Landmark EU Agreement Expands Options for Responsible Ship Recycling
The European Union (EU) and the European Council have recently reached an agreement that marks a significant shift in the way ‘waste’ is defined. This development is particularly relevant in the context of the Basel Convention, which historically prohibited the export of ‘waste’ from Organization for Economic Cooperation and Development (OECD) nations to non-OECD countries.
A noteworthy aspect of this agreement is its impact on end-of-life ships, which have long been classified as waste. This classification has been a contentious issue, especially considering that many end-of-life ships navigate to breaking yards under their own power. In a buoyant market, these ships are sometimes sold for further trading. However, complications arise due to the European Union Ship Recycling Regulation (EU SRR), which restricts the sale of end-of-life ships to yards in India, Pakistan, or Bangladesh. The reason behind this restriction is the absence of approval from the EU for these yards under its own regulations.
Interestingly, this ban encompasses several recycling facilities in India and Bangladesh that have gained approval from international classification societies for compliance with the International Maritime Organization’s (IMO) Hong Kong Convention—a global framework for ship recycling. Consequently, a misalignment persists between international regulations, as embodied in the IMO’s Convention set to take effect on June 26, 2025, and the EU’s specific regulation.
As a result, European owners find themselves with limited options for recycling end-of-life ships. One of the few viable options is the Aliaga region of Turkey, an OECD country. While recycling yards in other parts of Europe theoretically offer an alternative, there is minimal enthusiasm for ship recycling across the continent. The lack of demand for scrap steel and unfavorable prices for other recycled materials further dampen the prospects for ship recycling within Europe. Notably, European yards cannot compete with the prices offered for end-of-life ships in the Indian subcontinent, currently averaging around $500 per light displacement ton (ldt).
In response to this dynamic, Danish Shipping issued a statement on Friday, highlighting the potential impact of the new waste shipment agreement. According to the statement, this agreement “opens the door for responsible recycling of EU-flagged ships outside the EU and OECD.” For European owners and operators, this development is likely to be a welcome relief as they confront the looming challenge of clearing out older tonnage in the months ahead.
Nina Porst, Director of Climate, Environment, and Safety at Danish Shipping, expressed optimism about the agreement, emphasizing the importance of recycling ships in a safe, responsible, and environmentally sound manner. Porst anticipates a growing number of ships being recycled in the coming years and believes that the new agreement will contribute to ensuring the responsible disposal of EU-flagged ships. This misalignment between international regulations, as outlined in the IMO’s Convention scheduled to take effect on June 26, 2025, and the EU’s regulations, presents a conundrum. European ship owners find themselves with limited options for recycling end-of-life ships, with the Aliaga region in Turkey, an OECD country, emerging as one of the few viable choices. While recycling yards elsewhere in Europe could be an alternative, there is minimal enthusiasm for ship recycling across the continent. The demand for scrap steel is lackluster, and prices for other recycled materials are unappealing. European yards struggle to match the prices paid for end-of-life ships in the Indian subcontinent, where the current rate is approximately $500 per light displacement ton (ldt).
In essence, the recent agreement signifies a departure from the previous restrictive stance on the export of ‘waste’ and opens up possibilities for European owners to responsibly recycle their end-of-life ships outside the EU and OECD. This shift is likely to have far-reaching implications for the ship recycling industry, influencing the choices made by ship owners and operators as they navigate the complex landscape of international regulations and environmental considerations.