Report on the feasibility of a financial instrument that would facilitate safe and sound ship recycling

Each year, hundreds of large ships are sold for dismantling on the tidal beaches of South Asia. The negative impacts of this practice on the environment and human health have been extensively documented. Difficulties in enforcing the Basel Convention with regards to ships, as well as the European ban on exports of hazardous waste outside the OECD, led to the adoption of the Hong Kong Convention in 2009 and the European Ship Recycling Regulation in 2013 respectively. Using the possibility offered by Article 1(2) of the Hong Kong Convention, the Ship Recycling Regulation sets more stringent requirements than the Convention, notably with regards to health, safety and the environment.

Article 29 of Regulation (EU) No 1257/2013 on ship recycling calls on the Commission to report on "the feasibility of a financial instrument that would facilitate safe and sound ship recycling and, if appropriate, accompany the report by a legislative proposal". This report is submitted to comply with that reporting obligation. It first summarises the current regulatory approach to the issues stemming from ship recycling. It then presents the state of play of research on the feasibility of a financial incentive for safe and sound ship recycling, introducing a new concept, the Ship Recycling Licence. The report also contains a summary of stakeholders' feedback and ends with a conclusion.

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