A Review of the European Union’s Circular Economy Policy · A Review of the European Union’s Circular Economy Policy Jeff Dodick1 Dan Kauffman2 1Guilford Glazer Faculty of Management,

ThisprojecthasreceivedfundingfromtheEuropeanUnion’sHorizon2020researchandinnovationprogrammeundergrantagreementNo.730378

AReviewoftheEuropeanUnion’sCircularEconomyPolicy

JeffDodick1

DanKauffman2

1GuilfordGlazerFacultyofManagement,Ben-GurionUniversityoftheNegev2SapirAcademicCollege

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Contents1 Introduction......................................................................................................................1

2 EUHistorywithRegardstoCEPolicy................................................................................12.1 EstimatedBenefitsofCEtotheEU........................................................................................4

3 ReviewingtheEuropeanCommission’sCEPackage(2.12.2015)......................................63.1 Production..............................................................................................................................73.2 Consumption..........................................................................................................................73.3 Wastemanagement...............................................................................................................83.4 Boostingthemarketforsecondaryrawmaterials.................................................................93.5 Innovation,investment,andotherhorizontalmeasures.....................................................103.6 Monitoring............................................................................................................................14

4 AcritiqueoftheEU’sCEactionplan...............................................................................20

5 Summary.........................................................................................................................24

6 References......................................................................................................................26

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1 Introduction

The“CircularEconomy”(CE)isoneofthecentralpolicyplatformsoftheEuropeanUnionHorizon2020

strategy. Unfortunately, defining the CE has been a difficult task; recently, there have been two

summary papers byGhisellini, Cialani andUlgiati, (2016) andGeisendorf (2017, submitted paper)

which have attempted to do this. They show that the CE is derived froma variety of concepts in

economics,ecologyanddesign.Atitscore,thedefiningelementoftheCEisthe“restorativeuse”of

resourcesinwhichrawmaterialswouldnolongerbetransformedtodiscardedwaste,asfoundinthe

traditionallineareconomy(Geisendorf,2017,submittedpaper).Asoneofthechiefproponentsofthe

CE, theEllenMacArthurFoundation (2012,p.14)argues: “Whilegreat strideshavebeenmade in

improvingresourceefficiency,anysystembasedonconsumptionratherthanontherestorativeuse

ofresourcesentailssignificantlossesalongthevaluechain.”

Thequestionremainsastohowitmightbepossibletoimplementthisrestorativesystem.At

least one part of this answer emanates from (governmental) policy which provides some of the

necessaryconditionsneededbyproducersandconsumerstoparticipateintheCE;thusinthispaper,

wereviewtheEU’spolicyeffortstoimplementaCE.1

Theformatofthisreviewisasfollows:InthenextsectionofthispaperwereviewrecentEU

policyhistorywithregardstotheCEpriorto its(mostrecent)2015actionplan.Followingthis,we

discussthepossiblebenefitstheEUseesitselfreapingfromadoptingaCE.Thisisfollowedbyareview

of theEuropeanCommission’s (most recent)2015CEactionplan,whichconcurrentlydrawsupon

other specialized policy initiatives; this section also integrates a report by the Ellen MacArthur

Foundation,SystemiqandSUNInstitute(2017)concerningfutureinvestmentintheCE,andthepolicy

measuresneededtoactivatesuchinvestment.Mostrecently,theEuropeanCommissionreleaseda

reportontheimplementationofthe2015actionplan;thisisreviewedinthenextsection.Following

thatsection,weprovideacritiqueofthemostrecentactionplan.Thefinalsectionsummarizesthe

policyreview.

2 EUHistorywithRegardstoCEPolicy

Asnoted,thisreportdividesCEpolicyhistorybeforeandafterreleaseoftheEU’smostcurrentaction

plan in 2015.However, beforediscussing this earlier policy,webriefly note that the entire policy

reviewisderivedfromthreegroupsofsources:

1AfullreviewofCEontologyisprovidedbyGeisendorfasanotherpartofR2Pi’sdeliverables.

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1. Primarily,fromofficialdocumentsoftheEuropeanCommission.See:

http://ec.europa.eu/environment/circular-economy/index_en.htm,whichcollectsmanyof

therecentinitiatives.

2. FromcharitiesandNGOs,mostprominently,theEllenMcArthurFoundation:

https://www.ellenmacarthurfoundation.org/

3. FromacademicreviewsofCEpolicy(includingwastemanagementpolicies).

Ghisellini,CialaniandUlgiati,(2016)andSakaietal.,(2011)providethemostcomprehensive

(general)academicreviewsofCEpoliciesandimplementation.Theirpapersshowthattherehasbeen

littleacademicresearchconcerningCEpolicy,outsideofstudiesfocusingonChina(See:FengandYan

2007;Gengetal.2013;Jiao&Boons,2014;Shietal.2012;Yap,2005).2Thisispartlyrelatedtothefact

thatChinawasthefirstcountrytocodifyaCEpolicy(inthe2007CircularEconomyPromotionLawof

thePeople’sRepublicofChina)aspartofitswastemanagementsystem;inturnthishasmadeiteasier

toanalyzeitsimplementationastheCEhasexistedlongerinChinathanintheEU.

Another difference between China and the EU with regards to CE policy concerns their

“national political strategy”. CE in China is a direct outcome of a top down approach, with its

implementationstructuredfollowingbothhorizontalandverticalapproaches3(FengandYan,2007).

Chinese national governmental policy aims to transform not only its industry but also the

socioeconomicorganizationofitssociety(Naustdalslid,2014).

ThetopdownapproachofChina’sstrategyisalsoreflectedintheinstrumentsused,thatare

mainlyof“commandandcontrol”ratherthanmarket-based(FriendsofEurope,2014)asinEuropean

policy(EuropeanUnion,2013).Incontrast,thetransitiontowardsCEinEuropemainlyseemstobe

occurring as a bottom-up approach (e.g. from the initiatives of environmental organizations, civil

society,NGOs,etc.).Alltheseeconomicactorscallforgreenerproductsandadequatelegislationand

trytoinvolvebothcompaniesandpublicauthoritiesina“virtuouscycle”(Naustdalslid,2014).

TheverticalapproachinChinaimpliestheshiftofCEfromthelowlevelofanalysis(i.e.micro

=companyorsingleconsumerlevel)tothehigherhierarchicallevels(i.e.meso=eco-industrialparks,

andmacro = cities, provinces and regions)while the horizontal dimension implies a link between

“industries,urbaninfrastructures,culturalenvironment,andthesocialconsumptionsystem”(Feng

andYan,2007).

In the EU, the Waste Framework Directive (2008) 4 was established as the basic waste

management legislation, and EU Member States have implemented domestic laws on waste

2IncontrasttheonlyacademicstudiesfocusingonEUCEpolicywerebyCostaetal.(2010)andLehtorantaetal.(2011).3Explainedbelow.4Intermsoflegislation,theEUinfluencesmembercountriesthroughregulations(lawsappliedinfullthroughouttheEU),directives (binds members to achieve objectives; however, they are free to address their local distinctiveness whileincorporatingtheobjectivesintotheirlegalsystem)anddecisions(bindsparticularindividuals,firmsormemberstates,to

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managementunder thisdirective.Themostnotable characteristicof theEU’swastemanagement

systemisthepromotionof3R(reduce,reuseandrecycle)policiesinparallelwithwastemanagement

regulations. However, aswewill see, an analysis of these policies shows that there has been no

implementationofafullCEintheEU,asthemajorityofeffortswereconnectedwithwastetreatment

andrecycling,withtheoverallgoalbeingtoreducetheamountoflandfillasobtainingfinaldisposal

siteshasbecomeincreasinglymoredifficult.

Nonetheless,eventhoughEUmemberstateswereconsideredtohavedevelopedintegrated

and advanced waste management systems, Asian countries (in general) have been importing

recyclableresourcesinrecentyears,essentiallyplayingtheroleofglobalrecyclingfacilities(Sakaiet

al.,2011).

Inarecentreport,theEEA5(2016b)publishedananalysisofEUmaterialresourceefficiency,

whichisanupdateonanearlierreportfrom2011;italsobothcomplementsandcompletesthepicture

illustratedbySakaietal.’s(2011)study.ThescopeoftheEEAreportisconcernedwithmaterialflows

entering or leaving an economy (biomass, non-metallic minerals, metal ores and fossil energy

materials) as well as secondary (waste-derived) raw materials. Also within its scope are the

transformationsthatmaterialsundergothroughouttheirfulllifecycle,andinitiativestoclosematerial

loopsinthecontextofaCE.

Themostimportantfindingisthatlittlehaschangedsince2011withregardstohowmostEU

countries relate to theCE; formost countries CEmeansbetterwastemanagement. Furthermore,

climate change and resource efficiency policies appear largely disconnected in practice, while

integrationwithabio-economystrategyalsorequiresfurtherefforts.

