Introduction
The ship recycling landscape changed significantly in 2025 with the entry into force of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships on 26 June 2025. This shift is not simply a regulatory milestone, it changes the way vessel owners calculate the timing, process, and commercial outcome of scrapping decisions.
Historically, the decision to scrap vessels has been driven primarily by scrap prices, freight market conditions, and timing. Recycling was often treated as an end of life transaction, influenced by market cycles more than compliance constraints. While the Convention itself was adopted in May 2009, the required entry into force criteria were met in June 2023, and June 2025 marked the start of formal global enforcement.
For the UAE, this matters because the country is a regional decision making hub for owners, operators, technical managers, cash buyers, and financiers. More importantly, the UAE also introduced its own ship recycling regulation that took effect on 26 June 2025, aligning local requirements with international standards and placing obligations on UAE flagged ships and certain foreign ships connected to UAE waters.
As a result, scrapping decisions will no longer be governed solely by market conditions, they will increasingly be shaped by regulatory compliance, documentation readiness, and the availability of facilities that meet international standards.
What actually changed in June 2025
The Convention now sets out binding requirements governing the safe and environmentally sound recycling of ships. In practical terms, it establishes mandatory rules that cover both vessel preparation and recycling yard operations. The Convention now:
prohibits or restricts the installation and use of certain hazardous materials on ships, including asbestos, PCBs, ozone depleting substances, and specified anti fouling systems
requires ships to develop, maintain, and certify an Inventory of Hazardous Materials, not only at the point of recycling, but across the vessel’s operational life
requires ships going for recycling to obtain a ready for recycling certificate and to be recycled at an authorised facility
requires recycling facilities to be authorised by a competent authority and to prepare both a facility plan and ship specific recycling plans
Amongst other measures, the overall effect is that voluntary standards are replaced by mandatory requirements, and the burden is distributed across owners, flags, class, and recycling yards.
What standards recycling facilities must meet
The conversation around green recycling often focuses on ships, but the real structural change sits with facilities. Under the Convention, a ship recycling facility must be authorised by its competent authority and must hold a Document of Authorisation for Ship Recycling. In practice, that authorisation is built around the facility’s Ship Recycling Facility Plan, which sets out management systems, procedures, and controls designed to protect workers and reduce environmental harm.
The facility must also develop a ship specific recycling plan for each vessel it dismantles, built on the vessel’s hazardous materials inventory and the operational realities of the yard. This is where the process becomes less informal and more engineered, because the recycling plan ties the vessel’s risk profile to defined handling methods, waste streams, and safety procedures.
For EU flagged tonnage, the facility standard is even more explicit, because vessels must be recycled at yards on the European List. In February 2025, the European Commission updated the list, noting the addition of yards in the Netherlands and Türkiye and confirming that the list contained 43 facilities, most of which are in Europe and Türkiye.
This is important because it shows the direction of travel, compliant capacity is growing, but it is still concentrated, and it is still a constrained input when demolition volumes rise.
The UAE position, regulation, and what it signals
The UAE has not traditionally been viewed as a major recycling destination, but it has signalled a regulatory intent to align with international standards and control recycling outcomes linked to UAE waters. The UAE Ministry of Energy and Infrastructure issued the UAE Ship Recycling Regulation, applying from 26 June 2025 to UAE flagged ships and certain foreign ships connected to recycling decisions made in UAE waters.
Market commentary around the UAE regulation has highlighted that the UAE will likely need more compliant yard capacity if it wants recycling activity to grow locally under the new rules, and that the regulation is designed to encourage compliant recycling capacity.
Separately, industry summaries of UAE requirements have noted that UAE rules mirror the direction of EU standards by expanding hazardous material inventory expectations, including additional substances, and by emphasising higher control over documentation and compliance for ships calling UAE ports.
Whether the UAE becomes a material recycling location is still a market question. What is clear is that the UAE is positioning itself to be a jurisdiction where recycling decisions are more tightly regulated, more visible, and more dependent on certified facility standards.
How these regulations reshape owner decision making
These changes represent a new commercial reality for owners and operators, including those managed or controlled from the UAE. Previously, scrap timing was often opportunistic, driven by freight rates and scrap prices. Going forward, recycling decisions will be more influenced by the condition of the vessel, the readiness of documentation, and the practical ability to access an authorised facility without delay.
