Select Committee on Environment, Food and Rural Affairs Minutes of Evidence


Examination of Witnesses (Questions 1-19)

30 JUNE 2004

MR MARK BROWNRIGG, MR EDMUND BROOKES, CAPTAIN NIGEL PALMER AND MR TOM PETER BLANKESTIJN

  Q1 Chairman: Good afternoon. Could I apologise to our witnesses for keeping you waiting. Unfortunately, the Committee has a number of forthcoming attractions and Reports on a wide range of subjects and I am sure you are very interested to read what we have been up to, but we have to go through the process of approving them before we can publish them and it took a little longer than we had anticipated. Our apologies for keeping you waiting, but nonetheless you are very welcome. For the record, we have before us from the Chamber of Shipping Mr Mark Brownrigg, the Director General of the Chamber, Mr Edmund Brookes, the Deputy Director General, Captain Nigel Palmer, the Director of Government Affairs of BP Shipping and Mr Tom Blankestijn, the Manager of Maritime Policies and Regulatory Affairs for P&O Nedlloyd. Gentlemen, you are very welcome indeed. Looking at your submission to the Committee[3]I was struck by the fact that you are almost saying that those shipping companies who appear to be the initial owners of the vessel might not have as much direct interest in seeing through to the end the way that the ship might ultimately be broken up once it is declared as defunct because of the very nature of the dismantling operation and the way that those commercial transactions transpire. Yet you go on in your submission to make it very clear that as an industry you take your responsibilities very seriously indeed. Now, the reason this Committee has got involved in this is following up the short, sharp inquiry we did into the problems that Able UK had in terms of their arrangement initially to deal with American military vessels which (if I do not use the wrong phrase) ran aground because of all kinds of regulatory problems[4]In the course of that inquiry we learned that some 2,000 single hull tankers within the foreseeable future are going to have to be taken out of service and replaced and we decided that because of the environmental consequences of that we should hold this inquiry. Given my opening remarks and the slightly sort of arm's length position that you have about this, could I just ask how seriously you and your members do take the need to influence the way at the end of the day ships are broken up. Do you feel that you have a continuing responsibility for these matters even though the ownership of the vessel might have passed to a third party on its way to the breakers' yard?

  Mr Brownrigg: Perhaps I could start and then others could chip in, Chairman. Firstly, if I could say that we welcome the opportunity to come and answer your questions and are delighted to do so. I think the starting point is that a ship is not like another piece of industrial equipment or what have you, it is a unit which underpins and facilitates the carriage of international trade. By definition it does not stay in one country, it moves around the globe and it may well move through different ownerships over its life cycle. So you are not talking about someone who is building something to stay with it or keep with it, or operate it from beginning to end. That said, there are international and a huge range of detailed international regulations which deal with the structure of ships, with their operation, their maintenance and the whole process. There is a concern with quality right from the start. The fact is that if a ship moves from one owner to another during its lifetime it may well not be the original owner who is scrapping or recycling that ship. It is the case that the shipping industry is a global industry in this respect, and indeed so is the recycling industry, so perhaps it is not quite the same as buying a piece of factory equipment.

  Q2 Chairman: Just for the benefit of the Committee, and perhaps I will look to our colleague from BP to help us through this, what actually is the decision-making process, for example, when BP says, "Right, one of our tankers has come to the end of its life and we think it should be scrapped," what do you do? Just take us through the process that determines how it is going to be broken up.

  Captain Palmer: I can answer that fairly well. The simple answer is that sometimes we dispose of ships before the end of their economic life because they no longer fit our own requirements, in which case we will sell them to somebody else to continue using them. If a ship has reached the end of its economic life and so we are actually looking then to send it on to be dismantled, then although we may well use brokers as part of the process of disposing of the vessel we take our responsibilities on that very seriously and the history of that—and I was involved with the project of disposing of some of our single hull tankers a few years ago—in, I think, 1994 we put one of our VLCCs to Pakistan for breaking and we were—

  Q3 Chairman: Could I just stop you. You used shorthand, VLCC?

