COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Date: 2012-03-23
Institutions: European Commission
Subjects: export of waste, hazardous waste, ship's flag, vessel, waste recycling

EUROPEAN COMMISSION 

Brussels, 23.3.2012  
SWD(2012) 45 final 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on ship recycling 

{COM(2012) 118 final} 
{SWD(2012) 47 final} 

 
 
 
 
  
 
 
COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on ship recycling 

1. 

1. 

2. 

3. 

4. 

PROBLEM DEFINITION 

The Waste Shipment Regulation1 implements at European level the requirements of 
the  Basel  Convention  on  the  control  of  transboundary  movements  of  hazardous 
wastes and their disposal. It also implements the provision of an Amendment to the 
Convention  (the  so-called  ‘Ban  Amendment’)  which  prohibits  the  export  of 
hazardous waste outside the OECD. This Amendment has not yet entered into force 
at international level due to insufficient ratification. 

According  to  this  legislation,  EU-flagged  ships  going  for  dismantling  constitute 
hazardous  waste  (since  they  contain  hazardous  substances)  and  can  only  be 
dismantled within the OECD. This legislation is almost systematically circumvented. 
In  2009,  more  than  90 %  of  EU-flagged  ships  were  indeed  dismantled  outside  the 
OECD, mostly in South Asia (India, Pakistan and Bangladesh) through the so-called 
‘beaching’ method and with significant environmental and health impacts. 

This widespread non-compliance is firstly linked with the lack of recycling capacity 
available within the OECD in particular for the largest ships. The existing capacity at 
European  level  is  used  for  the  dismantling  of  small  ships  and  governmental  ships 
which  do  not  come  under  the  scope  of  the  Hong  Kong  Convention.  Similarly  to 
shipbuilding, ship dismantling has moved during the last few decades from European 
countries  to  non-OECD  countries  for  economic  reasons.  As  a  result,  the  option  of 
developing additional capacity in Europe has not been economically feasible.  

Secondly, the current situation of the ship recycling market is characterised by fierce 
and unfair competition between the major recycling states Bangladesh, India and (to 
a lesser extent) Pakistan. Other competitors with higher technical standards are only 
able  to  occupy  market  niches  for  special  types  of  ships  like  small  ships  and 
government  vessels  including  warships  (EU  and  Turkey)  or  the  fleet  of  committed 
shipowners (Turkey and China). 

1 

Regulation  (EC)  No  1013/2006  of  the  European  Parliament  and  of  the  Council  of  14  June  2006  on 
shipments of waste.  

EN 

2 

   EN 

 
 
                                                 
5. 

6. 

7. 

8. 

2. 

9. 

3. 

10. 

Finally, the current legislation is not adapted to the specificities of ships. Identifying 
when ships turn into waste is indeed difficult. In order to apply the current legislation 
and, in particular, the ban on exporting end of life ships outside the OECD, Member 
States  would  have 
to  make  an  effort  on  enforcement  which  would  be 
disproportionate  and  inefficient  taking  into  account  the  lack  of  recycling  capacity 
within the OECD as well as the legal possibility for any ship to change its flag. 

The situation is likely to worsen since large numbers of ships are expected to be sent 
for dismantling in the coming years as a result of an overcapacity of the world fleet 
which is estimated to remain for at least 5 to 10 years. In addition, the coming peak 
in  ship  recycling  around  the  phasing-out  date  for  single-hull  tankers  (2015)  is 
expected to essentially benefit the most sub-standard facilities. 

In  order  to  improve  the  situation  a  specific  Convention  has  been  developed  by  the 
International  Maritime  Organization.  The  Hong  Kong  International  Convention  for 
the  Safe  and  Environmentally  Sound  Recycling  of  Ships  was  adopted  in  2009  but 
will need to be ratified by the major flag and recycling states in order to enter into 
force and start producing effects. 

If  the  Hong  Kong  Convention  does  not  enter  into  force  and  if  the  European 
legislation is not modified, it is highly probable that the current market situation will 
persist.  A  peak  in  dismantling  activity  is  bound  to  lead  to  a  resurgence  of  lethal 
accidents  and  occupational  diseases,  as  the  new  staff  will  be  recruited  from  among 
the poorest and usually inexperienced rural labourers. 

