Flag-hopping undercuts EU ship recycling guidelines, European Commission found

February 28, 2025, by Sara Kosmajac

The EU Ship Recycling Regulation (SRR), in place since 2018, has largely met its objectives, but its further progress hinges on responsible practices of shipowners, a ‘considerable’ number of whom have “actively undermined” the guideline’s success, a new evaluation by the European Commission argues.

Illustration purposes only. Source: Pexels

In an evaluation released in late February, 2025, the European Commission highlighted the progress that the SRR has made thus far in supporting global standards, both existing and upcoming, such as the “Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships”, set to enter force in June 2025, though with full compliance required by 2030.

Countdown to compliance: Are shipowners ready for the Hong Kong Convention?

Regulation & Policy

The SRR mandates EU-flagged vessels to recycle at facilities on the European List that comprises around 43 greenlit yards, including 31 in Europe, 11 in Türkiye, and one in the United States. Among these, in its latest, 14th edition of the list, the EU has included one facility from the Netherlands, and one newcomer from Türkiye. Three facilities, located in Lithuania, Türkiye and Latvia, have reportedly been removed.

Despite making “considerable” headway, however, the Brussels-headquartered executive arm of the European Union underscored that the ship recycling regulation has been met with major stumbling blocks.

The most pressing issue, the commission has said, is shipowners who circumvent the regulation by switching to non-EU flags before recycling, allowing them to sell end-of-life vessels to cash buyers at steel prices that exceed EU rates who then dismantle the ships at South Asian yards where conditions more often than not fail to meet EU standards.

According to Belgium-based organization NGO Shipbreaking Platform, last year, 80% of the global vessel tonnage scrapped—meaning 255 out of 409 dismantled ships—was broken under unsafe conditions on the beaches of South Asia, primarily in Bangladesh, India, and Pakistan, all of which have ratified the Hong Kong Convention.

NGO Shipbreaking Platform: 80% of scrapped ships in 2024 dismantled under sub-par and high-risk conditions

Regulation & Policy

The ‘worst dumper’ of 2024, per the NGO, was China, which is said to have sold more than 50 units for dismantling, primarily in Bangladesh. Furthermore, an excess of 12 ships were also beached by shipping companies with headquarters in Switzerland, Russia, South Korea and the Philippines.

In 2023, the numbers were even more stark: out of 446 oceangoing vessels, some 85% of them were dismantled on the beaches of the aforementioned nations. Due to these practices, the NGO Shipbreaking Platform has repeatedly called for the EU to revise the SRR and extend it beyond the flag to ownership.

Another major shortcoming that is standing in SRR’s way is the frequent absence or poor quality of hazardous materials inventories during a vessel’s operational life, the commission’s evaluation proposed.

As explained, these inventories, crucial for ensuring safe dismantling, are often unreliable by the time of recycling. In fact, the report found that 45% of EU-inspected ships failed to comply with SRR inventory requirements, with many lacking a hazardous materials inventory entirely during operation.

In order to tackle the issue of ‘flag-hopping’—and, by extension, other, prevailing concerns related to the SRR—the European Commission has shared that it is exploring various mechanisms of action, such as crafting a ship recycling license. As understood, this is hoped to bridge the price gap between EU-listed yards and cheaper, less regulated facilities.

What is more, another step forward could be shifting compliance responsibility from the registered to the beneficial owner, which could make it more difficult for companies to evade EU regulations by changing a vessel’s flag before dismantling.