Maritime Compliance: Regulatory landscape of Ship Recycling

The global ship recycling industry is undergoing substantial change, with increasing pressure to adopt environmentally and socially responsible practices.

As a key regulatory framework, the Hong Kong International Convention (HKC) for safe and environmentally sound recycling of ships, established by the International Maritime Organization (IMO), will be effective from 26 June, 2025. Working in compliance with the HKC and EU Ship Recycling Regulation (EU SRR), alongside global treaties like the Basel Convention, may be a complex task for shipowners and recyclers.

DNV’s paper, Safe and green ship recycling for shipowners provides an in-depth analysis of these regulations, offering guidance to ensure that shipowners meet all necessary compliance requirements. The focus is on both the immediate obligations and long-term strategies that shipowners must implement to align with these regulations.

HKC compliance: key shipowner requirements

A core requirement for shipowners under the HKC is maintaining an Inventory of Hazardous Materials (IHM), which must be updated throughout the ship’s lifecycle and verified during inspections and before recycling. Experience shows that many ships do not have an efficient IHM maintenance procedure.

Shipowners need to prepare ships for safe recycling by sharing necessary ship drawings and documents with the recycling facility. The next important step is to find a ship recycler that is either accepted by the EU or has a valid Document of Authorization for Ship Recycling (DASR) according to the Hong Kong International Convention (HKC) or both.

The flag state is responsible for issuing an International Ready for Recycling Certificate (IRRC). If the ship needs to be exported for recycling, a Prior Informed Consent needs to be prepared and accepted by the Export, Transit and Import State in accordance with the Basel Convention Ban Amendment. Engaging with the correct authorities in various countries can be important to avoid negative publicity.

Increased transparency and accountability with HKC ratification

As of 8 January 2025, only 24 countries have ratified the HKC. Shipowners with HKC-flagged vessels must comply with these regulations, but all other ships visiting or ending their life in one of these countries should equally comply. Non-HKC ships should prepare and seek formal statement of compliance from their flag or RO.

Major ship recycling nations like India, Bangladesh, Pakistan and Turkey have ratified the HKC and are currently preparing for approval and issuance of DASR to their ship recyclers. Tone Knudsen Fiskeseth, Principal Consultant at DNV, further highlights: “With the HKC coming into force later this year, it’s an important step towards compliance in these ship recycling nations. They need to implement HKC ship recycling standards that prioritize safety, human rights and protection of the environment around the ship recycling facility. They also need to prepare for safe handling of hazardous waste in downstream industries.

Ship recyclers and their administrations will need to report to the IMO, meaning an expected increased level of transparency within the industry. Furthermore, if there’s a suspicion of a violation of the HKC, the Convention allows another Party to request an investigation, therefore also increasing accountability and responsibility in ship recycling.”

EU SRR: stricter requirements for ship recycling

In parallel, the EU SRR, established in 2013 and in effect since 2018, governs the recycling of EU-flagged vessels. This regulation also extends to vessels visiting EU ports and to recycling facilities in selected non-EU countries (currently UK, Turkey and the USA). The EU SRR mirrors the HKC in many ways, though it sets higher standards in some areas and has implemented a robust regime for independent control and inspections. DNV’s paper highlights several differences, helping shipowners navigate the requirements set out by both the HKC and EU SRR.

As Fiskeseth explains: “Whereas the HKC states that ships should be recycled in an environmentally responsible manner, the EU specifically requires that recycling operations are conducted on impermeable floors with effective drainage systems and that all waste and hazardous materials are safely contained.”

EU SRR sets high standards for downstream waste and health protection

Another example of the EU SRR’s higher standards is the focus on downstream waste handling and the protection of human health and the environment also outside the ship recycling facility.

“Whilst waiting for HKC authorities to implement independent inspection and authorization regimes for their ship recycling facilities, we advise shipowners to conduct their own due diligence when selecting recycling facilities, especially for ships being recycled at a non-EU listed facility,” Fiskeseth recommends. The DNV paper provides guidance to shipowners for how to prepare a responsible ship recycling policy by taking the EU’s requirements to sustainability practices and recent OECD guidelines into account.

Ensuring compliance with the Basel Convention and HKC in ship recycling

The Basel Convention, adopted by the UN, controls the transboundary movement of hazardous wastes, including ships intended for recycling. It aims to minimize the transfer of hazardous materials from developed to developing nations, enhancing global environmental protection. The Basel Convention Ban Amendment, which came into force in 2019, prohibits the export of hazardous waste to countries with less robust environmental safeguards.

Shipowners must be aware of the Basel Ban’s implications for the transboundary movement of ships intended for recycling, especially if the recycling destination is in a non-OECD country. The EU has adopted the same approach in the Waste Shipment Regulations (WSR). DNV’s paper provides a detailed breakdown of how shipowners can comply with both global and regional regulations ensuring their recycling operations align with both.

An EU-flagged ship shall be sent for recycling at a facility on the European List of ship recycling facilities. If the decision to recycle was taken when the vessel was geographically in waters of an OECD country, it must be recycled in a facility in an OECD country.

Positive progress in ship recycling industry

The ship recycling industry has made substantial progress, particularly within safety and environmental protection. Collaboration between shipowners, recyclers and third-party experts has played a pivotal role in these improvements.

The European Commission has recently concluded that their regulations have contributed to achieving higher environmental and social standards in ship recycling practices. Unfortunately, re-flagging has been a too common practice to avoid recycling facilities on this EU list. Whilst the EU will continue to work for higher standards, implementation of the HKC and higher focus from the IMO may eventually reduce the gap between recyclers on the EU list and those with a DASR.

Fiskeseth notes, “Since 2017, when we started our advisory work for the EU, we’ve seen real improvements for the listed recycling facilities, and they’ve made strong commitments to raise the standards for sustainable recycling. Improvements have been seen in IHM reporting, safe handling of hazardous substances, and enhanced safety measures for lifting and pulling operations. Use of suitable Personal Protection Equipment (PPE) have improved and contributed to safer working conditions.”

Rising demand and higher standards can drive ship recycling innovation

Fiskeseth concludes: “The EU SRR has established a robust framework that has significantly enhanced the environmental performance of ship recycling for EU-flagged vessels. However, there’s now a pressing need to elevate the environmental standards of ship recycling on a global scale. Industry forecasts indicate a significant rise in demand for ship recycling capacity. This, coupled with the demand for higher standards, may lead to a decrease in the market value of scrap ships. These major changes present an opportunity to innovate and develop more sustainable and efficient recycling practices for the future.”