OBJECTIVES OF THE EU INITIATIVE 

The  general  objective  of  developing  a  Ship  Recycling  Regulation  is  to  reduce 
significantly and in a sustainable way by 2020 the negative impacts of the recycling 
of EU-flagged ships, especially in South Asia, on human health and the environment, 
without  creating  unnecessary  economic  burdens,  by  facilitating  the  entry  into  force 
of the Hong Kong Convention. The specific objectives are to: 

SO1:  reduce  the  human  health  and  environmental  impacts  by  ensuring  that  EU-
flagged  ships  are  dismantled  only  in  safe  and  environmentally  sound  facilities 
worldwide, 

SO2: ensure the availability of sufficient and economically accessible sound and safe 
recycling capacity to dismantle EU-flagged ships, 

SO3: strengthen the incentives to comply with the European legislation. 

POLICY OPTIONS 

The first possible option (the ‘baseline option’) would consist in keeping the current 
legislation  (Waste  Shipment  Regulation)  unchanged.  Member  States  would  ratify 
and implement the Hong Kong Convention in their domestic legislation. They would 
however  continue  to  be  prohibited  from  exporting  large  commercial  EU-flagged 
ships outside the OECD for recycling even if, in practice, a large proportion of these 
ships would continue to be recycled in non-OECD countries. It is not expected that 

EN 

3 

   EN 

 
Member  States  would  significantly  improve  their  enforcement  of  the  legislation  as 
the  implementation  of  the  Ban  Amendment  would  require  significant  efforts  and 
would be ineffective (major reflagging to non-EU flags can be expected as a result of 
the lack of recycling capacity within the OECD). 

The second option (B) would consist of including in the Waste Shipment Regulation 
some requirements of the Hong Kong Convention. These requirements would apply 
to  recycling  facilities  located  in  the  EU  and  in  the  OECD  since  the  dismantling  of 
large  commercial  EU-flagged  ships  outside  the  OECD  would  continue  to  be 
prohibited.  Member  States  would  ratify  and  implement  this  Convention  in  their 
domestic legislation. 

The third option (C) would consist in excluding the ships covered by the Hong Kong 
Convention  (large  commercial  seagoing  vessels)  from  European  legislation.  These 
ships would instead be addressed only by the domestic legislation of Member States 
possibly based on the Hong Kong Convention’s regime. 

A  fourth  option  (D)  would  consist  in  covering  the  ships  under  the  Hong  Kong 
Convention  (large  commercial  seagoing  vessels)  by  a  new  ad-hoc  Regulation.  This 
Regulation  would  cover  the  whole  life  cycle  of  EU-flagged  ships,  implement  early 
the requirements of the Hong Kong Convention and, as allowed by the Convention, 
include  more  stringent  environmental  criteria  for  ship  recycling  facilities.  EU 
Member  States  would  be  informed  in  writing  and  in  due  time  of  the  shipowner’s 
intention to send a ship for recycling. This requirement as well as the introduction of 
sanctions, which would be at least equivalent to the ones applicable under the current 
legislation, will ensure compliance with the legislation. While it is difficult to expect 
the current ‘beaching’ facilities to be able to meet these requirements, it is possible 
that upgraded facilities might be able to fulfil these criteria in the future. In order to 
avoid  confusion,  overlaps  and  administrative  burden,  ships  covered  by  this  new 
legislation would no longer be covered by the Waste Shipment Regulation. 

A final option would consist in complementing option D with specific elements: 

Option  E1  would  consist  in  addressing  also  government  vessels,  including  navy 
vessels, in the new Regulation transposing the Hong Kong Convention, 

Option E2 would require EU-flagged ships to be treated in facilities providing a level 
of protection of health and of the environment equivalent to EU facilities, 

Finally, option E3 would consist in allowing the export of EU-flagged ships only to a 
list of third party audited and certified facilities. 

ASSESSMENT OF IMPACTS 

As recommended by the Impact Assessment guidelines, the assessment has focused 
only on the additional impacts of the other options compared to the baseline scenario. 
Quantitative data are provided in the table below. 

11. 

12. 

13. 

14. 

(1) 

(2) 

(3) 

4. 

15. 

EN 

4 

   EN 

 
16. 

17. 

18. 

19. 

