Compliant and profitable recycling of older vessels

Compliant and profitable recycling of older vessels23 September 2021 • 09:00-09:45 BST

#shiprecycling

Part ofShip RecyclingWebinar Week20-24 September 2021

Sponsored by

Presentation documents:Page 2: Capt. Prashant S. Widge, A.P. Moller - MaerskPage 10: Rohit Agarwal, Guideship Consulting ServicesPage 17: Gudrun Janssens, Royal Belgian Shipowners AssociationPage 37: Hitesh Vyas, Wirana Shipping DMCC

Classification: Public

Navigating through ship recyclingSep 2021

Captain Prashant S. WidgeHead, Responsible Ship Recycling at A.P. Moller-Maersk


A.P. Moller - Maersk At a glance

2

10,3 million ton of fuel/year

~700 vessels

~70 terminals

33,9 million ton of CO2/year

~80,000 employees

Present in

130+ Countries

Revenue of

39,740 USD million

EBITDA

8,2USD billion


Ship recyclingOur responsibility

Ensuring order in own house:Recycling our own ships responsibly

Preventing sub-standard recycling of ships we sell

Building leverage to transform the industry:Upgrading Alang, including hinterland Ship Recycling Transparency Initiative

*Prioritising by severity The vast majority of impacts happen with ships that are recycled long afterwe have stopped using them. We can only address these impacts by creatingopportunities in the global ship recycling industry. Investing our own ships inAlang is the most effective way to build this leverage

TRANSFORMING THE INDUSTRY

ORDER IN OUR OWN HOUSE

BUILDING LEVERAGE

*3


The RSR ProgrammeStandard and framework

4

Hong Kong Convention

Anti-Corruption

No contact with Intertidal zone during primary cutting

Sub-contractors

Labour and Human rights

Downstream waste

management

Full-time onsite presence

Skills and equipment upgrading

Right to stop work

Compliance validation audits


Engagement delivers results Builds unprecedented momentum

5


Regulatory developmentsA stalemate situation

6

HKC: Not entered into force. Already applied

EU SRR:In force. Applied but questions remain: capability, capacity, audits, momentum, review

Basel Ban:OECD vs. Non-OECD countries Billateral agreements needed

Policy, incentivies & safeguards to increase steel-scrap for producing clean steel & promote circularity

A balanced value chain Pressure to decarbonise & be circular

7

Focus on transparency & ESG

Growth in volumes vs. lack of capability and

capacity for large vessels

Actionable data, metrics, decison-making, differentiation

Industry challengesthat lie ahead

Thank you!Stay Safe!!!

8

Date of presentation, that is,23 SEPTEMBER 2021

Seminar Name:RIVIERA SHIP RECYCLING WEBINAR WEEK

COMPLIANT AND PROFITABLE RECYCLING OF OLDER VESSELS

➢The recycling of end-of-life ships in a safe and environmentally friendly manner has always been a challenge but NOT ANYMORE.

23 SEPTEMBER 2021 | RIVIERA SHIP RECYCLING WEBINAR WEEK

SHIP RECYCLING MONITORING FOR COMPLIANCE

• Monitoring serves as a powerful tool to ensure that compliance processes are adhered to and being constantly improved


ASSESSMENT OF RECYCLING YARDS

• Owners in assessing different yards;

• Improvement of standards for ship recycling in a project;

• Owners and managers in adapting and complying with existing and emerging recycling regulation.

Guideship’s ship recycling facility assessment service supports:


MONITORING AND AUDITING

• Monitoring

- Preventive and witnessing approach

• Auditing

- Retroactive and lessons learned approach


MONITORING + AUDITING = SOLID ASSURANCE OF QUALITY

THE CORE VALUES OF GUIDESHIP ARE:

Responsibility Integrity

Solidarity Excellence


The Green DealTowards a climate strategy

Ship recycling webinar week

Session:The recycling of older sea-going vessels

Can the issue of ship recycling by solved IN the EU..

….or BY the EU ?

Can EU solve issue of ship recycling for smaller vessels?

140 000 abandoned in EU yearly Capacity on EU list = inland and fishing

Reinforced fibre glass difficult to recycle No transparency about it

EU environment would benefit directly from including small vessels in EU SRR

YES, EU SRR can make a positive difference!

Can EU solve issue of ship recycling for the larger vessels

“IT IS (all about) THE CAPACITY, STUPID!”