These findings are reinforced by the individual surveys of EU countries. Only ten EU

respondents identified theconceptofacirculareconomyandclosingmaterial loopsasadriverof

materialresourceefficiency,andevenfewer—Flanders(Belgium),GermanyandtheNetherlands—

reportedhavingadedicatedstrategyforclosingmaterialloops.Twofurthercountrieshavededicated

strategiesataregional(subnational)level—inFlanders(Belgium),andScotland(UnitedKingdom).

Further,Belgium,France,Germany,theNetherlands,SwitzerlandandtheUnitedKingdommentioned

preparatoryinitiativestodevelopmetricsandindicatorsforthecirculareconomy.

There aremany reasons for the lackofCEdevelopment, including lackof investment and

insufficientuseofeconomicinstrumentsandincentives.Sotoo,alackofpolicyfocusingonclosing

theloopsintheCEisasourceofproblems.Indeed,itwasfoundthatamajorityofreportedpolicy

performor refrain from an action, confer rights or impose obligations). Implementation of EU directives is approacheddifferentlybythememberstatestosuittheircontextualdistinctiveness.ThisexplainsthereasonfordifferentpoliciesandlegislationsacrosstheEUmembersCostaetal.(2010).5TheEEA(EuropeanEnvironmentAgency)publishedthisreportinconjunctionwithEionetcountriesandtheEuropeanTopicCentreonWasteandMaterialsinaGreenEconomy(ETC/WMGE).

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initiativesacrossEurope(upto2015)relatedtotheCEfocusonwastemanagementasadownstream

policy option, rather than on prevention or reuse. This is emphasised by the fact that only two

countriesexplicitlycommentedthatacirculareconomyimpliesgoingbeyondmerelyraisingrecycling

ratesandincreasingtheuseofsecondaryrawmaterials.Infact,theCEisinterpreteddifferentlyby

differentstakeholdersandEUcountries;thispointstoaneedforanagreedupondefinitionoftheCE

anditsnecessarypolicies.

TheEEA(2016b)reportdidmakeanumberofrecommendations.Theseinclude:

1. Forthemajorityofcountries,compliancewithexisting legislation isthemaindriverofany

action taken at the national level. Targets seem particularly effective in energising policy

developmentandguidingpolicyimplementation.

2. Regional(subnational)initiativescantakeadvantageofphysicalproximity,reduceddistances

andastrongincentiveonthepartoflocalstakeholders.Whenexpandingtheknowledgebase

forthecirculareconomy,itisworthkeepinganeyeonemergingregionalandlocalinitiatives.

3. Itwouldbeusefultodisseminateinformationonsuccessful initiativesinwhichthecircular

economy helps achieve other key policy objectives, such as those related to the climate,

competitivenessoremploymentagendas.

2.1 EstimatedBenefitsofCEtotheEUResource benefits.By conserving (primary)materials embodied in high-value products, or

returningwastestotheeconomyashigh-qualitysecondaryrawmaterials,aCEwouldreducedemand

for primary raw materials; this would reduce Europe's dependence on imports, making the

procurement chains formany industrial sectors less subject to the price volatility of international

commoditymarketsandsupplyuncertaintyduetoscarcityand/orgeopoliticalfactors.

An estimated 6–12%of allmaterial consumption, including fossil fuels, is currently being

avoidedasa resultof recycling,wastepreventionandeco-designpolicies; themaximumpotential

using the existing technology is estimated to be 10–17 % (European Commission, 2011). Using

innovative technologies, resource efficiency improvements along all value chains could reduce

materialinputsintheEUbyupto24%by2030(Meyer,2011).

ArecentstudyoftheimpactsofaswitchtoaCEinthefood,mobilityandbuiltenvironment

sectorsestimatedannualsavingsofprimaryresourceinputsofEUR600millionintheEU-276by2030

(EEA,2016a).Achievingthiswouldrequiresystemicchangesinthesesectors.Forexample,inthearea

ofmobility,changeswouldentailmoresharingofcarsandbetterintegrationofdifferenttransport

modes.Forthefoodsystem,thestudymentionsmoreregenerativefarmingpracticessuchasorganic

farming,closingnutrientloopsandreducingfoodwaste.Moreover,inthebuiltenvironmentchanges

6TheEU-28,notincludingCroatia.

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would include factory-based industrialprocesses in construction, smarturbanplanning, sharingof

residentialandofficespace,andenergy-efficientbuildings (EMFandMcKinseyCenter forBusiness

andEnvironment,2015).

Environmentalbenefits.Theabsolutedecouplingofeconomicoutputandsocialwell-being

fromresourceandenergyuse,andfromrelatedenvironmentalimpacts,isthemainobjectiveofthe

EU's resource-efficiency policy (European Union, 2013). Indeed, although current waste policies

alreadycontributetothis,theEuropeanCommissionestimatesthatdifferentcombinationsofmore

ambitioustargetsforrecyclingofmunicipalandpackagingwasteandreducinglandfillcouldleadtoa

reductioningreenhousegasemissionsofaround424–617milliontonnesofcarbondioxideequivalent

over2015–2035,ontopofreductionsthroughthefullimplementationofexistingtargets(EEA,2016a).

Measuresbeyondwasterecycling,however,couldfurtherreducegreenhousegasemissions.

Ithasbeenestimated,forexample,that,inthefabricatedmetalsandhospitalityandfoodservices

sectors,resourceefficiencymeasurescouldavoidaround100–200milliontonnesofcarbondioxide

equivalentemissionsannually(AMECEnvironment&InfrastructureandBioIntelligenceService,2014).

Keepingmaterialsintheloopwouldalsoenhanceecosystemresilienceandtheenvironmentalimpacts

ofminingrawmaterials,oftenoutsideEurope.Thestudyofthepotentialinthefood,mobilityand

built environment systemsmentionedaboveestimatesaprospective reduction ingreenhousegas

emissionsof48%by2030and83%by2050comparedwith2012levels,andareductioninexternality

costsofup toEUR500millionby2030 (EMFandMcKinseyCenter forBusinessandEnvironment,

2015).

Economic benefits. A circular economy could provide significant cost savings for various

industries. For example, implementation of circular economy approaches in the manufacture of

complexdurablegoodswithmediumlifespansisestimatedtoresultinnetmaterialcostsavingsof

USD340–630billionperyearintheEUalone,roughly12–23%ofcurrentmaterialinputcostsinthese

sectors (Ellen MacArthur, 2012). For certain consumer goods — food, beverages, textiles and

packaging—aglobalpotentialofUSD700billionperyearinmaterialsavingsisestimated,that is,

about20%ofthematerialinputcostsinthesesectors(EllenMacArthurFoundation,2013).

Another study estimates the annual net benefits for EU-27 businesses of implementing

resource-efficiency/CE measures such as waste prevention, the recovery of materials, changing

procurementpracticesandthere-designofproducts.TheserangefromEUR245billiontoEUR604

billion,representinganaverageof3–8%ofannualturnover(AMECEnvironment&Infrastructureand

BioIntelligenceService,2014).

Socialbenefits.Socialinnovationassociatedwithsharing,eco-design,reuseandrecyclingcan

beexpectedtoresultinmoresustainableconsumerbehaviour,whilecontributingtohumanhealth.

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ACEisalsoexpectedtocreatejobopportunities. Indeed,accordingtotheEuropeanCommission's

impactassessmentonalegislativeproposalonwaste,increasedrecyclingtargets,thesimplification

of legislation, improved monitoring and the diffusion of best practice to achieve increased

recycling/preparingforreusetargetsformunicipalandpackagingwaste,incombinationwithreduced

landfillofwaste,couldresultinthecreationofupto178,000newjobsby2030(EEA,2016a).

The development of fully circular value chains might have significantly greater potential.

Estimates for theUnitedKingdomsuggest thataround500,000 jobscouldbecreated inacircular

economy.Whilesomesectorsmaydiminish,anetcreationofjobsby2030isprojected(Morgan&

Mitchell,2015).Thisstudyalsodemonstrateshowdifferingcircularstrategiescouldgeneratedifferent

typesofjobs.Forexample,labour-intensivestrategies,suchasthepreparationofproductsforreuse

orrecycling,wouldyieldlow-skilledjobs;medium-skilledjobsareexpectedtobecreatedinclosed-

looprecyclingandhigh-skilledjobsinbio-refining.

Moreover, ameta-study reviewing65 studies on employment and theCE found generally

positiveemploymenteffectsasaresultofmovingtowardsacirculareconomy.Thestudiesmainly

addressed energy and material savings; studies on employment effects of sharing, recycling and

furtherapproachesarescarce(Horbachetal.,2015;citedbyEEA,2016a).

3 ReviewingtheEuropeanCommission’sCEPackage7(2.12.2015)

Closing the loop - An EU action plan for the Circular Economy (COM (2015) 614 final) (European

Commission,2015)istheEuropeanCommission’smostcurrentCEpolicy.Itspurposeistoguidethe

EU and its states to transform the economy so as to “generate new and sustainable competitive

advantagesforEurope.”