From  an  environmental  perspective,  the  different  scenarios  will  have  the  same 
impacts  regarding  generation  of  hazardous  and  non-hazardous  waste  as  well  as  on 
CO2  emissions  except  for  option  E12.  The  options  would  however  have  different 
impacts regarding the percentage of hazardous waste which would be managed in an 
environmentally sound manner. Options C and E1 have a negative impact, options D 
and E2 a positive one and option B the same impact as the baseline scenario. 

Option  B  would  have  similar  social  impacts3  compared  to  the  baseline  scenario. 
Option C would have negative impacts (higher social costs) in the medium and the 
short  term.  Option  E1  would  have  negative  impacts  in  the  short,  medium  and  long 
term. Option D would have positive impacts in the short term only, while option E2 
would have significant positive impacts in the short, medium and long term. 

From  an  economic  perspective,  the  implementation  of  the  Hong  Kong  Convention 
will  entail  additional  costs  for  shipowners  (reduced  price  offered  for  their  ships  by 
upgraded  recycling  facilities  and  administrative  costs)  and  for  Member  States 
(administrative costs). Options B, D and E2 would anticipate the application of the 
Hong Kong Convention compared to the baseline scenario and would therefore entail 
additional  costs  for  EU  shipowners  and  Member  States  in  the  short  and  medium 
term.  They  would  however  have  no  additional  impacts  compared  with  the  baseline 
scenario  from  2025  onwards.  In  addition,  option  B  would  entail  additional 
administrative  costs  for  Member  States  regarding  control, 
inspection  and 
enforcement  in  the  short,  medium  and  long  term.  Option  C  would  have  positive 
impacts compared to the baseline scenario for shipowners and Member States in the 
short and medium term. Option E1 would have positive impacts in the short, medium 
and long term. 

Option B is expected to create problems of compliance since it would not resolve the 
problem  of  the  lack  of  legally  accessible  recycling  capacity  and  would  create 
confusion  by  mixing  two  sets  of  requirements  (from  the  Basel  and  Hong  Kong 
Conventions).  No  problem  of  compliance  is  expected  under  option  C  (all  facilities 
would be legally accessible) nor option E1. Option D would have a positive impact 
because  the  proposed  legislation  would  be  adapted  to  the  specificities  of  ships  and 
sufficient recycling capacity would be legally accessible at a slightly reduced price. 
In  addition,  specific  sanctions  will  be  introduced  in  order  to  address  the  possible 
remaining cases of non-compliance. For the same reasons, option E2 is expected to 
lead  to  a  higher  level  of  compliance  compared  with  the  baseline  option.  However, 
more non-compliance  can  be  expected compared to option D since the revenues of 
shipowners  would  be  more  negatively  affected  and  since  the  available  recycling 
capacity might be reduced as a result of stronger requirements for facilities. Option 
E3 would provide a tool for checking that the facilities to which EU-flagged vessels 
are  sent  for  recycling  comply  with  the  applicable  standards  and  rules  on  safe  and 
environmentally sound recycling of ships. It would however present a lower level of 
compliance than option D because of the possible reluctance of third countries due to 
sovereignty issues. 

2 

3 

Under option E1, governmental ships (including navy ships) currently recycled within the OECD would 
be  allowed  to  be  sent  for  recycling  in  Asia  thus  leading  to  higher  CO2  emissions  during  their  final 
voyage. 
Fatal and non-fatal accidents for adult and child workers.  

EN 

5 

   EN 

 
                                                 
20. 

21. 

22. 

Several  stakeholders  have  pointed  out  that  the  co-existence  of  two  sets  of  legal 
requirements (resulting from the Basel and Hong Kong Conventions) would be very 
confusing and administratively burdensome. Option B would therefore have negative 
impacts  on  the  simplification  of  the  existing  legislation.  Large  EU-flagged  ships 
would  no  longer  be  covered  by  European  legislation  under  option  C.  This  would 
have  a  positive  impact  on  the  simplification  of  legislation  in  the  short  term  which 
might  be  more  limited  in  the  long  term  if  the  EU  Member  States  have  diverging 
national legislation to implement the Hong Kong Convention. Options D, E2 and E3 
would  have  a  positive  impact  since  they  would  replace  the  current  legislation  by  a 
new instrument better adapted to the specificities of ships.  

