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A consultant's report to Defra identified several sites "in and around" Birkenhead that were suitable for dismantling ships.
Only Tyneside and Teesside, in the North East, could rival Wirral for their vital experience in "shipbuilding and other heavy industrial activity", it said.
The study concluded: "There is scope to utilise these skills at the opposite end of the lifecycle, to recycle ships".
A shipbuilding yard first opened in Birkenhead in 1824, the forerunner of the world-famous Cammell Laird yards which stretched down the Mersey.
However, the industry declined dramatically in the 20th century, resulting in the closure of the last Cammell Laird shipyard in 1993.
A year ago, Defra launched a search for the best location for a state-of-the-art recycling facility in Britain - a hunt that has now focused in on Wirral and the North East.
Its study, which is out to consultation for three months, says ministers would "welcome the establishment of compliant and economically viable ship recycling facilities in the UK".
It added that a "number of facilities" had expressed an interest, but suggested an ability to decommission oil rigs might also be needed to make such a business profitable.
Ben Bradshaw, a junior environmental minister, said: "Significant changes must be made if Government-owned and commercial ships are to be recycled in acceptable conditions."
The debate over ship recycling was sparked by the furore that greeted the towing of the four defunct American ships to Hartlepool for scrapping in 2003.
The company is still awaiting permission from the Environment Agency to allow it to revamp its dockyard to carry out the work, amid concern about the impact of planned dredging works.
However, it then emerged that Britain's own toxic ships - most of them Royal Navy vessels - were being ripped apart in the developing world by ill-trained workers risking their health.
Source:
icLiverpool
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