Oil industry: Safely disposing of offshore platforms could boost EU's green economy

Written by Martin Siecker and Richard Adams on 20 July 2017

Oil rig Photo credit: Steven Straiton


A 'responsible' recycling licence fee should ensure proper dismantling of oil rigs and merchant ships, say Martin Siecker and Richard Adams.

North Sea oil and gas have made a big contribution to Europe’s economy and energy security. Today, although the industry is contracting, new opportunities are arising as the need to safely dispose of offshore platforms and support facilities can create thousands of jobs, stimulate technical innovation and contribute to Europe’s green economy. At the same time the expansion of maritime recycling facilities in Europe will increase the pressure on sub-standard ship dismantlers in South Asia to improve their working and environmental practices.

The moment must be seized as now the offshore oil and gas industry will need to deal with a large proportion of its redundant assets. Of particular interest are the many floating platforms and oil and gas structures which are classified as vessels and which have spent their working lives in European waters.

Fixed oil and gas rigs are already covered by the OSPAR Convention, which has strict requirements for decommissioning fixed structures. Both EU and non-EU players are making investments in EU facilities to take advantage of this but the hundreds of floating structures in the North Sea escape similar scrupulous guidelines for their recycling.

There is a big risk that these vessels will join the high proportion of the EU merchant fleet that end up in South Asia, thanks to the cynical use of flags of convenience. 

The majority of these are being broken up on the beaches of India, Pakistan and Bangladesh, with little regard to environmental standards or workers’ rights. Around 1000 large vessels are being dismantled annually and their steel recycled.

It is a hazardous industry that exposes workers, the environment and communities to a great number of risks such as exposure to toxic materials - like asbestos, for example - which may lead to long-term health issues.

Shipbreaking has been declared the most dangerous job in the world by the ILO. In 2016, a shocking 86 per cent of the world’s end-of-life tonnage, including oil and gas structures, was broken up under basic conditions on Asian beaches and some 40 to 50 workers die every year in the process. Needless to say big money is involved with high profits for the unscrupulous people who organise the process - a chain that leads back to the owners themselves.

In recent years, the EU has tried, through various legislative measures, particularly the 2013 ship recycling regulation, to ensure that EU-owned vessels are safely disposed of. The problem is that the provisions only apply to EU-flagged vessels. Changing to a non-EU flag is easily done and means the vessel falls outside the scope of the regulation.

In its latest opinion on shipbreaking and the recycling society, the EESC advocated a financial incentive under the SRR to effectively stop ship owners from selling their vessels.

The financial instrument proposed by the EESC and now also supported by MEPs Margrete Auken, Pascal Durand and Bart Staes provides for a specific fee for each ship, held in escrow by a major financial institution that would build up capital to finance safe and sustainable recycling.

The amount of the fee would be determined by a combination of tonnage, type of transport, frequency of calling at EU ports, design based on the cradle-to-cradle principle and the presence of toxic materials on board. The capital is created by ship operators who, every time one of their vessels calls at an EU port, pay the appropriate charge to the fund linked to that specific vessel.

At the end of the ship's life, this fund could be reclaimed if the ship is indeed recycled in an EU-approved yard and thus used to make up for the loss of revenue stemming from going for responsible dismantling.

European industry is ready to seize the opportunity and at a joint event in late June, the EESC and the European Parliament, representatives of the recycling industry and European ports confirmed that they have the know-how to dismantle vessels according to European laws and that they are willing to invest and create sustainable jobs in Europe.

Initiatives in this regard already exist in several member states. This industry would provide Europe, and particularly its steel industry, with raw materials, whose scarcity and high and volatile prices are a cause for concern.

Many member states have facilities where the dismantling of floating structures can take place safely and with due regard for labour and environmental concerns. Hundreds of oil platforms and related installations will need to be dismantled in the coming years.

Having spent their working life in European waters it would be scandalous if they were then towed to Asia for breaking in sub-standard conditions, as happens only too frequently with merchant ships. Turning the historical Black Gold Industry into a Green Economic Legacy is a challenge that can and should be taken up. But in order to be successful, we need smart, common European rules.  Shaping such rules is part of the essence of the European Union. 

About the author

Martin Siecker is an EESC member

Richard Adams is an EESC delegate 

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