In December 2014, the European Commission decided to withdraw a pending legislative

proposal on waste, as part of the political discontinuity exercise carried out for the first Work

Programme of the Juncker Commission.8The Commission committed at that time to use its new

horizontalworkingmethodstopresentanewpackagebytheendof2015whichwouldcoverthefull

economiccycle,not justwastereductiontargets,drawingontheexpertiseofall theCommission's

services.

Thelegislativeproposalsadoptedwithintheactionplanfocusonchangesinconsumptionand

productionbehaviorsviareuseandrecycling,aswellaswastemanagementtoreducelandfilling,in

7TheCEPackageconsistsofanactionplanaswellasanAnnexandfourlegislativeproposalsonwaste.8 TheEuropean Commission’s Investment Plan for Europe is an ambitious infrastructure investment programme firstannouncedbyEuropeanCommissionPresidentJean-ClaudeJunckerinNovember2014; itsgoalwastounlockpublicandprivateinvestmentsinthe“realeconomy”ofatleast€315billionoverathree-yearfiscalperiod(Jan.2015–Dec.2017).

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ordertoclosetheloopofproductlifecycleswhilesupportingtheCEineachstepofthevaluechain

(European Commission, 2015). Further measures are proposed to make implementation clear,

promoteeconomicincentivesandimproveextendedproducerresponsibilityschemes.Thefollowing

sixsectionsbrieflysummarizeitsgoalsofthisplanandtheactivitiesthatfulfillthesegoals.

3.1 ProductionAnimportantEuropeanCommissiongoalistoimprovethedurability,reparabilityandrecyclabilityof

products.ThisistobeachievedviatheEcodesigndirective9aswellasincentiveswhichdifferentiate

thefinancialcontributionpaidbyproducersunderextendedproducerresponsibilityschemesonthe

basisoftheend-of-lifecostsoftheirproducts.Moreover,theCommissionwillexamineactionsfora

more coherent policy framework for the different strands of work on EU product policy in their

contributiontotheCE.

Concurrently,theEuropeanCommissionemphasizesmoreefficientproductionprocessesto

reduce waste and capitalize on business opportunities. Thus, the Commission promotes the

sustainable sourcing of raw material globally via dialogues, partnerships and its trade 10 and

developmentpolicy.Moreover,theCommissionwillincludeguidanceonbestwastemanagementand

resourceefficiencypracticesinindustrialsectorsinBestAvailableTechniquesreferencedocuments

(BREFs).TohelpSMEs(smallandmedium-sizedenterprises)benefitfromthebusinessopportunities

connected to increased resource efficiency the Commission is creating the European Resource

EfficiencyExcellenceCentre.11Finally,theCommissionisproposing(initsrevisedlegislativeproposals

onwaste)toclarifyrulesonby-productstofacilitateindustrialsymbiosisandhelpcreateacommon

understandingoftherulesonby-products.

3.2 ConsumptionTheCommissionisworkingwithstakeholderstomakegreenclaimsmoretrustworthy,andwillensure

betterenforcementoftherulesinplace,includingthroughupdatedguidanceonunfaircommercial

practices. To do this it is testing the Product Environmental Footprint (COM/2013/0196 final)

(European Commission, 2013), a methodology for measuring environmental performance, while

creatingthe(voluntary)EUEcolabel12,whichidentifiesproductswithareducedenvironmentalimpact.

Atthesametime,theCommissionproposedanimprovedlabellingsystemofenergy-relatedproducts

tohelpconsumerschoosethemostefficient,durableproducts.

9 The Ecodesign Directive (Directive 2009/125/EC) provides EU-wide rules for improving products’ environmentalperformance,whilepreventingthecreationoftradebarriersandimprovingproductquality.However,thefuturegoalistoexpand this directive to issues of durability, reparability and recyclability. See:http://ec.europa.eu/growth/industry/sustainability/ecodesign_en10See“Tradeandinvestmentforall"strategyadopted10.2015.11See:http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52014DC044012See:http://ec.europa.eu/environment/ecolabel/

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Price is a key factor affecting purchasing both in the value chain and for final consumers.

MemberStatesarethereforeencouragedtoprovideincentivestoensurethatproductpricesbetter

reflectenvironmentalcosts.Aspectsrelatingtoguarantees(suchasthelegalguaranteeperiod)are

also an important part of the consumption puzzle, as they protect consumers against defective

productsandcontributetoproducts'durabilityandreparability,preventingwaste.Atwo-yearlegal

guaranteeexistsintheEUforphysicalgoods,butproblemsexistwithitsimplementation.

Product lifetime can be extended through reuse and repair, hence avoidingwastage. The

reuseandrepairssectorsare labour-intensiveandthereforecontributetotheEU's jobsandsocial

agenda.Currently,certainproductscannotberepairedbecauseof theirdesign,or lackofpartsor

repairinformation.FutureworkonEcodesignwillremedytheseproblems.

Plannedobsolescencepracticescanalsolimitusefullifetime.Throughanindependenttesting

programme,theCommissionwill initiateworktodetectsuchpracticesandwaystoaddressthem.

Additionally,therevisedlegislativeproposalsonwasteincludesnewprovisionstoboostpreparation

forreuseactivities.

Reductionofhouseholdwasteisoftenmoreeffectiveatthenationalandlocallevels,where

itistargetedviaawarenesscampaignsandincentives.13TheCommissionpromoteswasteprevention

andreusethroughtheexchangeofinformationandbestpracticesandbyprovidingCohesionPolicy

fundingforprojectsatlocalandregionallevel.

InnovativeformsofconsumptioncanalsosupportthedevelopmentoftheCEviathe“sharing”

economy,consumingservicesratherthanproducts,orusing ITordigitalplatforms(Seealso:Ellen

MacArthur(2015));thesenewformsofconsumptionareoftendevelopedbybusinessesorcitizens,

andpromotedatnational,regionalandlocallevel.TheCommissionsupportsthesenewbusinessand

consumptionmodelsthroughHorizon2020andthroughCohesionPolicyfunding.

Publicprocurementaccounts for a largeproportionof EUconsumption (nearly20%ofEU

GDP). The Commissionwill encourage this role through its actions onGreen Public Procurement,

wherecriteriaaredevelopedatEUlevelandthenusedvoluntarilybypublicauthorities.

3.3 WastemanagementWastemanagementpolicy iscrucial fortheCEas itdetermineshowtheEUwastehierarchy(from

prevention to reuse to landfill) is actualized, so that the best overall environmental outcome is

obtained.Toachievehighlevelsofmaterialrecovery(aprimaryCEgoal)forallwaste,itisessentialto

send long-term signals to the public and private sectors, while establishing the right enabling

conditionswithintheEU,includingconsistentenforcementofexistinglegislation.

13Suchasincentivesystemsformunicipalitiesor"pay-as-you-throw"schemes,wherehouseholds(forexample)payaccordingtotheamountofnon-recyclablewastethattheythrowaway.

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Today,only40%ofEUhouseholdwasteisrecycled.TheCommissionisputtingforwardnew

waste legislation to provide guidance for increased recycling and reduced landfilling, which also

accountfordifferencesbetweenMemberStates.

Toincreasethelevelofhigh-qualityrecycling,improvementsareneededinwastecollection

andsortingsystems.Thesesystemsareoftenfinanced,inpart,byextendedproducerresponsibility

schemes, in which manufacturers partially pay for collection and treatment. To improve these

schemes,theCommissionisproposingminimumconditionsontransparencyandcost-efficiency.The

wasteproposalswillalsoaddressissuesrelatedtocalculatingrecyclingratestoensurehigh-quality

statisticsacrosstheEU,whileencouraginghigherandmoreeffectiverecyclingrates.

The new proposals also address barriers to higher recycling rates such as limited

administrative capacity, lack of investment and insufficient use of economic instruments; these

barriers can be overcome via time extensions for Member States, as well as providing technical

assistanceanddisseminatingbestpracticestoensureprogress.

EUCohesionPolicyisessentialforclosingtheinvestmentgapforimprovedwastetreatment.

Forthecurrent(2014-2020)financingprogramme,ex-anteconditionsmustbemettoensurethatnew

investmentsinthewastesectorareinlinewithwastemanagementplansdesignedbyMemberStates

tomeetrecyclingtargets.Thismeansthatfundingfornewlandfillandnewfacilitiesforthetreatment

ofwaste(suchasincineration)willbegrantedonlyinlimitedcases.TheCommissionhasforecasted

that€5.5billionwillbeneededforwastemanagementinthecurrentfinancingprogramme.

Anotherbarriertohigherrecyclingratesistheillegaltransportofwaste,bothwithintheEU

andtonon-EUcountries.Arevisedregulationonwasteshipmentwasadoptedin2014facilitatingthe

detectionofillegalshipments.

Whenwastecannotbepreventedorrecycled,recoveringitsenergycontentisinmostcases

preferabletolandfillingit;‘wastetoenergy’playsanessentialrolewithEUenergyandclimatepolicy.

TheCommissionwillexaminehowtooptimizethisrole,withoutcompromisingthedesireforhigher

reuseandrecyclingrates.Tothatend,theCommissionwilladopta'wastetoenergy'initiativeinthe

frameworkoftheEnergyUnion.

