This new report from Sandbag, the NGO Shipbreaking Platform, and Università della Tuscia explores how ship recycling could supply high-quality scrap steel to help decarbonise EU steel production.
Steel plays a central role in the European Union’s industrial strategy, and shifting to more sustainable production is essential to achieving the EU’s climate neutrality goals. One of the most effective pathways to decarbonise steelmaking is by increasing the use of scrap steel as it can dramatically reduce CO2 emissions, energy consumption, and water use. Among available technologies for steel production, Electric Arc Furnaces (EAF) stand out for their capacity to incorporate high proportions of recycled steel, achieving emission reductions of up to 80% compared to traditional Blast Furnace processes. However, this shift requires a steady, reliable supply of high-quality scrap.
The steel industry expects a rising demand for scrap in the coming years due to demands for lower carbon footprints and the implementation of new steelmaking technologies. Ship recycling presents a significant and largely untapped opportunity to meet this demand. Ship steel is recognised for its consistently high quality, certified through uniformed standards developed by global classification societies. As the EU/EFTA-owned fleet ages, the availability of end-of-life (EoL) assets is set to grow substantially. The forecasting analysis of the 11,902 EU/EFTA-owned vessels over 10 years old highlights the mid-2030s as the critical period for ship demolitions, with annual retirements exceeding 700 units. This level of recycling demand may translate to an estimated 10–15 million tons of scrap steel recoverable annually throughout the decade throughout the decade, which represents up to 20% of annual scrap steel consumption in the EU.
Beyond recycling, innovative companies are also exploring ways to extend ships’ life cycles, trace materials and components from construction to EoL, and reuse steel plates directly in construction applications. Cross-industrial synergies are needed to unlock the full potential of ship recycling, as well as more research to achieve greater transparency in steel documentation, including contamination risks from coatings, and improved data on future supply of EoL vessels to allow clear forecasting for the demolition market.
To fully harness the potential of ship steel within a circular economy, policies should furthermore support the development of safe and environmentally sound ship recycling, and stimulate material recovery and reuse. Policies should clearly promote the development of best practice guidelines aligned with ship recycling regulations and consistent with the EU’s circular economy principles, including the 9Rs hierarchy and the waste management pyramid. Ultimately, by recognising ship recycling as a valuable source of high-quality scrap steel, the EU can reduce dependence on imports, conserve valuable resources, and advance toward climate neutrality. This transition will foster innovation, strengthen industrial resilience, create green quality jobs, preserve and develop maritime skills, and position ship recycling as a key contributor to enhancing circularity in the maritime sector.
Related Publications
More on the circular economy
Chemicals and CCS/U: Exploring the role of carbon capture in the sector’s transition to ‘circularity’
This technical brief explores the potential role of carbon capture, storage and utilisation (CCS/U) for Europe's chemicals sector.
We find that CCS/U will be necessary in Europe’s chemicals sector, but only to a limited extent in targeted applications.
Steel labelling: Beyond the sliding scale
As EU policymakers debate how to certify low-carbon steel, Sandbag’s new briefing analyses the “sliding scale” method — and outlines why it may hinder rather than help decarbonisation. A new model is proposed based on product-specific benchmarks, multi-tier ratings, and circularity incentives.
Sandbag’s feedback to the call for evidence on the Circular Economy Act
Sandbag welcomes the Circular Economy Act (CEA) as an important step to accelerate the transition to a circular economy in the EU. Progress in this area has been slow and this act is sorely needed to address systemic issues holding back circularity, including the current fragmented approaches across Member States.
Electrification or electrical decarbonisation? We need both!
We agree with the European Commission’s general diagnosis that increasing the share of electricity in overall energy consumption is necessary to achieve deep decarbonisation. However, it is not sufficient. If overall energy use increases, or if electricity generation does not decarbonise rapidly, then electrification may fail its decarbonisation role.
Heat up industry, not the climate!
The European Commission has set out proposed terms and conditions for its auction on electrified /renewable industrial heat under the Innovation Fund (IF). We support the IF’s acknowledgment that indirect emissions are linked to the timing of electricity consumption rather than the source of electricity used. However, although it claims an intention to limit electricity use at hours of high marginal emission intensity, we are concerned that the proposed terms might lead to the opposite and significantly limit the scheme’s climate benefits.
Extending the CBAM to indirect emissions
The European Commission is considering amending the Carbon Border Adjustment Mechanism (CBAM) to include indirect emissions of CO2 from the use of electricity in the manufacturing of CBAM-covered goods.
New Principles for Steel Labelling: response to the consultation on the Industrial Decarbonisation Accelerator Act
Sandbag’s response to the EU’s Industrial Decarbonisation Accelerator Act sets out four principles to guide green steel labelling schemes, promoting credible standards based on lifecycle emissions and system-wide decarbonisation.
Getting Electrification Right: The broader challenge of induced emissions
This report examines how the climate impact of electricity use is shaped not just by its source, but also by its timing and location. It evaluates the EU’s RED III framework and associated hydrogen targets, using the RFNBO standard as a case study. The analysis shows that ill-timed use of renewable electricity (particularly for hydrogen production) can inadvertently drive fossil generation. It argues for more strategic use of electricity to avoid these unintended consequences and support genuine decarbonisation.
Steel emissions standards under threat from flawed “mass balance” proposal
A joint letter from 30+ NGOs warns that coal-based steel could be falsely labelled as green under proposed “mass balance” rules. The signatories call for traceable, credible emissions data in steel standards.
Joint statement urges EU to boost the use of recycled steel scrap in the automotive sector
A new joint statement urges the EU to set binding targets for recycled steel use in cars, citing the climate benefits of secondary steel and the need to reduce demand for high-emission imports.