Compliant recycling also changes the economics. Meeting the required standard often reduces net proceeds compared with older practices, because it increases process costs, compliance costs, and planning time. It also introduces timing risk, surveys, certification, inventory updates, and possible waiting periods for compliant capacity.
The key point is that recycling is no longer a last minute decision. It becomes part of lifecycle planning, and owners that plan earlier generally preserve more control over cost, timing, and counterparties.
Effects on capacity, geography, and market friction
While the Convention is a net positive for safety and environmental standards, the transition is unlikely to be smooth. One immediate challenge is capacity, there are only so many facilities that can meet authorisation standards at scale, and demand can cluster quickly when markets turn and demolition accelerates.
A second issue is geography. Compliant capacity is concentrated, and the European List data is a useful proxy for that concentration, with a large share of approved facilities in Europe and Türkiye.
This concentration can create bottlenecks, delays, and higher effective costs, even when scrap prices appear attractive. The risk is a two tier recycling market emerging more clearly, compliant facilities face demand pressure and pricing power, while non compliant facilities face reduced access to tonnage, especially for fleets linked to stricter regimes.
What this means going forward
Scrapping should no longer be treated as an exit transaction at the end of an asset’s life. Owners and managers, including those operating through the UAE, will need defined timelines and compliance planning to avoid costly mistakes, delays, and disputes.
At the same time, compliance pressure can slow scrapping in the short term, even if standards improve over time. Until compliant capacity expands and enforcement becomes more consistent across jurisdictions, the June 2025 shift will continue to influence the timing, economics, and practical execution of ship recycling decisions.
If you want, I can also tailor this into a version aimed specifically at a UAE audience, for example DMCC and DIFC readers, owners with UAE flag exposure, or technical managers who need a practical compliance narrative.
Our stance as a firm
Ruby Maritime confirms our full support for Green Ship Recycling and affirm that we are actively engaged in this field, in alignment with the UAE’s goals for environmental stewardship and sustainable maritime practices.
The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships enters into force on 26 June 2025,
Among other measures, the Convention:
- prohibits or restricts the installation or use of hazardous materials on ships, such as asbestos, polychlorinated biphenyls, ozone-depleting substances, and anti-fouling compounds and systems containing organotin compounds or cybutryne;
- requires detailed inventories of hazardous materials;
- outlines requirements for ship recycling facility operations, including working conditions at ship recycling yards; and
- sets out robust mechanisms for certification, compliance and enforcement.
Ships are recycled when they reach the end of their operational lives. Safe recycling processes are vital to ensure the careful and secure handling of environmentally hazardous substances such as asbestos, heavy metals, hydrocarbons and ozone-depleting substances.
Ship recycling facilities/yards must be authorized and must prepare a Ship Recycling Facility Plan, addressing worker safety and training; protection of human health and the environment; roles and responsibilities of personnel; emergency preparedness and response; and monitoring, reporting and record-keeping systems, taking into account IMO guidelines.
Before a ship can be recycled, the ship recycling facility must provide a Ship Recycling Plan which is specific to each vessel that is to be recycled. It must specify the way an individual ship will be recycled, depending on its particulars and its inventory.
Governments will be required to ensure that recycling facilities under their jurisdiction comply with the Hong Kong Convention.
An example of IMO supporting countries to reach the point where they are ready to accede to the Convention is the “Safe and Environmentally Sound Ship Recycling in Bangladesh” project (SENSREC Project – Bangladesh). Bangladesh is one of the world’s largest ship recycling countries by capacity.
The SENSREC Project has been funded by Norway since 2015 and has been implemented by IMO in a phased manner. It has helped Bangladesh to improve its ship recycling standards and has facilitated the country’s accession to the Hong Kong Convention.
Shipowners will be required to ensure their ships carry a certified Inventory of Hazardous Materials (IHM) for the operational life of their ship. For newbuilds, compliance will be mandatory from delivery post-June 2025. Existing ships will need to be certified at their next scheduled harmonised renewal survey, before 26 June 2030. At the point a ship is sent for recycling, it will need to undergo a final survey at a ship recycling facility in a country which is a signatory to the HKC. The facility must be authorised under national legislation and develop a ship specific recycling plan for every ship they process.