  Captain Palmer: Very Large Crude Carrier. I will try not to do the jargon. Okay, a very large crude carrier to Pakistan and we were so disturbed by what we saw there that we were determined that we would not do it that way in the future. So in 1997, when we had some more coming up over the next couple of years, we started a process to actually go around the world looking at all the recycling facilities to find out which ones actually met our own standards for health, safety and the environment. We determined there were a number and then it became an economic decision which one we went to. In fact we actually went to China as a result of that, into a facility there which could meet our own standards on being able to demonstrate—and for us to be able to audit throughout the process—that they were dealing properly with all the hazardous material, that their staff were being properly protected and that all of the materials were either disposed of in a responsible manner or resold as appropriate, depending on whether they could be reused. So the process for us is fairly simple in that we do take the final resolution of what happens to the unit at the end of its life, if we are the end user, very seriously. So we do not just pass it to somebody else and then forget all about it.

  Q4 Diana Organ: You have made it quite clear that you have seen a system of breaking up in Pakistan and you said that you were not happy with it. I wonder if you could tell me what it was about what was happening in Pakistan that made you unhappy and choose not to use that facility again, and the other is that when you are making a decision about where you go for the disposal or recycling of your ships you led us to believe from what you have just said in reply to the Chairman that environmental issues were top of your agenda. Are you saying that the economics never comes into it? Surely as a business you are looking at that first?

  Captain Palmer: Two questions. First of all, what disturbed us in Pakistan was the manner in which the breaking took place, the safety standards of the staff who were working there, the people who were working there and the environmental issues as a result of that. To take the second part of your question, the first requirement for us is that it meets our HSE objective, our health, safety and environmental standards, for any facility. If they meet that, then it becomes an economic decision of which one is the best solution for us. So if you have got two yards, both of which meet our standards and can conduct the operation properly, then clearly we will go for the one that is economically the best result.

  Q5 Diana Organ: But the facility in Pakistan that you looked at and thought, "No, this is not good enough for health and safety reasons", had you used that previously?

  Captain Palmer: Not in living memory, no. I think if I go back far enough, I think the last time we went through large demolition processes would have been in the early 1970s when I think Taiwan was the world leading ship breaker in those days. They are no longer in the business at all.

  Mr Blankestijn: What I would like to add is that it is not only Pakistan, it is India, Pakistan, Bangladesh, the Philippines, where the vessels are actually beached and where there is the unsafe situation for people and for the environment. In our search, when we looked at our ship recycling project, we had a couple of other aspects as well because we wanted a good relationship with the national government to also ensure that there are proper waste management structures in place, that as soon as you offload hazardous material it is treated in the proper way and also there needed to be further investment at the yard facility in order to cope with our requirements. So there were various reasons also for us to choose China because there all these elements were in place: we could train the staff ourselves; we could have our own supervisors at the facility; we could deal with the state environmental protection agency within China; and it safeguarded us also that what we wanted to do is outside of the standard of the beaches in India, Pakistan and Bangladesh, that what we paid for was indeed done in the proper way and safely.

  Q6 Mr Mitchell: You say that given the environmental considerations, which you are satisfied on, it is basically a question of price. That must surely load preferences to the Far East, to China you have said, because if you had them dismantled at home you have got what Charles de Gaulle would call the Chen Yi here in this country, all the environmental protests and presumably a lower price for the scrap because there you have got an expanding steel industry in China, or indeed India, whereas it is less necessary here?

  Captain Palmer: It is a question of what you mean by "home", I guess. We are a UK-based shipping organisation of the BP group. We have ships that we were recycling that were built in Japan, that spent their entire lives trading around the world. If they had ever come to this country, they would only have come on a few occasions and were then finally dismantled in China. Where is "home" for that ship?

  Q7 Mr Mitchell: So there is no preference for British knackers yards?

  Captain Palmer: Well, there are no British facilities that could take a ship of that size anyway.

  Q8 Chairman: The message that is very clear from what you have both said is that in the case of a company that owns the ship and makes the final deal you can exercise the responsibility that you have indicated, but if you dispose of it using third parties can you have influence over how they then subsequently dispose of the vessels?