3.4 BoostingthemarketforsecondaryrawmaterialsInaCE,recycledmaterialsareloopedbackas“secondaryrawmaterials”(SRMs)whichincreasesthe

securityofsupplyandcanalsobetradedlikeprimarymaterials.Currently,suchmaterialsmakeupa

smallproportionoftherawmaterialsusedintheEU.Severalbarriers impedethe(growing)useof

thesematerials; one such barrier is quality. In the absence of EU standards, it can be difficult to

ascertainimpuritylevelsorsuitabilityforhigh-graderecycling.TheCommissionwillthereforelaunch

workonEU-widequalitystandardsforSRMsinconsultationwithdifferentindustries.Moreover,itwill

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establish rules clarifying when an SRM should no longer be legally considered 'waste', providing

operatorswithalevelplayingfield.

So too, it is important toestablishquality standards for recyclednutrients,as theycanbe

returnedtosoilsasfertilizers (reducingtheneedfor limitedmineral-basedalternatives).However,

theiruseisalsohinderedbydifferingstandardsacrosstheEU.Therefore,theCommissionwillpropose

arevisionofEUregulationstostimulatethesustainabledevelopmentofthemarket.

Water scarcity has worsened in the EU in recent decades. This calls for not only water-

efficiencymeasures, but the reuse of treatedwastewater,which is still an under-usedmeans for

increasingsupply.Waterreuseinagriculturealsocontributestonutrientsrecyclingbysubstitutionof

solidfertilisers.TheCommissionwilltakelegislativeactionstopromotereusingtreatedwastewater.

AfurtherissueforexpandingtheSRMmarketconcernschemicals.Anincreasingnumberof

chemicals have become environmental concerns and are subject to restrictions. However, some

chemicalsarepresentinproductssoldbeforetherestrictionsapplied,andthesearesometimesfound

inrecyclingstreams.Theyarealsosometimeshardtoremove,creatingbarriersforsmallrecyclers.

Thepromotionofnon-toxicmaterialsandthebettertrackingofchemicalswillaidtheuptakeofSRMs.

Itisalsoimportanttofacilitatethecross-bordercirculationofSRMstoensurethattheycan

betradedacrosstheEU.Actioninthisareawillincludesimplifyingcross-borderformalities.Moreover,

toimprovetheavailabilityofdataonSRMstheCommissionwillimprovetherecentlyinitiatedRaw

Materials Information System and support EU-wide research on raw materials flows, as well as

improvedatareportingonwasteshipments.

Akeyfactorincreatingadynamicmarketforsecondaryrawmaterialsissufficientdemand,

drivenbytheuseofrecycledmaterialsinproductsandinfrastructure.Theprivatesectorisessential

in creating demand, aswell as shaping supply chains; a number of economic actors have already

committedthemselvestoensuringacertainlevelofrecycledcontentintheirproducts.Thisshouldbe

encouraged, given that market-driven initiatives are a fast way to deliver tangible results. Public

authoritiescanalsocontributetothedemandforrecycledmaterialsthroughprocurementpolicies.

3.5 Innovation,investment,andotherhorizontalmeasuresInnovationandinvestmentarethekeyparametersunderwhichtheCEcanflourishastheydirectly

contributetothecompetitivenessandmodernizationofEUindustry.TheHorizon2020workprogram

2016-2017includes:Industry2020inthecirculareconomy,aprogramgrantingover€650millionfor

innovativedemonstrativeprojectssupportingCEprojectsandnewbusinessmodels.Italsoexploresa

pilotapproachtohelpinnovatorsfacingregulatorybarriersbysettingupagreementswithprivateand

publicstakeholders.ThisexpandsupontheexistingbudgetforHorizon2020 implementedin2014-

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2015.14 In turn these efforts will be supplemented by the Eco-innovation action plan which has

earmarked nearly €80 billion over the period 2014-2020 for a series of environmental initiatives

includinginnovationandresearch15.

Developing the CE will also require public and private sources of financing to scale-up

improvedtechnologies,developinfrastructureandincreasecooperationbetweenactorsinthevalue

chain.TheEUhasaseriesoffundingprogramsearmarkedfortheseefforts.

Concomitantly, the CE requires a qualified workforce with new skills; consequently, the

Commission,basedonitsGreenEmploymentInitiative(COM(2014)446)isanalyzingneeds,whichwill

leadtothedevelopmentofsuchskills,aswellastosupportjob-creation.Itisalsoactingthroughits

forthcomingNewSkillsAgendaforEurope.

SMEs face challenges, such as access to funding, and the difficulty participating in the CE

economy(ifitisnottheircore).TheCommissionsupportsthesecompaniesbyanalyzingthebarriers

theyencounterwhileencouraginginnovationacrosssectorsandregions.

Finally, on theglobalplane, theCommissionwill be cooperating closelywith international

organizationsandotherpartnerstoreachthe2030SustainableDevelopmentGoals.

Asanaddendumtothe2015EUActionplanoninvestmentinthecirculareconomy,themost

recentreportofEllenMacArthurFoundation,SystemiqandSUNInstitute(2017)discussestennext-

waveCEinvestment“themes”dividedintothreevaluechains,mobility(transportationsystems),food

andthebuiltenvironment,thatcouldbefulfilledthrough2025withinvestmentsof€320billion.As

the previous report “Growth Within” (Ellen MacArthur, 2015) pointed out these value chains -

representing60percentoftheaverageEUhouseholdbudgetand80percentofresourceconsumption

-couldcontributesignificantly toEurope’soveralleconomicperformanceandwelfarebyadapting

themtoaCEsystem.AlthoughtheirresearchshowsthatthemainbarriersforinitialscalingofCircular

EconomyBusinessModels(CEBM)donotemanatefromthepolicyside,therearestillmanycomplex

policiesthatincrease(realorperceived)complexityandcost,andthereforeholdbacktheprogressof

circularmodels.EllenMacArthurFoundation,SystemiqandSUNInstitute(2017)haveidentifiedfour

(outoftheteninvestment)themesdistributedamongthethreevaluechainsthatwouldbenefitfrom

changingpolicy/regulation:

1. Mobility

a. Remanufacturing car parts: Policies preventing use of remanufactured parts; for

example,theECDirectivesrelatedtoend-of-lifevehicles,electronicequipment,and

14See:http://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/main/h2020-wp1415-climate_en.pdf15See:https://ec.europa.eu/environment/ecoap/about-action-plan/union-funding-programmes

12


thedisposalofhazardouswastefocusprimarilyonrecyclingandhavemixedeffects

onremanufacturingactivities

2. Food:

a. Farming through indoor urban farms: Urban permits and zoning laws preventing

constructionofnewindoorfarms

b. Developingnextwaveproteinsources:Restrictionscurrentlyimposedbyhumanfood

chainlegislation

3. BuiltEnvironment:

a. Closing Building loops: Legislation preventing construction players from certifying

non-virgininputsandusingsomeassociatedmachinery.

Moreover,EllenMacArthurFoundation,SystemiqandSUN Institute (2017)have identified

fouroverarchingpolicyissuesthatcancatalyzeactioninalloftheteninvestmentthemes:

1.Settingdirectionandshowingcommitment.Oneofthesuccessfactorsofthecleanenergy

revolutionisitsclarityofdirection;fewcompanyexecutives,researchersorpolicymakersdoubtthat

theEUandtheworldareheading towardsacleanenergysystem.Therefore, they investbusiness

developmentbasedonthisbelief,furtherreducingcostandincreasingattractiveness,andensuring

thedrivetowardacleanenergysystem.However,thereisnosuchclarityformostofthetenthemes.

Asaresult,toomanyinvestorsarewaitingforatrendtodevelop(suchaslowerproductioncosts);so,

providingdirectionisanessentialpolicytask,suchasprovidingstrategies,publicinvestments,ortrade

agreements.

OnecrucialcaseistoendeavortoleveltheplayingfieldforCEBM.Repeatedlywhenanalyzing

circular business cases, thehistoric bias for linearmodels becomesobvious: for example, primary

materialscanbeeasilytradedinternationally,whilesubstantialhurdlesexisttotradesecondaryones.

Moreover, labour taxes are ten times higher than resource taxes even though labour should be

maximizedwhileresourceuseminimized.Finally,externalities,suchascongestionandenvironmental

damagesarenotpriced.

2. Removing policy barriers.Many of the identified themes require legislative changes to

become investable at scale;most often, these consist of removing policy barriers. Further, these

barriers currently exist tomanage consumerhealthbut in the contextof adoptionofCEbusiness

innovation, theserisksarecontrollable.Forexample,qualityandsafetystandardscouldbeset for

remanufactured parts or food proteins. Depending on the specific legislation, the changemay be

requiredatEUorMemberStatelevel.16

16TheEUInnovationDealsareanexampleofhowtheEuropeanCommissionapproachesthelegislativechangesrequiredtowardsacirculareconomy;see:https://ec.europa.eu/research/innovation-deals/index.cfm

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3.Creatingplatformsfordialogue,cooperation,andawarenesscreation.Successfulexamples

ofcircularbusinessmodelsdemonstratetheneedformultiplestakeholdersalongthevaluechainto

change(partof)thewaytheyexecutetheirbusinessmodel.Forexample,inthecaseofloopingwaste

streams,newsupplierswouldhavetobecontractedtoproviderequiredwastestreams,whilethe

stakeholderscreatingthewastewouldneedtobeincentivisedtoseparateandcollectthewastein

therequiredvolumesandquality.Moreover,customerswouldhavetobecomeawareofthebenefits

in order to shift fromonly accepting newproducts to adding productsmade from the end-of-life

streams.Allofthisrequiresawarenesscreationandnegotiationsbetweendifferenteconomicactors.

