EU Commission’s new Circular Economy Package

On 2 December 2015 the European Commission published its highly anticipated revised Circular Economy Package. In a similar vein to the earlier package proposed by the outgoing EU Commission in July 2014, the new package says that it will boost EU competitiveness, create EU jobs and generate sustainable growth. The new package is to be supported by €5.5.bn in structural funds, and at least €650m from other funds and investments. As part of the package, the EU Commission has published an Action Plan which it says is a “clear pathway” towards achieving its goals and that this concrete mandate will “close the loop” in the circular economy.

In light of the scope and wide-ranging implications of the package and indeed the concept of a circular economy, we are intending to produce a series of articles on these proposals including what this will mean for different sectors and industries. For now, a very high level outline of the background to these measures and keys aspects of the new package is set out below.

Background

In conceptual terms, we should not underestimate how fundamental a circular economy could be if achieved. If applied in full, it presents a strong challenge to the current economic linear model. In principle the Circular Economy is aimed at moving away from the current model whereby we extract virgin raw materials, from which we make and use products and then dispose of them. The Circular Economy would have the products reused or repaired, and if that is not possible, recycled into new raw materials to start the process again.

Key aspects

Sectoral approach

There are a number of new and revised measures in this recent package which could have significant impacts on a variety of sectors and actors; in particular the EU Commission in its Action Plan sets out specific actions in respect of plastics, food waste, critical raw materials, construction & demolition, and biomass and bio-based materials.

Waste proposal

A major aspect of the recent package is the EU Commission’s revised legislative proposals on waste. The proposals include targets and what the EU Commission describes a “concrete measures” to address barriers to adoption as well as incentivise take up and achievement of its goals. These include:

Targets:

• A common EU target for recycling 65% of municipal waste by 2030;
• A common EU target for recycling 75% of packaging waste by 2030; and
• A target to reduce landfill. In this regard the clarity of the EU’s papers is far from satisfactory. The language is certainly inconsistent. Our reading is that the target is much less ambitious than many have anticipated or interpreted. It seems to us that the target is to reduce by 2030 the landfilling of municipal waste to maximum of 10% of all municipal waste generated.

Measures and incentives:

• A ban on landfilling of separately collected waste with promotion of economic instruments to discourage landfilling generally;
• Simplified and improved definitions and harmonised calculation methods for recycling rates throughout the EU;
• More and smarter extended producer responsibility obligations;
• Concrete measures to promote re-use and stimulate industrial symbiosis – turning one industry's by-product into another industry's raw material; and
• Economic incentives for producers to put greener products on the market and support recovery and recycling schemes (e.g. for packaging, batteries, electric and electronic equipment, vehicles).

Legislative proposals:

The new package will amend six waste-related Directives, namely:

• 2008/98/EC on Waste;
• 94/62/EC on Packaging and Packing Waste;
• 1999/31/EC on the Landfill of Waste;
• 2000/53/EC on End-of-Life Vehicles;
• 2006/66/EC on Batteries and Accumulators and Waste Batteries and Accumulators; and
• 2012/19/EU on Waste Electrical and Electronic Equipment.

It also proposes (i) legislation setting minimum water re-use requirements, (ii) a revised Regulation on fertilisers, and (iii) an Implementing Regulation on television and electronic displays.

Action Plan
The key actions in the Commission’s Action Plan focus on the following areas:

• Products –focussing on design and processing, in particular in respect of electronic equipment via the Ecodesign Directive and BREFs;
• Consumption – including better enforcement of guarantees on tangible products, acting on false green claims, proposing requirements on repair information;
• Green and public procurement – actions to use procurement as a vehicle for change;
• Waste management – in particular, revising legislative proposals on waste, combatting illegal shipments of waste;
• Energy from waste initiative: EfW via thermal incineration does not sit comfortably with the principles of the Circular Economy. The EU Commission implicitly accepts this and is promising an initiative in this regard in 2016;
• Waste as a resource – focussing on strengthening the secondary raw materials market through, for example, better interface between chemicals, products and waste legislation, and improved electronic data exchanges.

Comment

We have some doubts concerning the overall claims by the EU Commission relating to the economic benefits of the package. Some of our doubts arise from an unfortunate lack of precision used in the EU’s documentation. This drives the reader to draw inferences. In terms of raw materials recovered in the circular economy, the inference is that the EU will benefit because a degree of security of supply of such raw materials for EU businesses will be generated by the circular economy. However in a global economy can that assumption be made? Also in terms of the creation of jobs, the inference is that these will be non-exportable European jobs. However again, is this assumption necessarily valid?

There can be no avoiding the difficulties which will be faced in trying to put in place a successful circular economy. It presents such a challenge to the incumbent linear economy that it will require immense cultural, legal and economic change, with very strong push and pull levers. There is no expectation of success in a short term. Indeed the EU Commission’s proposals highlight so many areas which are still work in progress. In later articles we will report on some of the detail relevant to particular sectors.