Estimating the ship dismantling capacity in compliance with the European Union’s Ship Recycling Regulation

Purpose

End-of-life ships are often dismantled in substandard conditions, causing environmental and health concerns. The European Commission has introduced a new Directive on the matter inspired by IMO’s so-called Hong Kong Convention. The Directive calls that by the end of 2018, if not earlier, EU-flagged ships must be dismantled sustainably in shipyards certified by EU. This paper addresses two questions: i) what is the level of capacity needed in order to dismantle the existing EU-flagged fleet; and ii) how available EU-certified recycling capacity is able to match this need.   

Methodology

The level of required dismantling capacity is estimated by size and age structure for all merchant ships under the EU-flag as per Jan. 1, 2017. Main research methods include descriptive statistics, regression analysis and ANOVA. The fleet data is obtained from the Clarkson World Fleet Register and dismantling capacity data is compiled based on official statistics.  

Results

Based on actual fleet data, more EU-certified dismantling capacity is needed in the future. This suggests that EU shipyard certification process must be extended well beyond the borders of EU. Additionally, EU-regulation will most likely shift the dismantling market balance towards Europe, and thus increase the prices of dismantling.

Originality / Value

Literature that investigates fit between existing and required dismantling capacity of EU-flagged ships is both scarce and outdated. This research, derived from state-of-the-art statistics, answers this evident need. The paper contributes to policymaking by evaluating the implications of EU Ship Recycling Regulation while also providing valuable insights for the future.