Thepublicsectorcouldplayanactiverolebysettingupplatformswiththerightsetofplayers

tofacilitatediscussions.AsuccessfulexampleofthiswastheEuropeanResourceEfficiencyPlatform

(established2012–14)whichwasvitalforcreatingtheEuropeanCommission’sfirstCEpackageinJune

2014.Itservedasaneffectivemechanismtogatherinformationfromrelevantstakeholders,aswell

asdevelopsolutions.Consequently,similarplatformsmightbesetupformobility,food,andthebuilt

environment.Thisshouldbedoneforthemeswherethepublicsectorplaysalargeifnotleadingrole

aswellasthosewheretheprivatesectorismorelikelytolead.17

4. Focus public procurement, public circular economy investments, and financial support

towardsthetenthemes.Someoftheinvestmentthemesrequiretechnologyinnovations.Asprivate

capitalisnotalwayssetuptoinvestintheperceivedriskleveloftheseinnovations,focusedpublic

sector supportwouldbeneeded to de-risk such innovations for theprivate sector to provide the

neededfunding.AlthoughtheCEbudgetwithinHorizon2020iscurrentlyalreadybeingdeployedin

thisarea,itdoesnotyetcovertheidentifiedthemesandunderlyinginnovationsfully.

In addition to innovation funding, the public sector has been supporting lower risk

investmentsatlargerscalewithacentralfocusoninfrastructure.Forexample,EuropeanInvestment

Bank (EIB)hasbeen investing€14.5billionover the last twoyears throughtheEuropeanFund for

Strategic Investmentsmostly in infrastructure projects, however less than 10% of this is going to

circulareconomy-relatedinvestments.Asthecircularinvestmentthemesidentifiedinthisreporthave

large infrastructure components, allocating a budget within existing funds for them would shift

investmentstowardscircularopportunitieswhileprovidingnewgrowthopportunitiestothosefunds,

butalso,atthesametime,shiftinvestmentstowardscircularopportunities.Investmentfundsatthe

MemberStatelevelcouldwellprovideanadditionalsupplyofpubliccapitaltowardstheinvestments

themes.Lastly,reformstoexistingsubsidyframeworksshouldbeconsidered,mainlyintheareaof

shiftinglinearagriculturalpracticestowardsmorecircularones,whilefiscalincentivesshouldalsobe

gearedtowardscircularbusinessmodels.

17Anexampleofaprivatesector-ledinitiativeistheNewPlasticsEconomy:http://newplasticseconomy.org/

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3.6 MonitoringInordertomonitortheeffectivenessofCEactionattheEUandnationallevels,itisimportanttohave

asetofreliable indicators.Thus,theCommissionwillworkcloselywiththeEuropeanEnvironment

AgencyandmemberstatestoproposeaneffectivemonitoringframeworkfortheCE.Thisframework

will complement data already collected by Eurostat, as well as indicators found in the Resource

Efficiency Scoreboardand the +Raw Materials Scoreboard. This framework will be published in

connectionwiththeCommission'sreportingontheSustainableDevelopmentGoals.TheCommission

willreportonprogressinimplementingitsactionplanfiveyearsafteritsadoption.

Implementationofthe2015EUactionplan:AreportbytheEuropeanCommission

TheCommissionputforwardasetofkeyinitiativesin2016tosupporttheCE.Theseinitiativescover

thefullvaluechainandarepresentedbelow inchronologicalorderof theircompletion(European

Commission,2017).

Legislativeproposalononlinesalesofgoods(9.12.2015).18Thisproposalaimstostrengthen

guaranteesforconsumerstobetterprotectthemagainstdefectiveproductsandcontributestothe

durabilityandreparabilityofproductssoastoreducewaste.Undertheproposal,incaseofadefective

productsoldonline,duringthefirsttwoyearsfromthetimeofdelivery,thesellermustprovethatno

faultexistedatthattime(currentrules,provideforonlya6-monthperiod).Moreover,theproposal

providesatwo-year legalguaranteeforsecondhandgoodsandpromotesahierarchyofremedies

whererepairismorestronglypromoted.

Legislativeproposalonfertilisers(17.3.2016).19Thisproposal(whichwasnotdetailedinthe

2015actionplan)createsasinglemarketforfertilisersmadefromsecondaryrawmaterials,thereby

transforming a waste management problem into economic opportunities. The draft regulation

provides rules for freemovementofallCE-marked fertilisingproductsacross theEU.Basedonan

impactassessmentaccompanyingthisproposal20anestimated120,000jobscouldbecreatedthanks

torecyclingofbio-wasteinorganic-basedfertilisers.

LaunchoftheInnovationDeals(26.5.2016).TheCommissionissuedacall forexpressionof

interest for Innovationdeals foracirculareconomy21; thecall constitutesapilotapproach tohelp

innovatorsfacingregulatoryobstacles.IftheexistenceofanEUlegislativebarrierisconfirmed,the

Commissionwillconsiderlaunchingafurtherassessmentoftheimpactofthisregulation.22

Ecodesign(30.11.2016).TheCommissionhasdecidedtofocusitsEcodesigneffortsonproduct

groups with the highest potential in terms of energy and resource savings while reinforcing the

18Seehttp://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2015%3A635%3AFIN19See:https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-157-EN-F1-1.PDF20See:http://ec.europa.eu/DocsRoom/documents/1594921https://ec.europa.eu/research/innovation-deals/index.cfm?pg=home2232expressionsofinterestfrom14differentMemberStatesweresubmitted.

15


evidencebaseforregulatoryaction.ThisresultedintheadoptionoftheEcodesignWorkingPlan2016-

2019aspartoftheCleanEnergyforAllEuropeanspackage.23

EcodesigncanalsohaveanimportantcontributionincreatingagreaterCE.Whileecodesign

measures have so farmainly focused on energy efficiency, in this working plan, the Commission

undertook to also explore the possibility to establish requirements relevant for the CE such as

durability,reparability,upgradeability,easeofreuseandrecycling.

Immediately after adopting the CE Action Plan, the Commission also asked the European

standardisationorganisationstodevelopgenericstandardsondurability,reusabilityandrecyclability

ofspecificproducts.Manyconsumerandindustrialproductscouldbemademoredurable,reusable

andrecyclableifappropriatemetricsandstandardswereinplace.ThethreeEuropeanstandardisation

organisationshaveacceptedtheCommission’srequestandhavesubmittedajointworkingplanthat

willdeveloparound20genericstandards.

Foodwaste(throughout2016).FoodwasteisakeyareaintheCEthatshouldbeaddressed

along the entire value chain. The Commission launched a stakeholder’s platform on food waste

prevention,madeprogressindevelopinganEUmethodologytomeasurefoodwaste,andprepared

guidelinestofacilitatefooddonationsandtheuseofformerfoodstuffasfeed.

On1.8.2016,theCommissionestablishedtheEUPlatformonFoodLossesandFoodWaste.

TheplatformwillbethekeyforumintakingactionsneededtoachievetheSustainableDevelopment

Goalscommitmenttohalvefoodwastepercapitaby2030.

In2016,theCommissionworkedonpreparingguidelines(tobepublishedin2017)tofacilitate

fooddonation.TheguidelinesareintendedtoprovideamoreconsistentinterpretationbyMember

StatesregulatoryauthoritiesofEUrulesapplyingtofoodredistribution.Itaimstoaddressbarriers,

forbothdonorsandreceivers,fortheredistributionofsafe,surplusfood.

TheCommissionisalsocreatingguidelinesforuseofformerfoodstuffasfeed,withtheaim

to valorise the nutrients in former foodstuffs through their safe-use in animal nutrition. This

substitutescerealsandoilseedintheanimals’dietswhilefreeinglandfortheproductionoffoodand

reducingtheneedforimportedfeed.

Waste-To-Energy(1.2017).TheCommissionisadoptingaCommunicationonwaste-to-energy

processesandtheirroleintheCE(COM(2017)34). Itsgoal istoensurethattherecoveryofenergy

fromwasteintheEUsupportstheobjectivesoftheCEactionplanwhilebeingguidedbytheEUwaste

hierarchy. The communication also examines how the role of waste-to-energy processes can be

optimisedtomeettheobjectivessetoutintheEnergyUnionStrategyandintheParisAgreement.

23COM(2016)773final.

