Everything you need to know about the EU's new Circular Economy Action Plan and Industrial Strategy

The European Commission has today (11 March) unveiled its Circular Economy Action Plan, a sweeping set of commitments aimed at ensuring that circularity and resources efficiency acts as a "prerequisite for climate neutrality" in line with the European Green Deal and Industrial Strategy.

The strategies build towards the bloc's net-zero target for 2050

The strategies build towards the bloc's net-zero target for 2050

The Action Plan outlines a plethora of commitments that aim to enshrine circular economy considerations into carbon reductions efforts, economic growth opportunities and risk management approaches in a way that negates potential cases of greenwash. It aims to explore how circularity and resource efficiency can assist with the broader EU goal of reaching climate neutrality by 2050, and delivering against the aims of the Sustainable Development Goals.

Executive Vice-President for the European Green Deal, Frans Timmermans, said: “To achieve climate-neutrality by 2050, to preserve our natural environment, and to strengthen our economic competitiveness, requires a fully circular economy. Today, our economy is still mostly linear, with only 12% of secondary materials and resources being brought back into the economy.

“Many products break down too easily, cannot be reused, repaired or recycled, or are made for single use only. There is a huge potential to be exploited both for businesses and consumers. With today's plan, we launch action to transform the way products are made and empower consumers to make sustainable choices for their own benefit and that of the environment.”

One of the global ambitions of the plan is to ensure that Free Trade Agreements reflect the enhanced objectives of the circular economy, meaning that UK businesses will indirectly be subject to standards and legislation that will be set up across the bloc over the coming years.

The Action Plan outlines ambitions to implement specific waste reduction targets for certain waste streams, with a heavy focus on electronics, textiles, plastics and construction. A harmonised separate waste collection system for food waste will also be explored.

The ambitions of the plan will have a big implication on existing business models. A ban on the destruction of unsold durable goods will be introduced while incentives will be created to promote product-as-a-service ownership models and take-back schemes for select product streams.

While many of the specific legislative actions still need to be defined, the Action Plan outlines intentions to restrict the creation of single-use items, increase the percentage of recycled content used, reduce hazardous chemical use and link the durability, recyclability and raw material use of a product to wider environmental considerations such as carbon reduction efforts as part of a lifecycle examination approach.

The Action Plan outlines ambitions to implement specific waste reduction targets for certain waste streams, with a heavy focus on electronics, textiles, plastics and construction. A harmonised separate waste collection system for food waste will also be explored.

E-waste

One way that the Commission will link the circular economy to the wider carbon-neutral goal is through an extension of the Ecodesign framework. Currently, energy-related appliances such as refrigerators and washing machines are subject to ecodesign requirements to improve their energy efficiency, which is highlighted through energy labelling mandates. The Action Plan intends to “swiftly adopt and implement” ecodesign and energy labelling plans for the “broadest possible range of products” by 2024 in a bid to enable consumers to make more informed purchases and encourage manufacturers to produce low-carbon products.

Electronic items such as smartphones, laptops and tablets will be subject to these new requirements under a ‘Circular Electronics Initiative’ that aims to promote longer lifetimes for electronic products by promoting durability, repairability, reuse maintenance and recycling. The Commission has highlighted the electronics sector as a “priority” for implements a “right to repair” approach to consumer transactions that include a requirement for companies to update previously obsolete software.

Most electronic equipment won’t be allowed to be destroyed under the proposals, with the Action Plan floating an EU-wide take-back scheme for old phones, chargers and tablets.

Electric vehicle (EV) batteries will also be subject to new rules on both recycled content and efforts to improve the collection and recycling rates to ensure valuable materials are recovered.

Textiles

The EU plans to unveil a “comprehensive” EU Strategy for Textiles, that will consist of eco-design measures to promote second-life materials and to eliminate the presence of hazardous chemicals.

Under the strategy, businesses will be empowered to promote sustainable textiles to consumers and offer reuse and repair services for their products.

Similar ecodesign and service-based solutions will also be discussed for “high impact intermediary products” such as steel, cement and chemicals.

Plastics

On plastics, the Commission is aiming to examine the potential ramifications of using bio-based feedstocks to ensure that environmental benefits are delivered and that it doesn’t lead to an increase in packaging-related carbon emissions. The use of biodegradable or compostable plastics will also undergo similar examinations.

The Action Plan also outlines ambition to restrict the use of microplastics that are intentionally added to products to improve functionality.

The Commission will take action to ensure that the EU does not export its waste challenges, particularly plastics, to third countries. A “recycled in the EU” benchmark will be prioritised as a result. This builds into a wider ambition of the Action Plan to create a Global Circular Economy Alliance to identify knowledge and governance gaps in advancing a global circular economy.

A Bioeconomy Action Plan will be developed to support a circular bio-based sector that considerations environmental impacts and benefits.

The bioeconomy plan may overlap slightly with proposal to tackle food waste production, which will be outlined under a forthcoming EU Farm-to-Fork Strategy that will “address comprehensively the food value chain”.

