What companies can expect from the evolving principle of Circular Economy in 2021 and beyond

At the end of 2019, the European Commission (the Commission) adopted a well-known environmental strategy for the upcoming 5 years called “The Green Deal.”  That strategy aims at changing the way European economies work and switches the focus to sustainability. Its goals can be divided into several pillars:

• Greenhouse gas (GHG) emission strategy increasing the European Union (EU)’s Climate goals for 2030 and 2050;  
• Green energy strategy to supply clean, affordable and secure energy;
• Energy and resource-efficient building and renovation;
• Biodiversity and ecosystem restoration strategy;
• A zero pollution goal for a toxic-free environment;
• Environmentally friendly and healthy agriculture system Farm to Fork;
• Sustainable and smart mobility; and finally
• Mobilizing industry for a clean and circular economy.

What is the circular economy?

Circular economy is a model of production and consumption opposite to a linear model (e.g. production – use – disposal), where sources, products and services can be used several times for the initial purpose, or another purpose, or can be recycled. This involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible, and it leads to the extended life cycle of products.

On 11 March 2020, the Commission published a new Circular Economy Action Plan, where it redefines goals and introduces anticipated changes in product policy. Companies can expect revisions of the Ecodesign Directive, REACH Regulation, Batteries Directive, Packaging and Packaging Waste Directive, Construction Product Regulation, Directive on Waste Electrical and Electronic Equipment and Regulation on Persistent Organic Pollutants. In addition, new legislation is planned to be adopted.

Circular economy: ecodesign directive

The Commission’s plan is to widen the Ecodesign requirements to products other than just energy-related products, such as high impact intermediary products like steel, cement and chemicals. This will hopefully induce producers to deliver on circularity and manufacture sustainable products. It will also provide information about products’ energy performance and footprint.

The products must be made of a certain percentage of recycled material and companies are encouraged to create products that are easy to remanufacture or high-quality recycle rather than completely dispose of. Further details will be introduced by the upcoming Ecodesign Working Plan.

Circular economy: electronics initiative

Less than 40% of electronic waste is recycled in the EU. Producers of electronics can expect that they will have the obligation, as part of their services, to repair electrical and electronic products that they have placed on the market. The Commission will present a legislative proposal and non-legislative measures establishing a new “right to repair” in 2021.

Furthermore, the take-back scheme for electrical and electronic equipment may be expanded, as governed by the Directive on Waste Electrical and Electronic Equipment, to the return or sell-back of products such as old mobile phones, tablets and chargers. Finally, the rules on restrictions of hazardous substances in electric and electronic equipment will be revised in 2021 to ensure safe recycling.

Circular economy: batteries directive

Electromobility, transport powered by electric energy, is one of the main pillars of sustainable transport infrastructure. As such, the Commission plans to revise the collection and recycling of all batteries to ensure the recovery of valuable materials.

The Batteries Directive now prohibits the placing on the market of certain batteries and accumulators with a mercury or cadmium content above a fixed threshold. For mercury, the content of more than 0,0005% by weight of mercury is prohibited, for cadmium, the threshold is 0,002% by weight. The Commission intends to promote the collection and recycling of battery waste beyond the existing rate of 45%.

Companies can expect that non-rechargeable batteries will likely be phased out soon where rechargeable or other alternatives exist. There may be new thresholds adopted regarding the carbon footprint of battery manufacturing, along with other restrictions regarding ethical sourcing of raw materials and security of supply

Circular economy: packaging and packaging waste directive

In 2017, there was 173 kg of packaging waste per inhabitant in Europe, the highest level ever. Therefore, the Commission is revising the Packaging and Packaging Waste Directive, with a goal that all packaging on the EU market will be reusable or recyclable by 2030.

The current Packaging and Packaging Waste Directive provides for measures such as extended producer responsibility schemes, deposit-return schemes and targets for minimizing single waste. It also sets recycling targets – by 31 December 2025, at least 65% by weight of all packaging must be recycled, and by 31 December 2030, at least 70% of the packaging must be recycled.

It can be expected that companies will have to comply with more stringent limits for waste prevention in the future. Also, producers of packaging will have to invest in reusability and recyclability of packaging. The use of some materials will be restricted, especially when reusable alternative product exists. Producers will be encouraged to use only one material or polymer when manufacturing packaging in order to reduce the complexity of the recycling. There may also be labelling restrictions that would ease the separation of the packaging waste.

Circular economy: strategy for plastics

The Single-Use Plastics Directive on 5 June 2019 phased out certain plastic products, such as plastic straws, plates, cutlery and so forth, and it requires Member States to restrict the production of other certain types of plastics products, such as food containers and cups for beverages. However, the Commission wants to go further with the fight against single-use plastics and aims to impose mandatory requirements for the amount of recycled material in plastics and waste reduction measures for plastic packaging, construction materials and vehicles.

By the end of 2021 and beginning of 2022, companies can expect to see these changes along with restrictions to the use of microplastics in products. Companies producing biodegradable or compostable plastics will most likely face a new policy framework regarding sourcing, labelling and use.

Circular economy: strategy for sustainable built environment

According to Eurostat, the construction sector is responsible for over 35% of the EU’s total waste generation, and at the same time, the GHG emission from material extraction, manufacturing of construction products, construction and renovation of buildings produces 5-12% of the total national GHG emissions.

The Strategy for Sustainable Built Environment, to be introduced in 2021, covers energy efficiency, climate, as well as construction and demolition waste issues. The energy efficiency of buildings is also a focus, and this trend will continue with a stronger emphasis on circular economy principles. Companies can anticipate investments in technologies with optimized lifecycle performance and longer life expectancy. 

Circular economy: safety of secondary raw materials

To increase circularity, it must be safe, efficient and affordable to use secondary raw materials. Secondary raw materials are recycled materials that can be used in manufacturing processes instead of, or alongside, virgin raw materials. Thus far, there is no EU-wide quality standard policy for certain materials (such as plastics), no harmonized trading policy of these materials across the EU nor mechanism to identify the potential presence of chemicals of concern in recycled materials. 

In 2021, the Commission intends to develop a solution for minimizing the presence of hazardous substances in recycled materials and for the high-quality sorting of recycled materials. It plans to revise the annexes to the Regulation on Persistent Organic Pollutants to reflect scientific and technical progress. These efforts are connected to the EU’s Chemicals Strategy for Sustainability.

Circular Economy: Changes in 2021

Next year, 2021, will be full of changes for European environmental law. Companies should be aware that they will be required to make a lot of investments to comply with updated legislation and to transition to the circular economy scheme. It would be wise for companies to stay up to date on the EU’s initiatives regarding circular economy because, as one can see above, there are impacts to the industrial, manufacturing and construction industries. Even though it may seem challenging today, a circular economy leads to innovation and that can only benefit the EU’s protection of the environment and its people.