What's Happening?
The global ship recycling industry is facing challenges due to fragmented legal regimes, particularly between the EU and South Asian countries like Bangladesh and India. These countries account for a significant
portion of global ship recycling but face regulatory hurdles due to EU standards that exceed international conventions. The EU Ship Recycling Regulation restricts EU-flagged ships from being recycled in non-EU facilities, which are not on an EU-approved list, creating a compliance gap. Despite South Asian facilities investing in compliance with international standards, they remain excluded from the EU list, leading to regulatory gridlock.
Why It's Important?
This regulatory mismatch has significant implications for the global ship recycling industry, which relies heavily on South Asian facilities due to their capacity and cost-effectiveness. The exclusion of these facilities from the EU-approved list limits the recycling options for EU-flagged ships and creates a bottleneck in the industry. This situation highlights the need for harmonization of international regulations to ensure sustainable and efficient ship recycling practices. The current framework risks concentrating environmental and labor risks in South Asia while regulatory credit is claimed elsewhere.
What's Next?
To resolve this impasse, there is a call for the EU and OECD states to recognize South Asian facilities that meet international standards, allowing them to be included in the EU-approved list. This would require a policy shift towards harmonizing regulations with the realities of the ship recycling industry. Such a move could facilitate legal and sustainable recycling pathways, aligning global capacity with regulatory standards. The focus will also be on securing long-term investment to maintain compliance and improve infrastructure in South Asian facilities.
