The Elegant Exit Company (EEC) is a ship recycling startup based in the Netherlands that aims to revolutionize the industry by converting old ships into green steel. In February 2023, EEC purchased the Wan Hai 165, a containership built in 1998, from Taiwanese shipping company Wan Hai Lines. The plan was to recycle the vessel in a sustainable and responsible manner at the ASRY yard in Bahrain, one of EEC’s partner yards. However, EEC had to obtain approval from the Supreme Council for Environment (SCE) in Bahrain before proceeding with the demolition process.
The permitting process faced delays, as there were initial misconceptions about EEC’s commitment to responsible green ship recycling. Local regulatory bodies took time to understand the environmentally friendly nature of EEC’s project, and the company faced skepticism and was perceived as potential polluters. The length of the process was also influenced by variations in the ease of doing business worldwide, highlighting the need to adapt to different regulatory environments.
Captain Soumitro Roy, EEC’s Head of Middle East Operations, explained that three key areas were scrutinized for local and international compliance during the permitting process. These included analyzing the national legislative framework, evaluating the recycling yard’s capabilities to meet statutory and regulatory requirements, and assessing the downstream waste management infrastructure. EEC adheres to the Hong Kong Convention, but Captain Roy acknowledged limitations in monitoring downstream hazardous waste management and preventing pollution in the intertidal zone. The company overcame these challenges by emphasizing the noble cause behind their project, maintaining transparency, and ensuring compliance at every stage.
Compliance with the EU Ship Recycling Regulation (EU SRR) was crucial for EEC. By treating the ship as if it were registered under the EU flag, EEC assures ship owners with high environmental, social, and governance (ESG) commitment that their assets will be recycled transparently and in full compliance with stringent regulations.
Looking ahead, EEC aims to transition from a strategically aligned supply chain management model to a vertical supply chain management model. This means owning vessels, ship recycling yards, and steel mills under the EEC umbrella. The company plans to replicate this model in various locations, with the Middle East being their initial focus.
EEC expects the market for sustainable shipbreaking practices to evolve significantly in the coming years. With approximately 15,000 vessels requiring recycling within this decade, supply and demand dynamics will play a crucial role. As environmental awareness grows and factors like leed steel and carbon taxes come into play, steel mills may face a shortage of ferrous scrap, leading them to pay sustainable prices for an assured supply. Ship owners, facing limited recycling slots, may also be inclined to sell their assets at sustainable prices for green recycling. Ship recycling yards, benefiting from a steady supply of vessels, will likely invest in additional infrastructure to lower demolition costs. Ultimately, market dynamics will drive the establishment of sustainable pricing for all stakeholders involved.
