will receive a credit note equivalent to 40% of the ship’s scrap value. This credit can then be used as a rebate toward the construction of a new vessel at an Indian shipyard.
The dual benefits of this scheme are clear. Firstly, it promotes sustainable recycling practices, ensuring that ships are dismantled in an environmentally responsible manner. Secondly, it provides a much-needed boost to India’s shipbuilding industry, positioning it as a formidable competitor in the global market.
Schues commended the scheme for its innovative approach, emphasizing its potential to drive significant growth in India’s maritime sector. “By incentivizing ship recycling within the country and supporting local shipyards, India is setting itself up as a global leader in both recycling and shipbuilding,” he said.
Challenges in International Regulations
Despite his enthusiastic endorsement of the scheme, Schues raised a critical concern regarding international regulatory frameworks, particularly the misalignment between the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) and the Basel Convention.
The HKC, set to come into force in June 2025, establishes standards for safe and environmentally sound ship recycling. Many Indian shipyards, particularly those in Alang, Gujarat, are already compliant with these standards. However, the Basel Convention, which regulates the transboundary movement of hazardous waste, currently prohibits European shipowners from sending their ships to Indian recycling yards, citing concerns over “waste tourism.”
Schues argued that this regulatory discord hampers progress toward a greener maritime industry. “The Basel Convention’s restrictions prevent European owners from utilizing high-quality, compliant recycling yards in India, even when these yards meet the strictest international standards,” he explained. He called for a harmonized approach, advocating for the alignment of the HKC and Basel Convention to unlock the full potential of India’s recycling capabilities.
The Alang Advantage: Leading the Way in Green Steel
India’s ship recycling industry has long been a cornerstone of its maritime economy, with Alang, Gujarat, emerging as a global hub. The region has seen substantial investments in modernizing its facilities, ensuring compliance with international safety and environmental standards. With the capacity to handle over 800 ships annually by 2030, Alang is poised to play a pivotal role in meeting the global demand for recycled materials.
One of the most promising aspects of this industry is its potential to drive the production of green steel. India can significantly reduce its carbon footprint in steel production by utilizing recycled steel from dismantled ships and harnessing renewable energy sources such as solar and wind power. This positions the country as a future leader in the global green steel market.
Schues underscored the importance of this development, noting that the shift towards sustainable materials is crucial for achieving long-term environmental goals. “India’s focus on green steel production not only aligns with global sustainability targets but also creates immense economic opportunities,” he said.
Ethical Recycling: A Growing Priority for Shipowners
The issue of ethical ship recycling has gained prominence in recent years, with increasing scrutiny on labour conditions and environmental practices at recycling yards. Unsafe working conditions and improper disposal of hazardous materials have historically plagued the industry, particularly in developing countries.
However, the tide is turning. Indian yards have made significant strides in ensuring worker safety and environmental compliance. Schues emphasized that shipowners are becoming more conscientious about where and how their ships are recycled. “There is a growing demand for ethical recycling practices. Shipowners want to ensure that their vessels are dismantled in facilities that prioritize safety and environmental responsibility,” he noted.
The Ship Recycling Credit Note Scheme aligns with this shift, providing financial incentives for shipowners to choose compliant Indian yards. This supports ethical recycling and enhances the global reputation of India’s ship recycling industry.
BIMCO’s Role in Advancing Global Standards
BIMCO, through its Ship Recycling Alliance, is actively working to bridge the regulatory gaps between the HKC and Basel Convention. The organization is advocating for policies that promote safe and environmentally sound recycling while ensuring that shipowners can access high-quality facilities worldwide.
Schues highlighted BIMCO’s commitment to this cause, stating, “We are striving to create a unified framework that enables ship recycling to be both safe and sustainable. Aligning international conventions is a critical step in achieving this goal.”
A Vision for the Future
As the global maritime industry faces mounting pressure to reduce its environmental impact, initiatives like India’s Ship Recycling Credit Note Scheme represent a beacon of hope. By incentivizing sustainable practices and supporting local industries, the scheme offers a blueprint for achieving economic growth while safeguarding the environment.
Schues concluded his remarks by expressing optimism about the future. “India’s ship recycling and shipbuilding industries have the potential to lead the world in sustainability. With the right policies and international cooperation, we can create a greener, more prosperous future for the maritime sector,” he said.
The success of this initiative could set a precedent for other countries, demonstrating the power of innovative policies in driving sustainable development. For India, it marks a significant step toward becoming a global leader in the circular economy, aligning with its broader environmental and economic goals.
