Flag-hopping undercuts EU ship recycling rules
Challenges in EU Ship Recycling Regulation
The EU Ship Recycling Regulation (SRR) has been in effect since 2018. Its main goal is to ensure that ships are recycled in a safe and environmentally friendly manner. A recent evaluation by the European Commission reveals that while the SRR has made significant progress, its success is threatened by the actions of some shipowners. Many of these owners have been found to actively undermine the regulation. This behavior poses a serious challenge to the SRR’s objectives.
The European Commission’s evaluation, released in late February 2025, highlights the SRR’s achievements in promoting global recycling standards. These standards include the upcoming “Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships,” which is set to take effect in June 2025. Full compliance with this convention is expected by 2030. The SRR requires EU-flagged vessels to be recycled at facilities listed on the European List. This list currently includes around 43 approved yards, with 31 located in Europe, 11 in Türkiye, and one in the United States. The latest update to this list added one facility from the Netherlands and another from Türkiye, while three facilities in Lithuania, Türkiye, and Latvia were removed.
Despite these advancements, the European Commission has identified significant obstacles to the SRR’s effectiveness. The most pressing issue is the practice of “flag-hopping.” Shipowners often switch to non-EU flags before recycling their vessels. This allows them to sell end-of-life ships to cash buyers at higher prices than those offered in the EU. These buyers then dismantle the ships in South Asian yards, where safety and environmental standards are often not met.
According to the NGO Shipbreaking Platform, a Belgium-based organization, 80% of the global vessel tonnage scrapped last year was dismantled under unsafe conditions in South Asia, particularly in Bangladesh, India, and Pakistan. These countries have ratified the Hong Kong Convention, yet unsafe practices persist. The NGO also reported that China was the largest contributor to unsafe shipbreaking in 2024, selling over 50 vessels for dismantling, primarily in Bangladesh.
In 2023, the situation was even worse, with 85% of 446 oceangoing vessels being dismantled on the beaches of South Asia. The NGO Shipbreaking Platform has called for the EU to revise the SRR to extend its reach beyond flagging to ownership. This change could help address the issue of flag-hopping and improve compliance with safety standards.
Ship Recycling Needs to Pick Up for Shipping to Lower Emissions
Another significant challenge facing the SRR is the lack of reliable hazardous materials inventories during a vessel’s operational life. The European Commission’s evaluation found that 45% of EU-inspected ships did not meet the inventory requirements set by the SRR. Many ships lacked a hazardous materials inventory altogether. This absence makes safe dismantling difficult and increases the risk of environmental harm.
To address these issues, the European Commission is exploring various solutions. One potential approach is to create a ship recycling license. This license could help bridge the price gap between EU-listed yards and cheaper, less regulated facilities. Additionally, the Commission is considering shifting compliance responsibility from the registered owner to the beneficial owner. This change could make it harder for companies to evade EU regulations by changing a vessel’s flag before dismantling.