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ProposaltoamendtheDirectiveontherestrictionoftheuseofcertainhazardoussubstances

inelectricalandelectronicequipment(1.2017).Alongwiththisreport,theCommissionisadoptinga

proposaltomakeatargetedamendmenttotheDirectiverestrictingtheuseofhazardoussubstances

in electrical equipment (RoHS Directive). The directive, by triggering the substitution of certain

hazardoussubstancesinelectricalequipment,enhancesthepossibilityandprofitabilityofrecycling

wasteofthatequipment.

Enablingoperatorstoprolongtheuseofelectricalequipmentwillpostponetheirend-of-life

thusavoidingadditionalgenerationofhazardouswaste.Itisestimatedthatthemeasurewillprevent

thecreationofmorethan3,000tonnesofhazardouswasteperyearintheEU.

TheproposaltoamendtheRoHSDirectivewill:

• enablesecondarymarketoperationsforcertainelectricalequipment

• enablerepairwithsparepartsofcertainelectricalequipmentplacedonthemarketbefore

22.7.2019.

Fullyenablingsecondarymarketoperationsandincreasingsparepartavailabilitywillhavea

positiveeconomicimpactbybringingmarketopportunitiestotherepairindustries.Itwillreducecosts

andadministrativeburdenforSMEsandpublicauthorities.

To facilitate preparation for the environmentally sound treatment of waste electrical

equipment, the Commission also initiated dialogues between manufacturers and recyclers of

electronic products to improve the exchange of information about preparation for reuse and

treatmentofnewequipment.

Theplatformtosupportthefinancingofcirculareconomy(1.2017).Togetherwiththisreport,

a platform is launched, bringing together the Commission, the European Investment Bank (EIB),

financial market participants and businesses to increase awareness of the CE business logic and

improve the uptake of CE projects by investors.While the business case for the CE is clear, this

messagestillhastoreachagoodpartofbusinessesandfinancialsectorintheEU.Theplatformhasa

three-pillarstructure:

• The coordination and awareness raising pillar will share best practices amongst project

promoters and stakeholders. It will analyse the characteristics of CE projects and their

particular financingneeds,adviceon improvingbankability,aswellascoordinateactivities

regardingfinancing.Adedicatedexpertgroupwillbecreatedinthiscontext.

• TheadvisorypillarwillbeusedtodevelopCEprojectsandtoimprovebankabilityprospects.

• The financing pillar will explore whether a dedicated financing instrument for circular

economyprojectsisneeded.

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Inaddition to thekey initiatives listedabove,anumberofother importantactionsby the

Commission,listedbelow,havehelpedtomainstreamtheCEintothefulllifecycleofproducts,with

tools suchasbestpractices, procurement, information to consumers and funding schemes. These

toolsareessentialforensuringthattheCEistakenupbyallrelevantactorsintheeconomytobecome

standardpractice.

GuidanceoncirculareconomyintoBREFsforseveralindustrialsectors.TheCommissionhas

integrated CE aspects into the Best Available Techniques Reference Documents24 (BREFs) which

MemberStateshavetoreflectwhenissuingpermitsforindustrialinstallations.Thiswillhelptoreduce

wastegeneration,boostrecyclingandreduceresourceuse,thusbringingfurthersustainabilityand

competitiveness. In addition,novel techniques that integrate aspects relevant toCEare identified

throughBREFs,thuspromotinginnovation.

GreenPublicProcurement(GPP).In2016,theCommissionpublishednewGPPcriteriafora

hostofsectors.Thesecanbeusedbypublicauthoritiesonavoluntarybasis,andincluderequirements

relevanttotheCE.AspublicprocurementaccountsforalargeproportionofEuropeanconsumption,

theinclusionofrequirementsrelatedtocircularityinpublicauthorities’purchasingwillplayakeyrole

inthetransitiontowardsaCE.

UpdatedGuidanceonUnfairCommercialPracticesDirective-Actiononenvironmentalclaims

(25.5.2016).TheCommissionhas adopted a revised guidance for theUnfair Commercial Practices

Directive,which includes specific elements tomake green claimsmore trustworthy. The guidance

addressesfalse,unintelligible,orambiguousinformation,includingclaimsrelatedtotheCE.Itwillaid

consumers so that they are protected from misleading commercial information which result in

consumerslosingconfidenceinlabelsandincompaniesbeingdiscouragedfrommakingtruthfuland

relevant claims. The revised guidance integrates the input from national authorities, European

businessorganisations,consumerassociationsandenvironmentalNGOs.

Stepping up enforcement of the revised Waste Shipment Regulation (28.7.2016). The

Commissionadoptedanactsettingoutapreliminarycorrelationtablebetweencustomsandwaste

codes.ThisnewtoolwillhelpcustomsofficialsidentifywastecrossingEUbordersillegally,forinstance

labelledassecond-handgoods.ItwillstrengthentheenforcementoftheWasteShipmentRegulation

andwillhelptopreventtheleakageofvaluablerawmaterialsoutoftheEU.

Good practices inwaste collection systems (Throughout 2016). The Commission has been

promotinggoodpracticesforseparatewastecollectionacrossEUMemberStates.TheCommission

hasreviewedthestateofimplementationofseparatecollectionintheEUMemberStates.Thereview

ledtoasetofrecommendationsaddressingdifferentlevelsofdecision-making.Therecommendations

24http://eippcb.jrc.ec.europa.eu/reference/

18


have been discussed with stakeholders and EU Member States in a conference (29.1.2016).

Additionally,Horizon2020issupportingthisworkstreambyfinancinganumberofconcreteprojects

inthisarea.

Waterreuse(6.2016).GuidelineswereissuedundertheCommonImplementationStrategy

fortheWaterFrameworkDirectivewiththeaimtobetterintegratewaterreuseinwaterplanning.25

AswaterscarcityhasworsenedinsomepartsoftheEU,thereuseoftreatedwastewaterinsafeand

cost-effectiveconditionsisavaluableandunder-usedmeansofincreasingsupply.Facilitatingwater

reuseinagriculturewillalsocontributetorecyclingofnutrientsbysubstitutionofsolidfertilisers.

Construction and demolition (9.11.2016). The Commission proposed an industry-wide

voluntaryprotocolformanagingconstructionwaste.Theprotocolwillincreasetrustinthequalityof

recycledmaterialsandencouragetheiruseinconstruction.(Constructionwasteisthelargestwaste

stream in the EU so theWaste FrameworkDirective (2008/98/EC) establishes a target of 70%of

constructionwastetoberecoveredby2020).

Biomassandbio-basedproducts(30.11.2016).InitsrecastoftheRenewableEnergyDirective

as part of the package on Clean Energy for all Europeans the Commission adopted sustainability

criteria for all bioenergy uses. In order to limit pressure on biomass resources, the Commission

proposedthatonlyefficientconversionofbiomasstoelectricityshouldreceivepublicsupport.

Support for circular economy through Cohesion policy funds and smart specialisation

strategies (Throughout,2016).TheCommissionundertooktargetedoutreachactivitiestoassistEU

Member States in the uptake of cohesion policy funds for the CE. Many regions have identified

prioritiesrelatedtotheCEintheirSmartSpecialisationStrategies,whichguidetheirinvestmentsin

innovationthroughcohesionpolicy.In2016,newthematicsmartspecialisationplatformshavebeen

launchedaidingcooperationwithothersalongvariousvaluechains.

Fortwodecades,EUcohesionpolicyhasprovidedpolicyimplementationsupportrelevantto

theCE.26In the current fundingperiod (2014-2020), ex-ante conditions for fundingare inplace to

ensurethatnewinvestmentsinthewastesectorareconsistentwiththewastemanagementplansof

EUMemberStatestomeetrecyclingtargets.TheEUsupportforthe2014-2020periodforinnovation,

SMEs,lowcarbon-economyandenvironmentalprotectionamountstoEUR150billion.

TheCircularOceanINTERREGproject27dealswiththeproblemofmarinelitterintheNorthern

PeripheryandArcticregionbyfindingsolutionstore-useplasticwaste,suchasoldfishingnetsand

ropes,andtodriveeco-innovation.

25See:http://ec.europa.eu/environment/water/pdf/Guidelines_on_water_reuse.pdf26e.g.EUR6bnforwastemanagementin2007-1327See:http://www.circularocean.eu/

19


Other important funding measures for the CE include the EU's research and innovation

FrameworkProgrammeHorizon2020.Asanexample,thisprogramiscontributing€8.8milliontothe

RESYNTEXprojectthatwilldevelopCEbusinessmodelsforrecyclingwithinthechemicalandtextile

industry.Additionally,theLIFEprogrammehasbeensupportingCEprojectssince1992withover670

wastereduction,recycling,reuseprojectstotallingtoEUR1billionofEUfunding.Thiscontinuesunder

thenewLIFEprogramme2014-2020withEUR100millioninvestedinto80CEprojectsduringitsfirst

twoyears.

Research and Innovation: Industry 2020 in the circular economy. The Horizon 2020Work

Programme2016-17 invests€650million in"Industry2020 in thecirculareconomy"whichgrants

fundstodemonstratetheeconomicandenvironmentalfeasibilityoftheCE,andconcurrentlyastrong

impetustoEUre-industrialisation.