No option is expected to unduly affect small and medium sized enterprises since the 
main  businesses  concerned  (EU  shipowners)  are  rarely  small  and  medium  sized 
enterprises. 

to 

the 

linked 

the  Hong  Kong  Convention 
The  costs 
(administrative costs during the operating life and reduced selling prices at the time 
of  recycling)  over  the  lifetime  of  ships  are  negligible  and  no  impact  is  therefore 
expected on consumers in the baseline and in the other scenarios.  

implementation  of 

23. 

In  principle,  none  of  the  options  envisaged  in  the  impact  assessment  report  has  a 
direct impact on the EU budget. 

EN 

6 

   EN 

 
The quantified additional impacts of the different scenarios compared to the baseline scenario are summarised in the table below. 

Environmental 
Hazardous 
waste treated in 
an ESM 
manner4 

Work 
load 
EU5 

Workload 
(protected 
workers)5 

Workload 
(not 
protected 
workers) 
5 

0 % 
-6 % 
23 % 
30 % 
23 % 
0 % 
-20 % 
0 % 
16 % 
0 % 
0 % 
0 % 
0 % 
16 % 
0 % 

0 
-5 
0 
0 
0 
0 
-6 
0 
0 
0 
0 
0 
0 
0 
0 

0 
189 
1 423 
-938 
1 423 
0 
-2 497 
0 
-3 778 
0 
0 
0 
0 
-3 428 
0 

0 
468 
-2 246 
-2 385 
-2 246 
0 
3 244 
0 
0 
0 
0 
0 
0 
0 
0 

Social 

Workload 
(not 
protected 
child 
workers) 
5 
0 
159 
-764 
-811 
-764 
0 
1 103 
0 
0 
0 
0 
0 
0 
0 
0 

Fatal 
accidents 
(adults) 6 

Non 
fatal 
accidents 
(adults)6 

Fatal 
accidents 
(children) 
6 

Non fatal 
accidents 
(children) 
6 

0 
1 
-2 
-4 
-2 
0 
1 103 
0 
0 
0 
0 
0 
0 
-2 
0 

0 
184 
-473 
-1 105 
-473 
0 
3 
0 
-2 
0 
0 
0 
0 
-756 
0 

0 
0 
-1 
-1 
-1 
0 
633 
0 
-833 
0 
0 
0 
0 
0 
0 

0 
29 
-133 
-148 
-133 
0 
1 
0 
0 
0 
0 
0 
0 
0 
0 

Impacts 

m
r
e

t

t
r
o
h
S

m
r
e

t

i

m
u
d
e
M

m
r
e
t
g
n
o
L

)
5
1
0
2
(

)
0
2
0
2
(

)
5
2
0
2
(

B 
C 
D 
E2 
E3 
B 
C 
D 
E2 
E3 
B 
C 
D 
E2 
E3 

Social 
costs7 

Economic 

Revenues 
ship owners7 

Administrative 
costs 
(Member 
States) 7 

0 
969 792 
-3 372 237
-5 401 791
-3 372 237
0 
5 993 494 
0 

-1 952 011 
12 540 267 
-22 019 545 
-66 349 943 
-22 221 755 
-112 036 486
31 192 613 
-112 036 486
-2 820 429 -189 916 941
-112 266 395
149 062 972 
159 369 991 
149 062 972 
63 072 738 
148 854 325 

0 
0 
0 
0 
-3 114 124
0 

378 604 
0 
356 430 
356 430 
356 430 
640 117 
-436 341 
617 943 
617 943 
617 943 
22 174 
-879 612 
0 
0 
0 

4 
5 
6 
7 

EN 

Percentage of waste generated by ship recycling treated in an environmentally sound manner (ESM) for each option compared to the baseline option. . 
Expressed in man years. 
Number of persons. 
Expressed in €. 

7 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
                                                 
5. 

24. 

25. 

26. 

27. 

28. 

29. 

COMPARISON OF OPTIONS 

The  policy  packages  have  been  assessed  against  the  criteria  of  effectiveness, 
efficiency and coherence. 

From  an  effectiveness  point  of  view,  options  D,  E2  and  E3  would  seem  the  most 
attractive. Indeed, they offer the highest potential level of achievement of all specific 
goals, while options B and E1 would have globally negative effectiveness and option 
C would only have positive effectiveness regarding the Specific Objectives 2 and 3. 

