EU Says Owners “Significantly Undermining” Recycling Regs by Flag Switches

A decade after the European Union first adopted its ship recycling regulation to address concerns over environmental issues, it issued a new evaluation of the regulations highlighting shortcomings. Overall, it concludes the regulation is effective, but finds shipowners continue to “flag hop” incentivized by additional revenue from selling end-of-life ships.

The commission evaluated the framework ahead of the June 2025 entry into force of the Hong Kong Convention ratified by UN members in 2024 to provide a global framework for recycling and the treatment of environmental concerns. The EU was also reviewing the list of companies authorized under the regulation and released an update.

While saying it believes the regulation has “largely achieved its objectives,” the report however warns that its “effectiveness has been significantly undermined through the practice of shipowners charging ship’s flag shortly before being recycled.” It also points to a continuing absence of hazardous materials inventories on ships in service which it says results in the quantities of inventories often being insufficient at the recycling stage.

Shipowners they concluded are still incentivized by additional revenue to send their vessels to South Asian yards despite none of the yards being recognized by the EU. Ships are transferred from the flags of EU member states to a non-EU flag shortly before being recycled. Middlemen often buy the vessels without disclosing intent and send them to Asia or sometimes briefly lay the ship up in an intermediary country before delivering it to the scrapyards.

There have been several high-profile cases but, in most instances, owners elude punishment while scrapping ships in Asia. In June 2024, Norwegian regulators imposed an approximately $750,000 fine for illegally exporting two ships to India for scrapping despite claims by then-owner Teekay that it sent the ship for further trading. As part of the evaluation, the EU reports it will focus on preventing circumvention efforts by clarifying standards and ensuring penalties for infringements.

The updated list for 2025 from the EU removes yards in Latvia, Lithuania, and Turkey from the recognized group. The list currently has 31 yards in Europe, 11 in Turkey, and one in the United States. Ships registered in an EU member state are required to use one of these yards for ship recycling. The EU emphasized the importance of the regulations saying European shipowners have 30 percent of the world’s tonnage.

The EU highlights the Hong Kong Convention sets out international ship recycling standards that are less stringent than the current EU Ship Recycling Regulation. It is assessing how the convention will be implemented and possibly improved towards stricter global standards. The EU reports its model has become a benchmark both within and outside the EU. It will look to further enhance the standards to ensure that environmental risks are reduced during the handling of end-of-life vessels.