1. Capacity in numbers of GT recycled

It is all about the capacity

Not sufficient capacity in EU listed facilities for the EU fleet of today

Capacity in numbers of GT recycled

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

20000000

Capacity in EU (IHS) Capacity needed to recycleONLY EU flagged fleet

Capacity needed to recycleONLY EU owned fleet

Capacity in South Asia (IHS)

Ship recycling capacity for large sea going vessels (GT, 2018)

Not sufficient capacity in EU listed facilities for the EU fleet of today


0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

20000000

Capacity in EU (IHS) Capacity needed to recycleONLY EU flagged fleet

Capacity needed to recycleONLY EU owned fleet

Capacity in South Asia (IHS)

Ship recycling capacity for large sea going vessels (GT, 2018)


“EU needs to boost additional ship

recycling capacity”

(NGO ship breaking platform)




2. The geographical balance needed worldwide for a fleet operating globally


https://ec.europa.eu/environment/topics/waste-and-recycling/ships

This is today’s available capacity for EU internationally operating fleet

➢quite simar to BC options which did not work

Capacity: the geographical balance ?

https://ec.europa.eu/environment/topics/waste-and-recycling/ships

This is today’s available capacity for EU internationally operating fleet

➢quite simar to BC options which did not work

➢On top, additional trip to EU to be recycled?

➢Two times additional CO2 emissions



What do we know?

➢EU list insufficient capacity in numbers of GT recycled

➢EU list is not geographically balanced, in fact similar to options under BC

Can EU solve issue of ship recycling for the larger vessels?

What do we know?

➢EU list insufficient capacity in numbers of GT recycled

➢EU list is not geographically balanced, in fact similar to options under BC

➢ It is possible to develop safe and sound SRF in other continents as well

➢There is an international legal initiative, HKC will

➢make adequate capacity available, worldwide

➢enhance transparency and traceability worldwide

➢create a global level playing field and provide a global solution

➢allow for proper enforcement by the respective competent authorities


Let’s implement the principle of CSR – recycling:

Strengthen the 1 international instrument by pushing for it to enter into force

China holds the key for its entry into force


Can the issue of ship recycling by solved IN or BY the EU?

Redershuis | Ernest Van Dijckkaai 8 | B-2000 Antwerp

+32 3 232 72 32 | [email protected] | www.rbsa.be

Compliant and Profitable Recycling of Older Vessels

Presented by: Hitesh VyasWIRANA SHIPPING CORPORATION

Benefits of Ship Recycling – Energy Savings, GHG Reduction 90% of Ship’s LDT is Steel. Production of fresh steel is energy intensive.

One ton Steel Production generates about 2 tons of CO2 (source- News.MIT.Edu)

Machinery, Equipment, Furniture etc are sold for re-use. Further energy saving in producing new units of these

Generates employment

Develops Ancillary Businesses

Balances freight markets

Generates cash flow for end of life ship for Owners

Almost 85% of world’s ship recycling is carried out in India, Pakistan and Bangladesh

How is Ship Recycling RegulatedThere is no Global Ship Recycling Regulation in force today

Ship recycling is legally governed by National Regulations as applicable to Ship Recycling Facilities (SRF). Forexample:

India – Presently - Ship Breaking Code 2013 (amended up to 13th November 2019)

Once HKC comes into force - Recycling of Ship Act, 2019

Bangladesh – Bangladesh Ship Recycling Act 2018 and Ship Breaking & Recycling Rules 2011

Pakistan - Balochistan Shipbreaking Industry Rules 1979

EUSRR –Came into force w.e.f. from 31.12.2018. All EU Flagged ships must be recycled at EU Listed yards. EUSRRalso stipulates Ship Recycling requirements for SRF that are EU listed.

Hong Kong Convention for Safe and Environmentally Sound Recycling of Ships 2009 (HKC) has not yet come intoforce but it is a truly global regulation for ship recycling as it was adopted at a diplomatic conference attended bydelegates from 63 countries. HKC stipulates responsibility of ship recycling on flag states under which ships areregistered as well as states where the ship is being recycled.

Role of Administration after HKC comes into forceSome of the procedures as per HKC, once it comes into force:

Reporting Requirement –

a. Initial notification and reporting is required to be made by Ship Owner to the Administration in due time of theirintention to recycle.

b. And SRF must notify its competent authorities of the intent.

c. Once IRRC is received by SRF, they report to their Competent Authorities.

d. Upon completion of ship recycling. Statement of Completion is submitted by SRF to Competent Authorities and acopy of Statement of Completion is send by competent authorities to Administration that issued IRRC (Regulation 24and 25).

Surveys - A final survey prior to the ship being taken out of service and before the recycling of the ship has started.This survey shall verify – IHM, SRP (Regulation 10)

Issuance & Endorsement of Certificates - An IRRC shall be issued either by the Administration or by any person ororganization authorized by it, after successful completion of a final survey in accordance with the provisions ofregulation 10, (Regulation 11)

Duration & Validity of Certificate - IHM can be issued with validity of 5 years and IRRC can be issued with avalidity of 3 months and IRRC duration can be extended for a single point to point voyage by the administration(Regulation 14)

Where are we on HKC today and how far

We need more contracting states that could achieve another 10.23% of global fleet size = Abt 147 million GT.This can be achieved fairly quickly. For eg fleet size of Panama is about 226 million GT

To achieve Ship Recycling Capacity we would need one more major Ship Recycling Country such as Bangladesh,Pakistan or China (China because maximum quantity in last 10 years is to be considered)

If China agrees to ratify HKC this year then we could have HKC come into force from 2023 but if China does notratify then next recycling country that could help is Bangladesh but that could take longer.