Option  B  would  globally  have  negative  efficiency  since  it  would  decrease  the 
revenues of shipowners, increase the administrative costs for EU Member States and 
would  not  solve  the  current  problems  of  compliance.  Option  C  would  also  have 
negative  efficiency:  its  positive  impacts  on  the  revenues  of  shipowners  and  on  the 
administrative  costs  for  EU  Member  States  will  be  offset  by  significant  negative 
environmental and social costs in the short and medium term. Option E1 would have 
globally  negative  effectiveness  with  positive  economic  impacts  for  EU  Member 
States  but  negative  environmental  and  social  impacts.  Options  D  and  E3  contain 
effective measures accompanied by limited implementation and administrative costs, 
which  contributes  efficiently  to  all  specific  objectives.  Option  D2  would  have 
globally positive efficiency. 

Options  D,  E2  and  E3  would  have  positive  efficiency.  However,  option  E2  would 
entail very substantial costs for shipowners which will only be partially offset by the 
environmental and health benefits. 

From an effectiveness point of view, option D seems the most attractive. Indeed, it 
offers  the  highest  potential  level  of  achievement  of  all  specific  goals  and  a  higher 
level of compliance than option E3.  

Moreover,  as  shown  by  the  analysis  of  coherence,  even  if  option  D  presents  some 
trade-offs  between  the  positive  environmental  and  social  impacts  and  the  negative 
economic impacts, the trade-offs are lower than for option E2. The loss of revenues 
for  shipowners  under  option  D  (resulting  from  lower  prices  offered  by  improved 
facilities) would indeed be offset by gains in terms of environmental protection and 
of social impacts. This option addresses all the current problems and introduces new 
requirements  to  ensure  compliance  before  recycling  (obligation  to  inform  the  flag 
state  in  writing)  and  after  (sanctions  if  ships  are  not  dismantled  in  authorised 
facilities).  It  will  therefore  increase  compliance.  In  terms  of  coherence,  option  D 
therefore ranks highest. In view of the above, option D is the recommended option. 

30. 

The  table  below  summarises  the  comparison  between  the  options  in  terms  of 
effectiveness, efficiency and coherence. 

Option 

B 

C 

D 

E1 

E2 

E3 

Effectiveness 

EN 

8 

   EN 

 
 
 
 
 
 
 
• 

• 

• 

SO1  negative  negative positive  in  the 
short  term  and 
neutral  in  the 
long term 

negative positive 

positive 

SO2  negative  very 

very positive 

neutral 

positive 

positive 

very 
positive 

SO3  negative  positive  positive 

slightly 
negative

positive 

positive 

Efficiency  

negative  negative very positive  

negative positive  

very 
positive 

Coherence 

no 

no 

yes 
limited 
off  

no 

with 
trade 

but 

yes 
with 
important 
trade 
off 
and  risk  of 
non-
compliance 

yes  with 
limited 
trade 
off 
but  with 
risks 
of 
non-
compliance

Conclusion  

Recommended 
option 

6. 

31. 

MONITORING AND EVALUATION 

Given the existing compliance problems, progress should be monitored to check the 
implementation  and  effectiveness  of  the  EU  legislation  and  its  contribution  to  the 
objectives.  It  is  proposed  to  compare  each  year  the  list  of  ships  which  were 
considered as likely to go for recycling the year before and the list of ships recycled 
in EU audited and certified facilities. 

32. 

Indicators of the progress in this context could be in particular: 

• 

• 

• 

• 

the  number  of  ship  recycling  facilities  that  are  fulfilling  the  criteria  of  the 
Regulation; 

the  number  and  percentage  of  EU-flagged  ships  dismantled  in  such  facilities 
compared to the worldwide number and percentage; 

the  state  of  ratification  of  the  Hong  Kong  Convention  by  the  major  flag  and 
recycling states; 

data  on  the  type  of  employment  in  ship  recycling  facilities  (typology  of 
employment,  accidents,  occupational  diseases)  as  well  as  data  on  the 
environmental pollution associated with ship recycling, as available. 

EN 

9 

   EN 

 
 
 
 
 
 
 
33. 

34. 

Taking  these  indicators  into  account,  it  is  necessary  to  review  the  EU  policy 
regular 
concerning 
implementation/progress reports to the European Parliament and the Council. 

regular  basis  and 

recycling  on  a 

submit 

ship 

to 

Should compliance problems continue, further action could be taken at EU level like 
the setting up of an EU ship dismantling fund. 

EN 

10 

   EN