ICS Questions Benefits of China’s Ship Recycling Policy

The International Chamber of Shipping (ICS) voiced concern in relation to China’s new ship recycling policy, saying that such incentives to artificially boost shipbuilding could have a negative impact on the global supply/demand balance restoration speed in shipping.

China introduced a new policy whereby it is offering significant subsidies of about USD 250 per gross tonne for Chinese shipping companies that scrap vessels early and then place orders at Chinese shipyards for at least the same tonnage.

While addressing the governments in Paris at a meeting of the OECD Working Party on Shipbuilding, ICS reminded governments that for reasons of safety, as well as economy, a ship was built with an expected life span of 25 years or more.

According to ICS, it was a big thing indeed for ships to be recycled when they are only 15 years old, which in some cases was happening at the moment.

ICS also suggested that the CO2 emissions created by dismantling a new ship far earlier than intended, and then constructing a new one, were considerable, but were often overlooked, and could actually outweigh the CO2 saved through efficiency reductions achieved by the new ship replacing it.

Using the current definition of a fuel efficient vessel, a new-build ship that complies with the applicable Energy Efficiency Design Index (EEDI) – adopted by IMO to help reduce CO2 emissions – it should not always be assumed that ordering so called eco-ships would be in the best interests of the owner, their customers or the environment.

Many older ships, if operated at slower speeds, or given improvements such as engine upgrades or new propellers, may well continue to operate efficiently with low levels of fuel consumption that make them attractive economically and environmentally – especially if the owner has a smaller debt to service.

But in the long run all ships in operation would in effect be ‘eco ships’ as all new builds will have to comply with tighter EEDI IMO standards, and all of the existing fleet will eventually be replaced.

ICS added that the OECD should be cautious about becoming involved in the question of what constitutes an ‘eco-ship’, as the Chamber believes that this subject is best left to the International Maritime Organization (IMO) or for shipyards to negotiate with their customers.

If further consideration were to be given to an OECD definition of ‘eco-ship’ this should not be used as a justification for future subsidies by governments that might lead to market distortion.

Press Release; Image:Shipbreaking Platform