Business reporting requirements

Companies operating in, or hoping to sell into, the bloc will be mandated to “substantiate their environmental claims” using Product and Organisation Environmental Footprint methods.

The Commission plans to test how these methods perform through Ecolabel approaches first, to see whether businesses can provide and include more information on the durability, recyclability and recycled content of their products and services. This, the action plan states, would include the development of an “industry-led reporting and certification system” for the circular economy.

The Commission is also targeting SMEs to foster new approaches to collaboration in order to train smaller business on closed-loop practices and implementation under the Enterprise Europe Network.

Carbon consideration

The Commission has committed to analysing how circular products and services will impact climate change mitigation and adaptation and how this can be measured.

In particular, the Action Plan commits to incentivising the uptake of “carbon removal and increased circularity of carbon”, in relation to biodiversity projects. The Commission will explore the development of a regulatory framework for certification of carbon removals “based on robust and transparent carbon accounting”.

Green Finance

The Action Plan also mentions efforts to integrate the new circular economy objectives into the recently announced EU Taxonomy Regulation, which determines what economic activities can be considered 'green', paving the way for billions of euros to be invested to fight climate change.

The Circular Economy Finance Support Platform will continue to offer guidance to businesses and project leaders on the financial risks and capacity building considerations of closed-loop approaches.

Industrial Strategy

The Circular Economy Action Plan is intertwined with the EU’s Industrial Strategy, which was released on Tuesday (10 March).

The Industrial Strategy is focused on a need for “industry to become greener, more circular and more digital while remaining competitive on the global stage”.

It features plans to revamp and decarbonise high-carbon, energy-intensive sectors and develop a smart and sustainable transport network. It will support breakthrough clean technologies for zero-carbon steel.

The Industrial Strategy outlines a focus to combat carbon leakage that enables high carbon industries to relocate to areas and jurisdiction that don’t have robust climate regulations in place. In response, The EU Emissions Trading System Innovation Fund will be developed to help deploy additional large-scale innovative projects to support clean products in all energy-intensive sectors.

The strategy will also create frameworks for businesses and investors to “drive low carbon investment and green growth” although the means to do so lack definition.

Finally, a new European Clean Hydrogen Alliance, Alliances on Low Carbon Industries, Industrial clouds and Platforms, and Raw Materials will all be launched to spur low-carbon innovation.

Ursula von der Leyen, President of the European Commission, said: “Europe's industry is the motor of growth and prosperity in Europe. And it is at its best when it draws on what makes it strong: its people and their ideas, talents, diversity and entrepreneurial spirit. This is more important than ever as Europe embarks on its ambitious green and digital transitions in a more unsettled and unpredictable world. Europe's industry has everything it takes to lead the way and we will do everything we can to support it.”

Industry reaction

Jennie Galbraith, Head of Sustainability at British American Tobacco said:

“We welcome the European Commission’s plan. The Circular Economy is an innovative solution to a pressing challenge that we as an international business are wholeheartedly committed to. Over time we want to simplify the design of our electronic products and aim to maximise their longevity, while also seeking to minimise waste through increased product recovery and recycling.  This means we need to be smarter in how we design things and be conscious of what happens to our products when the consumer has finished with them.

“The proposals aim to make environmentally-friendly products the norm. Our industry still has a long way to go and it is paramount we not only work relentlessly, at all levels, to green our processes, reduce wastage and encourage renewable practices, but also to provide eco-conscious products to consumers who are rightly concerned about wider global issues and want to see large firms take a leadership role in enacting change.”

CLG Europe's Head of EU Relations Ursula Woodburn said:

"The new Industrial Strategy is a significant step in the direction needed to tackle the present climate and environment crisis, and we welcome the huge opportunities it offers. We continue to urge the EU to ensure that the delivery plan is constructed around the goal of a net-zero economy – it is this substance that will be key to kickstarting the massive structural transformation required over the next 10 years.

“The scale and complexity of the challenge is immense, but carbon neutral industry is feasible and offers major investment opportunities. Businesses and industry sectors need the kind of support and signals that indicate the transition to net-zero is happening with political support and policy alignment. If the EU can refine and build on this strategy with its sights squarely set on the decarbonisation of industry, this central pillar of the Green Deal has the chance to make Europe a world leader in climate-neutral and circular technologies, products and services.”

Meadhbh Bolger, resource justice campaigner at Friends of the Earth Europe, said:

“The Von der Leyen Commission’s plan for a circular economy is out of touch with the reality and urgency of the planetary emergency. It will fail to reduce resource consumption – as the previous one did – because it is written to satisfy the demands of endless economic growth, over the needs of people and the natural world. Our overconsumption of resources is wrecking the environment and communities around the world, and instead of setting targets to reduce this, the Commission has buried its head in the sand and merely promised to ‘monitor’ our consumption.”

Matt Mace



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