  Mr Blankestijn: They will come under the international legislation or guidelines that have been produced within International Maritime Organisation (IMO), and in which the International Chamber of Shipping (ICS) has been also very instrumental on behalf of the industry. The guidelines were put together in such a way that anyone who would buy a ship even for twenty-four hours is identified as a shipowner. So he should take the same responsibilities under those guidelines. Another part is that we propose a green passport during the lifetime of the ship, so that from the new building up until the final moment, details of all the hazardous materials (they make an inventory of these materials, of where they are and their quantities) can be passed on more easily from one owner to the other. Now, that is not perfect yet, but it is in the process of being further developed within IMO.

  Q9 Chairman: We are going to come on to talk about that and Ms Ruddock is going to ask you some more detailed questions on that, but just before that what statistics are there available to give us some idea of the number, scope, scale and the size of the ships which are disposed of?

  Captain Palmer: The industry disposes of somewhere between 500 and 1,000 ships a year. It will vary. The average number is about 700 ocean-going vessels are dismantled every year globally. The number will vary between 500 and 1,000 because when ships go will depend on economic circumstances at that time, and that is roughly equal to the number of ships that are built every year, so it is not a surprise. Ships have a life. So many are built every year. The number grows slightly as well with world trade growth, but it is almost static, so effectively the same number drop off the back end as come in at the front end.

  Q10 Chairman: As far as the single hull tankers are concerned, has anybody made a projection as to the volume year by year as we go forward as to how many will have to be dealt with?

  Captain Palmer: Yes, there is, but the vast bulk of those have already gone. I think we have some numbers. Over the next few years the ones that have to be phased out (this is legally when they have to go): in 2004 there are fourteen, in 2005 twenty-nine, none in 2006, five in 2007 and two in 2008-09. So it is not an enormous number. That is the smaller sizes.

  Q11 Chairman: That is the small size. On that basis that is just over forty. How come we think there are two thousand to go?

  Captain Palmer: Because a lot of those are not due to be phased out by 2008-09. Those are the years I have got up to.

  Q12 Chairman: So whilst there is a larger quantity, it is at some point in the future?

  Captain Palmer: Correct, but those are mostly in the smaller sectors and the smaller tonnage ranges, many of which are in Europe because they are the small coastal tankers.

  Q13 Chairman: A final question before we pass on to Ms Ruddock. Are there any specific legal requirements as far as the UK or the European Union are concerned which you have to adhere to when you are starting the process of disposal of the ships?

  Captain Palmer: There is very little legal regulation around this area. Most of the stuff that is in place has been voluntary codes generated by the industry, such as the Ship Recycling Code, which started off as a voluntary process put together by the International Chamber of Shipping by a number of shipowners.

  Q14 Chairman: That is the one you have put with the evidence?[5]

  Captain Palmer: Correct, and that then was adopted by IMO, not as legislation but as recommended good practice.

  Q15 Joan Ruddock: I think you have just answered my first question, which was going to be that there is no regulatory process here, we are just dealing with voluntary agreements? Both the IMO and the ICS guidelines are entirely voluntary agreements?

  Captain Palmer: Yes.

  Q16 Joan Ruddock: So the first interesting question will be what proportion of ships that are being dismantled and recycled are actually following these guidelines? Have you any idea on that?

  Mr Brownrigg: It is too soon to say. The guidelines were only adopted last December, following the sequence that has been described. What one can say is that guidelines are available. They are available for the shipping industry, they are available for the recycling countries and it will be monitored within the International Maritime Organisation process over the coming years.

  Q17 Joan Ruddock: But can you make a guess? What is the kind of cooperation that occurred during the development of these guidelines? Is it thought that the majority are going to follow them or not?

  Mr Brownrigg: Before I hand over to others, perhaps I could just say that normally things do not go through the IMO if there is no intention to pay good attention to them.