Additionalcallshavealsobeenlaunchedin2016,withintheframeworkofthePublicPrivate

Partnershipson"FactoriesoftheFuture","SustainableProcessIndustries"and"Bio-basedIndustries"

tohelpdevelopthenecessarykeyenablingtechnologiestosupportEUmanufacturingacrossabroad

rangeofsectors.

Technologyservicestoacceleratetheuptakeofadvancedmanufacturingforcleanproduction

bymanufacturingSMEs(8.11.2016).UnderHorizon2020,theCommissionpublishedacalltoestablish

aone-stopshopaccessforSMEstoaccesstechnologyservicesand/orfacilitiesinthefieldofadvanced

clean-production manufacturing. (Many SMEs lack the resources or competence to integrate

innovativeadvancedmanufacturingtechnologiesrelatedtocleanproduction).

The Commission has supported SMEs in their transition to the CE through the continued

implementationoftheGreenActionPlanforSMEs.EUfundshavealsosupportedthousandsofSMEs

inthepastdecadesforboostingresourceandenergyefficiencyandinnovationinmanufacturingand

production.ThisSMEsupportcontinuesfromthecohesionpolicyfundsinthe2014-2020period.A

EuropeanResourceEfficiencyExcellenceCentreforSMEsstartedoperatingin1.2017;itprovidesself-

assessment tools as well as networking opportunities to SMEs. A pilot project executed by the

Commissionwill provide practical capacity building to SMEs in the area of CE and eco-innovation

startingfrom2.2017.

Keyinitiativesfor2017.The2017CommissionWorkProgrammeconfirmsthefullcommitment

toensurethetimelyimplementationoftheCEActionPlan.In2017,theCommissionwillproposea

PlasticStrategytoimproveplasticrecyclingandreuse,toreduceplasticleakageintheenvironment

andtodecoupleplasticsproductionfromfossilfuels.

TheCommissionwillalsoputforwardadetailedanalysisofthelegal,technicalandpractical

problemsattheinterfaceofchemical,productandwastelegislationthatmayhinderthetransitionof

20


recycled materials into the productive economy. The objective is not only to promote non-toxic

materialcycles,butalsotoenhancetheuptakeofsecondaryrawmaterials.

The Commission will also come forward with a legislative proposal on minimum quality

requirements to promote the safe reuse of treated waste water, while ensuring the health and

environmentalsafetyofwaterreusepracticesandfreetradeoffoodproductsintheEU.

ThemonitoringframeworkassessingtheprogressofthecirculareconomyintheEUandits

MemberStateswillalsobepresentedin2017.

In2017,theimplementationoftheEcodesignworkingplanwillhaveanincreasedfocusonCE

andresourceefficiencybeyondenergyefficiency.

TheCommissionwill alsopublish the FitnessCheckonEUEcolabel andEMAS28in the first

quarterof2017.

2017willbeacrucialyeartodevelopapolicydialoguewithstakeholders.Tothisaim,the

CommissionandtheEuropeanEconomicandSocialCommitteelaunchedaCEstakeholders’platform,

at theoccasionofan inter-institutional stakeholders' conferenceon thecirculareconomyon9-10

March2017inBrussels.

4 AcritiqueoftheEU’sCEactionplan

TheEU’sCEpolicy(EuropeanCommission,2015)isabroadprogramthatistakingdefinitestepsto

createtheconditionsforimplementingtheCEinEuropeanmemberstates.Nonetheless,bothdeMan

andFriege(2016)andWiltsetal.(2016)raiseaseriesofcritiquesconcerningitspolicyemphases.

DeManandFriege’s(2016)firstcritiquestartswiththesuggestionthattheCE,aspresently

conceived,maybescientificallyflawed.TheCE’sbasicprinciplesarguethat(ultimately)allindustrial

processesshouldbedesignedsothattheirmaterialflowsarefullyconsistentwithnaturalcycles.29In

thatcase,theyareeitherfullyclosedordesignedsuchthatallmaterialflowsintotheenvironment

consistofnaturallyoccurring ‘nutrients’. If that is thecase, therewouldbenoreasontominimize

throughputandnoreasontoreducewaste.ThemostradicalversionofthisCEapproachisfoundin

the“cradle-to-cradle”(c2c)philosophy(Braungart&McDonough,2009),whichissummarizedbytwo

designprinciples:(1)“wasteequalsfood”,and(2)“usecurrentsolarincome”.Inthisversionofthe

CE,material flows should be designed such that allmaterialswill either be used in the economic

28TheEUEco-ManagementandAuditScheme(EMAS)isapremiummanagementinstrumentdevelopedbytheEuropeanCommissionforcompaniesandotherorganisationstoevaluate,report,andimprovetheirenvironmentalperformance.See:http://ec.europa.eu/environment/emas/index_en.htm29ThisisclosetotheCEdefinitionfoundinthereportscompiledbytheEllenMacArthurFoundation.

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processordispersedasnaturalnutrientsintotheenvironment.Thereisnowaste,only“food”forthe

nextindustrialprocess.Moreover,allenergyusedintheeconomyshouldcomefromthesun.

deMannandFriege(2016)raisethreescientificproblemswiththisCEapproach:

i. In reality,waste is almost never ‘food’. All production processes lead to downgrading

materials;sotocreatevaluefromsuchmaterials,energyisalwaysneeded.Tocreatea

waste-freeeconomywouldcosthugesumsofenergy.Creatingendlessmaterialcycles

withoutcontinuouslyaddingenergywouldopposetheSecondLawofThermodynamics;

thus, complete recycling is a thermodynamic impossibility as it would require infinite

quantitiesofenergyandinfinitetime.30

ii. The assumption that natural nutrients can be fed into the ecosphere without any

problems,regardlessoftheirquantityisproblematic;thiscannotbeguaranteed.There

arescaleproblemsevenwithnaturalnutrients(Reijnders,2008).

iii. Ourknowledgeconcerningharmfuleffectsofsubstanceflowsisgrowing.Inthepast(and

likelyintothefuture)theproductionofbeneficialproductsalmostalwaysresulted(and

will result) in the creation of wastes, used products and /or hazardous materials,

necessitatingtreatmentanddisposal.

De Man and Friege’s (2016) second critique emanates from the practical problem of

optimizingproductionsystemstocompletelyclosematerial loops,as it requiresa firmcouplingof

diverseprocessesofmaterialconversion,notonlywithinonecompany,butalsobetweenprocesses

indifferent companies and countries. This tends to createdependencies that couldbedifficult to

establish and manage in a market economy, where not only quantities processed and products

producedcontinuouslyvarywithmarketdemand,butalsocompaniesappearanddisappearregularly.

Moreover,optimizationofmaterial flowscreatesdependenciesbetweendecisionsnowand inthe

(far) future, when products will reach their end of life. Dealing with such complexities and

dependencieslimitstheavailabilityofpracticaloptionsforoptimizingmaterialcycles.

ExperienceswithimplementingCEstrategies–especiallyinthecontextofc2cprojects–are

still limited. Theydo show that implementation isdifficult and that theiroutcomesaremodest in

comparisonwithoriginalexpectations.Examplesofrelativelysuccessfulimplementationsallreferto

simpleproductsclosetooriginalmaterialsandbiologicalcycles;however,successfulexamplesforthe

designofcomplexhigh-techproductsaredifficulttofind.

30AccordingtoEurostat,theEUseekstohavea20%shareofitsgrossfinalenergyconsumptionfromrenewablesourcesby2020.Thismakesitevenmoredifficulttoadoptac2c.closedloopdefinitionoftheCE(atleastinthenearfuture)astodoso may mean adding to the green-house emissions. See: http://ec.europa.eu/eurostat/statistics-explained/index.php/Renewable_energy_statistics.

22


AccordingtodeManandFriege(2016)experienceshowsthatproductsdesignedonthebasis

ofCEprinciplesarenotnecessarilyleadingtominimumenvironmentalimpact.TheybasethisonBjorn

and Strandesen’s (2011) study which suggests that when material cycles were closed, Life-Cycle

Assessments show that theiroverall environmental impactwasoftenhigher than thenon-circular

design.Moreover,studiesonelectronicconsumerproductshaveshownthatrecoveringallmaterials

present in a certain product in their original grade is not possible without creating substantial

additionalenvironmentalimpacts.

DeManandandFriege(2016)arguethatitisnecessarytoincludemultiplestrategiesbeyond

“consistency” wherein materials are fed back in a way that is optimally consistent with natural

substanceflows.Instead,theyarguethatitwillbenecessarytoincreaseenergyandmaterialviaan

“efficiency” strategy in order to further decouple growth in waste generation, energy use, and

pollutionfromgrowthineconomicactivities.Concurrently,itmaybenecessarytoquestiontheneed

for certain products and services in order to keep the ecological footprint of the economywithin

acceptablelimits,inlinewitha“sufficiency”strategy.

