VSM: ‘Excessive bureaucracy’ hurts sustainable ship recycling prospects in Germany

November 1, 2024, by Naida Hakirevic Prevljak

The Association for Shipbuilding and Marine Engineering (VSM)—the voice of the German maritime industry—has called on the government to review legal hurdles to (sustainable) ship recycling in Germany.

As explained, the recycling of ships is now largely regulated at the European and international levels. However, in Germany, the professional recycling of aged ships has only been possible under ”disproportionately high hurdles”. German companies have faced major challenges in this regard in terms of licensing.

The German shipbuilding industry has always been interested in the sustainable recycling of end-of-life ships but the complex approvals and certifications remain an obstacle to ship recycling, according to VSM.

To use the advantages of the circular economy through sustainable ship recycling in this country, these legal hurdles should be reviewed and reduced to “a reasonable level”, the association warned.

“The requirements for ship recycling in Germany are an example of excessive bureaucracy that makes meaningful economic action difficult or even impossible. In the proposals we have now presented we see a targeted solution that also meets environmental requirements and at the same time removes hurdles,” Reinhard Lüken, General Manager of VSM, commented.

“We therefore propose adjustments to the 4th Federal Immission Control Act (4th BImSchV) by adding the professional recycling or dismantling of ships to the immission control approval of shipyards. We also advocate a simplified approval process under Section 19 of the Federal Immission Control Act for the dismantling of ships larger than 500 GT and uniform recommendations for action for local approval authorities,” the association explained.

“Since the Federal Environment Ministry is currently evaluating the 4th BImSchV, we hope that our proposal will be included in this revision process.”

Specifically, companies licensed as shipyards already recycle and reuse parts of ships as part of repairs and extensive conversions. It is “incomprehensible” that this is not possible for the professional recycling of entire ships, or is only possible with significant effort, VSM said.

In this respect, the legal basis for the professional disposal of ships in Germany are needed to become “significantly more attractive”. The current regulations “unnecessarily block sensible initiatives by the shipbuilding industry”.

The recycling of maritime units also includes the offshore sector. There is already a large market for the dismantling of oil and gas production facilities. In the long term, VSM said that one should think about how the offshore wind generators will be recycled. In just a few years, the first facilities will be due for repowering, and Germany has ambitious expansion targets but no comprehensive recycling strategy yet.

VSM further said that there is “great potential” in Germany for the recycling of coastal and inland vessels as well as government vessels – especially below the threshold of 500 GT.

However, the practice in recent years has shown that shipyards do not receive a recycling permit or that the permit requires a lengthy (approx. 18 months) and complex approval process. Today, shipyards are already allowed to weld off 70% of a ship and dispose of it properly or send it to the recycling process but they are not allowed to dispose of 100% properly because this would mean moving too far away from shipbuilding in terms of approval and becoming a waste disposal company.

Barriers exist, however, there is market potential for sustainable ship recycling in Germany

Last year, the German Maritime Centre—an independent and publicly funded cross-sector think tank based in Hamburg— published a study analyzing the market environment for sustainable ship recycling in Europe and focusing on the potential of ship recycling yards in Germany.

The study concluded that there are several barriers to market entry for sustainable ship recycling in Germany. The legal framework for the material permit requirements for a ship recycling yard is unclear. Ship recycling yards are considered “stationary waste disposal facilities”. The size of the ship and the amount of materials and hazardous substances contained in it are decisive for their approval according to BImSchG.

It is difficult for a ship recycling yard to obtain a permit under the licensing regulations for waste disposal facilities due to the high variability of the ships to be dismantled. A separate permit exclusively for ship recycling yards does not exist at present. The responsibility for the approval of a ship recycling plan and the type of approval has not been clarified in Germany.

High labor costs, bureaucratic hurdles, and high financing volumes for the purchase of ships to be scrapped represent significant barriers to market entry in Germany, the think tank pointed out.

The same applies to European ship recycling yards, although they face fewer bureaucratic hurdles. Norway and Denmark, for example, already have ship recycling yards that dismantle ships.

The German Maritime Centre concluded in the study that “a multifaceted approach is needed to realize the market potential for ship recycling in Germany.”

Recommendations for action include:

Ship recycling in Germany can also take place on the premises of existing shipyards in addition to the construction and conversion/repair of new ships. The prerequisite for this is that when a ship recycling facility is established, only part of the shipyard is used and designated for the purpose of ship recycling. A license would only have to be applied for this part of the shipyard. Existing licenses for the rest of the yard would remain unaffected. This means that licenses already granted under the BImSchG will not be lost.
In terms of industrial policy, an awareness of the issue should be raised, both in the maritime sector and in the recycling industry and industry associations. A cooperation or partnership between a ship recycling yard and a steel company could promote this, as steel companies, for example, will use more steel scrap in the future as part of the switch to “green steel”. Part of the demand can be met by steel obtained from ship recycling. In this way, the maritime industry would contribute to the climate and resource-saving circular economy.
To be able to produce green steel cost-effectively, its production requires a high degree of autonomy in the use of personnel and machinery. Ship recycling yards can collaborate with universities, research laboratories and mechanical engineering companies to advance the development of innovative solutions for ship recycling and enable an efficient dismantling process.
The legal requirements for the authorization of ship dismantling facilities should be adapted to allow for the approval of ship recycling facilities.
Funding programs are needed to meet the high financial requirements for setting up a ship recycling yard.
To enable sustainable ship recycling in Germany and as part of the circular economy, cooperation between industry and politics is necessary.

To remind, In Europe, a regulation regulating the sustainable dismantling of ships entered into force on November 20, 2013.

At a global level, the Hong Kong Convention of the International Maritime Organization (IMO) will enter into force on June 26, 2025. The convention regulates the safe and environmentally sound recycling of ships and is mandatory for ship recycling facilities worldwide.