HKC to come into force 24 months are all “REQUIRED” conditions are fulfilled

CONDITIONS REQUIRED ACHIEVED TO DATE

Min. No. of States 15 17

Min % of Global Fleet

40% 29.77%

Recycling Capacity Max in last 10 yrs 3% of contracting states fleet size At Best of last 10 years, India and Turkey can fulfil abt 80% of 40% of global fleet size

Quick look at Recycling Developments in Bangladesh SENSREC - IMO, and the Ministry of Industries - Bangladesh are jointly implementing a Norwegian funded

project entitled "Safe and Environmentally Sound Ship Recycling in Bangladesh”.

Phase I (2015-2017) and Phase II (2018-2020) have been successfully completed.

The third phase of an IMO-implemented project to enhance safe and environmentally sound ship recycling inBangladesh has been given the go-ahead, with Norway committing approximately US$1.5 million to supportimproved ship recycling in Bangladesh. Agreement between Government of Norway and IMO to support Phase IIIwas signed on 24th July 2020.

Phase III will focus on improving Ship Recycling Standards in compliance with HKC Specific technical assistancewill be provided to the Government of Bangladesh to establish a facility for treatment, storage and disposal ofhazardous wastes

Phase III of the project is expected to be implemented over 18 months. Phase III is expected to start by December2021 / January 2022

This will pave the way for Bangladesh to move forward on its path towards becoming a party to the HKC

Bangladesh today has 1 yard that has received SOC for HKC compliant ship recycling

Quick look at Possibility of China ratifying HKC1. Wef 1.1.2019, foreign flagged ships are not permitted to be recycled in China.

2. We have seen a consistent policy development towards pollution control

3. China has been curtailing steel production in order to meet its targets to reduce energy intensity and pollution.

4. President Xi Jinping has pledged to zero out greenhouse gas emissions across entire country by 2060.

5. Our understanding is that starting to accept ships for recycling is an important way to meet steel requirementswithout increasing pollution caused by steel production.

6. Our understanding is that by accepting to ratify HKC with an intention to bring about HKC into force forresponsible ship recycling globally, will demonstrate China’s commitment to Climate

Ship Recycling Standards –Mandatory & VoluntaryTill HKC comes into force, National regulations for SRF and EUSRR for EU flagged ships and EU listed yards arelegal instruments for ship recycling practices.

On voluntary basis there are many stakeholders who have decided to either follow HKC recommended practices orset their own Ship Recycling Standards on lines of HKC and / or EUSRR or anywhere around these.

Banks –RSRS Standard with 12 members already having joined the initiative (ABN Amro, Danske Bank, DNB,Eksportkreditt, Hamburg Commercial Bank, ING, KfW IPEX Bank, NIBC, Nordea, SEB, Sparebank 1SR-Bank,Sparebanken Vest)

Maersk – Has its own RSRS

Various Shipping Companies – Have set their own ship recycling requirements which could be on lines of HKC, HKC++, EUSRR

SRTI – Ship Recycling Transparency Initiative where stakeholders (30 members) from Ship Owners, Banks, CargoOwners, Insurance Providers etc have joined to encourage and disclose ship recycling practices followed for theirvessels.

Compliant Yards, Contracts, Ship TypesCompliance India Turkey Bangladesh Europe & UK USAHKC Approved 98 21 1EU Listed - 8 - 34 1

TYPES OF STANDARD CONTRACTS FOR SHIP RECYCLING

Sr. No Name of Contract Remarks

1 BIMCO RECYCLECON Standard contract for sale of vessels for Green Recycling

2 Norwegian Sales Form SALEFORM 2012 formerly there was Norwegian Sale Form SALEFORM 1993). There are about 13 changes in 2012 as compared to 1993 form

3 Nippon Sale Form More common in Asian market

4 Singapore Sale Form 2011 More common in Asian market

Types of ShipsTanker Ore Carrier LPG/LNG Reefer Research Vsl Livestock Drill Ship Dredger Bulker

OBO RORO/ROPAX Rail Ferry MPP/Tween Fish Factory Tug AircraftCarrier

Container FPSO/FSO/FSU

Pass/Cruise PCC/PCTC Barge Rig OSV Naval Vsl Lash Barge Carrier

General Cargo Trawler

THANK YOU!!

Documents

Compliant and profitable recycling of older vessels