The pressure of climate change brings a dual challenge and opportunity to the global ship recycling industry. With the Hong Kong Convention set to enter into force in June 2025, the International Maritime Organization (IMO) aims to establish a baseline for dismantling ships in ways that prioritise human health, safety, and environmental protection (International Maritime Organization, 2024). This convention, coupled with the Basel Convention's framework for managing hazardous waste (United Nations Environment Programme, 2011), represents a significant step forward in sustainable ship recycling. However, while they offer guiding principles, these frameworks have limitations in stringency, leaving loopholes that can undermine their effectiveness.

The Hong Kong Convention focuses on minimising environmental risks during ship dismantling but lacks rigorous enforcement mechanisms for facilities outside certified zones, especially in regions where regulations are less robust (NGO Shipbreaking Platform, 2019). For example, the Hong Kong Convention does not set requirements for the management of hazardous wastes once they leave the gate of the recycling facility. The convention also relies on flag state jurisdiction, which can be circumvented through flag-hopping to countries with less stringent enforcement.

Meanwhile, the Basel Convention regulates the transboundary movement of hazardous waste, but it struggles with ambiguous definitions, allowing hazardous materials to be misclassified as "second-hand goods", and its enforcement relies heavily on individual countries, leading to inconsistent application and persistent illegal waste trafficking (Khan, 2019). As a result, many ships continue to be dismantled in conditions that fall short of the standards these conventions aspire to uphold.

A potential solution that could accelerate sustainable ship recycling and prevent environmentally hazardous dismantling practices is the establishment of a ship recycling licence (Devaux & Nicolai, 2020). Rather than functioning like a typical driver's licence, this ship recycling licence would operate more like a deposit scheme for shipowners. By requiring EU shipowners to pay an annual fee, this licence would create a fund that could be used to support sustainable recycling facilities within the EU. At the end of a ship's life, if owners choose to dismantle their ships at an EU-listed recycling facility, they will receive full reimbursement of their contributions, effectively incentivising responsible end-of-life disposal.

The concept of a ship recycling licence aligns with the broader push for the "polluter pays" principle within maritime environmental policy (ClearSeas, 2024). Currently, it is common for ships to be dismantled on beaches in countries with less stringent environmental and safety regulations, such as those in South Asia, where shipbreaking practices often result in severe pollution and poor working conditions for labourers (Schulz & Bell, 2023). The proposed licence system would hold shipowners accountable for their choice of dismantling facilities, encouraging them to think twice before sending vessels to facilities that might cut corners to save costs.

This licence scheme could initially apply to ships flagged in EU countries but could be extended to cover all ships entering EU ports, regardless of their flag. This would parallel the approach taken in the EU's Emissions Trading Scheme (EU ETS), which has extended its reach to international operators as they dock in EU territory (European Commission, n.d.). Such a move would allow the EU to leverage its market size to push for higher recycling standards worldwide, potentially setting a benchmark that other regions might emulate.

The funds collected from the licence fees could serve as more than just a deterrent against unsafe recycling; they would also be a means of bolstering the capacity of sustainable facilities within the EU Ship Recycling List. Ship dismantling is complex and costly due to the range of hazardous materials that need to be handled safely, from asbestos to heavy metals. By investing in the expansion of sustainable ship recycling facilities or improving existing ones, the EU could eventually lower the costs of recycling at certified facilities, making it more attractive for shipowners to follow sustainable practices without facing prohibitive costs. This investment could extend beyond simply building more facilities. Advancements in technology, such as robotic disassembly and improved waste handling systems, could significantly reduce the risks involved in recycling operations and lower the price tag of sustainable ship dismantling.