  Mr Blankestijn: One thing I would like to add is that for shipowners it is very difficult also to know which facilities can cope with these requirements because most of the facilities are still on the beaches. So there is no other alternative available in capacity to handle this as per the guidelines, so it is almost the chicken and the egg situation of where are the investments for the new facilities versus the shipowners, and then it becomes also much clearer what the commercial elements are of the pricing effects of the labour cost, of the waste management handling, etcetera. As soon as that is more settled then the voluntary option is followed more easily.

  Mr Brookes: Could I add to the comments that were made and come back to the way the process has been developed because this may help you. There are something like thirty-five or thirty-six members of the International Chamber of Shipping and we in the UK are proud to be the founding member. They all contributed to the development of the guidelines (of which we have given a copy to the Committee), which led to the International Maritime Organisation's guidelines. All the individual members of those thirty-five organisations take the work of the International Chamber of Shipping and put it out and spread the message. As has been said to you, it is voluntary but you have heard from my colleagues the way they have picked up even before this and developed it. So we are doing our bit in trying to move the whole process forward, I am not saying to take the moral high ground but to try to put forward a process which is sustainable in all contexts.

  Mr Brownrigg: Could I add to that, if I may, that it was not just one international association of the size you have heard, but in fact a number of sectoral shipowner organisations came together with us too and they are listed in the industry code, which really does mean that the vast majority of the world shipping industry is covered. The Baltic and International Maritime Council, the International Association of Dry Cargo Owners, the independent tanker owners, and the Oil Companies' International Marine Forum. They are representative of sizeable shipping interests and really do cover pretty much the world fleet except for those who never join these sorts of things.

  Q18 Joan Ruddock: Okay, so you are obviously hopeful of a positive outcome, but in terms of getting to the point where you can break up safely and recycle we had evidence from you about the green passport. Now, that presumably is something that is already under way. Again, have you any idea how many ships would have green passports and how many ships belonging to UK companies, for example, might have green passports?

  Mr Blankestijn: It is still future work for IMO because there is no standard yet and preferably if you take something from new build up until, say, the phasing out of the ship it is more easy to administer a standard document and ensure that it is adhered to. So that is definitely something which needs to be developed and it is being developed at the moment.

  Captain Palmer: The only thing I would add is that as things move on things change. The issue of hazardous materials. Materials are not hazardous when they are on board the ship. They are there for a reason. Asbestos was used as a fire precaution on ships in the past. It is no longer fitted to ships, and you are coming towards the end of that being an issue with ships because the majority of ships that were constructed with asbestos in place have already reached the end of their lives or are in the process of doing so now. So as time has gone on you have probably less hazardous materials in ships than existed twenty, thirty years ago. Now, that is not to say that in twenty or thirty years' time something that is being used today will not be determined to be hazardous. Asbestos was regarded as perfectly safe in the days when it was put in; it would not have been used had it not been. So the logic of the green passport is to ensure that there is a record with the ship of what is actually contained in it and where it is, which is rather more important perhaps than what it is or indeed the quantity. It is where it is and then ensuring that when you take it to somebody part of your process is to determine that they can actually manage, handle and dispose of that or reuse it in an appropriate manner, protecting their people. The answer to your earlier question is responsible shipowners will follow these guidelines and people who value their reputations will follow these guidelines. Will everybody follow it? Does everybody dispose of their car in this country in a responsible manner? Most do.

  Joan Ruddock: No, they dump in on my streets in my constituency!

  Mr Mitchell: There is no international fly-tipping?

  Q19 Joan Ruddock: One might argue there is.

  Captain Palmer: That is a question. The ships are valuable assets. They are not fly-tipped to the extent that the materials they contain are actually quite valuable. You are not talking about things that are sold for pennies. There is a lot of steel in a ship and the majority of it is steel, copper and things like that. It is quite right that that should be reused. It feeds the electric arc mills of a lot of the world.


3   Ev 1 Back

4   Environment, Food and Rural Affairs Committee, Minutes of Evidence and Memoranda, Session 2002-03, US "Ghost Ships", HC 1336 Back

5   www.marisec.org/resources/shiprecylingcode.pdf Back


 
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