AEuropeanpolicybasedonCEeconomic ideasmaycreateexpectationsthatwillneverbe

realized.Itsometimesconveysamisconceptionthatthereexistsan“easypath”tocreatingagrowing

economywithaneverdecreasingecologicalfootprint.Itmayalsocreatetheexpectationthatthiscan

bedoneonthebasisofmarketforcesandvoluntaryactionsonly.Itneglectstheunsolvedenergyand

waste issues that result from its implementation. It could weaken the necessary attention to

regulatoryissues.

In fact, De Man and Friege (2016) support (some of) their contentions with worrisome

evidence. The new10% landfill target for 2030 or 2035 (depending on themember states) goes

beyond the targets of the 1999 directive (European Commission, 1999); however,manymember

stateshaveneverandstilldonotmeeteitherthe50%,orthe35%targetofthatdirectivewithout

consequencesdrawnbytheCommission.Newinstrumentsforenforcementbesidesbetterreporting

bymemberstatesarenotproposedinthelatest(2015)package;thus, it is likelythattheywillnot

achievethedefinedtargetsand it isdoubtful, ifamorestringenttargetwillbeachievedtenyears

later.

ThisargumentcomplementstheearlierobservationconcerningtheEU’sCEpolicyasbeing

generatedfromabottom-upphilosophy.Costaetal.(2010)addthatlocalgovernmentcanactasa

bridgebetweennationalgovernmentandlocalcompanies,butitsinfluenceislimited.Higherlevelsof

influence(e.g.supra-national,national)cansettheobjectivesandtargetstowhichsub-nationallevel

agents(e.g.localgovernment,companiesetc.)arelefttorespondwithsolutions.CitingGertler,Costa

etal.(2010)notes:“Economicsalonewillbringyouacertainamountofsymbiosis.Togofurther,you

23


need political impetus to require pollution control technologies and/or to adjust prices to make

symbioticarrangementseconomicallyviable”.31

ItiscertainlyastepforwardthattheCommissionacceptsthatrecyclingstrategieshavetobe

linked to product design, but the amendments for theWaste Electric and Electronic Equipment

directive (WEEE) and the Battery Directive do not explicitly include such regulations. Uniform

definitionsfor“municipalwaste”andforrecyclingtargets,ashavebeenproposedbytheCommission,

areanimportantcontributiontoEuropeanwastemanagement,butdedicatedtargetsforvaluableor

scarceresourcesarestilllacking.Itmightalsobeaddedthatatleastwithinthemostrecentpolicies

discussedinthisreview,littletonomentionismadeofthelinkbetween(renewable)energyandits

connectiontotheCE.

Sustainableresourcemanagementwillstartfromanintegratedconceptcoveringwastepolicy,

resourcemanagement, energy efficiency, and climate protection. In every single case, an optimal

solutionhastobeselectedonthebasisofeconomicandecologicalpriorities.Europeanpolicyshould

focusoninstrumentsthatcaneffectivelyinfluencethemarketsoastoreduceconsumptionofscarce

materialswhileincreasingthelevelofmaterialandenergyrecovery.DeManandFriege(2016)also

suggestthefollowingspecificmeasures:

• Themostsuccessful toolagainstwasting resources–ashasbeenshown insomemember

states–isadeadlineforlandfillingorganicwastefractionsintherelativelyshortterm.This

wouldbeastrongcontributiontoclimateprotection,becauserecoveryofmaterialandenergy

are the only alternatives. The Commissionmight also encourage the transport of residual

waste fromcountries still relyingon landfills forwastedisposal to countrieswith thebest

availabledisposaltechnologylikewastetoenergy(Newman,2015).

• Economic incentives such as instituting extended warranty periods would contribute to

enhancethelongevityofproducts(‘designforrepair’).Infact,aswehaveseentheEuropean

CommissionhastargetedthisissueviaitsEcodesigndirective.

• Rulesforthedesignofspecificproducts,especiallythoseincludingprioritymaterials,would

foster recoveryoperations (“design for recycling”).Moretransparencyabout thematerials

used,especially inthecaseofcomplexlong-livinggoods(buildings,electricdevicesetc.), is

necessarytofacilitatemethodicaldeconstructionofproductstoenhancematerialrecycling

opportunities.Again,theEuropeanCommissionhastargetedsomeoftheseissuesthroughits

Ecodesigndirective.

31ApparentlythereisnoconsensusconcerningregulationandenforcementwithintheEU.AsZbigniewKamieński,formerdeputydirectorofDepartmentofInnovationandIndustryinMinistryofEconomyofPolandstated:“anintroductionofsuch[acircular]economyshouldbeadaptedtospecificconditioninagivencountry.Itshouldrelyonvoluntaryschemes,ratherthanadditionalregulation”.See:https://www.euractiv.com/section/sustainable-dev/news/circular-economy-the-future-of-europe/.

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Only if it includesamixofstrategiesand instrumentsthatareoptimallygearedtoprovide

specific solutions in specific situations, will a policy on materials, product design, and waste be

effective.AcleardecisiontostoplandfillingorganicwasteinEuropewouldbeagoodfoundationfor

furtheractions.Basingpolicyone-sidedlyononeselectedstrategy–suchas(arigidlydefined)“circular

economy”or“zerowaste”–maysoundattractivebutmaynotbeenoughtocreatesustainability.

Indeed, some of this criticism is replicated by Wilts et al. (2016) who note that despite

ambitioustargets,policiesandinstrumentsthatwouldenableatransitionfromaconventionalwaste

managementtoanintegratedandcomprehensiveresourcemanagementarestillmissing.Moreover,

thiswillrequireinnovativepolicymixeswhichdonotonlyaddressdifferentend-of-pipeapproaches

butintegratevariousresourceefficiencyaspectsfromproductdesigntopatternsofproductionand

consumption.

ThepolicymixesthatWiltsetal.(2016)envisionsinclude:

i. WastetargetsforresourceefficiencywhichechoesdeManandFriege’s(2016)suggestion

ii. Mandatory Ecodesign standards for reuse and reparability. As of now EU Ecodesign

standardsfocusonenergyefficiencyandthereappearstobenoplanstomakereuseand

reparabilitymandatory.

iii. Individual producer responsibility which goes beyond (the EU’s) extended producer

responsibility by creating a direct feedback loop between the design of brand-specific

productsandtheirend-of-lifemanagementandprovideincentivesforproducerstoadapt

theproductdesigntoeasyrepairandreuse.

5 Summary

TheEU’sCEpolicy,undertherubricofitsHorizon2020planhastheambitiousgoaloftransforming

Europe’seconomyinordertolessentheimpactofahostofenvironmentalproblems.Aswehaveseen,

priortothe2015actionplan,muchofEuropeanenvironmentalpolicyinfacthadnoconnectionto

the “restorative” aspects of the CE. Instead, it focused on reducing solidwaste,most notably via

recycling,aswellaslesseningtheimpactofgreen-housegasemissions.Indeed,thisclaimissupported

byalarge-scaleEEA(2016b)study,whichshowedthatpriortotheEU’s2015actionplan,formostEU

member states, CE simply meant better waste management. Furthermore, climate change and

resourceefficiencypoliciesappearedtobelargelydisconnectedinpractice,whileintegrationwitha

bio-economystrategyneededfurtherefforts.

Alongwithwastemanagement,EU’s2015actionplan,“Closingtheloop”addsfivekeyaction

areasaddressingtheimplementationofafullCE:production,consumption,secondaryrawmaterials,

25


innovationandinvestment,andmonitoring.Thisactionplanwasfollowedayearlater(in2016)bya

specificsetofpolicyinitiativesthatcoverthefullvaluechain.Thesepolicystatements(aswellastheir

variousannexes)andthebudgetsthathavebeenallocatedtoimplementingthemindicatethatthe

EUseestheCEasthefocusofitsnearfutureeconomicandenvironmentalstrategy.Andindeedifthe

CEisimplementedfullyitcouldhaveatransformativeeffectonEUmemberstates’economies.

However, recent critiques of the CE indicate that there are formidable barriers to CE

implementation in the EU. De Man and Friege’s (2016) recent work indicates that there are

considerablescientificandpracticalproblemstoovercometowardsCEimplementation.Grantedthat

DeManandFriege’s(2016)workisbasedonac2cinterpretationoftheCE,whichisthemostextreme

definitionoftheCE;stilltheircritiqueshouldbeconsideredcarefully.32Concurrently,Wiltsetal.(2016)

critiqueechoesDeManandFriege’s(2016)concernswhileaddingintheobservationthattheEU’s

actionneedsamoreinnovativepolicymixthatpushestheEuropeaneconomytoamore“restorative”

level.Moreover, both studies seem to imply that EU (and itsmember states’) policymayhave to

embracegreaterregulationviamandatorymeasures.Suchmeasuresarenotwithoutcontroversy,as

Naustdalslid(2014)arguesthatthetransitiontowardstheCEinEuropemainlyseemstobeoccurring

asabottom-upapproach(e.g.fromtheinitiativesofenvironmentalorganizations,civilsociety,NGOs,

etc.).ThequestionthereforeremainshowfarwilltheEU(anditsmemberstates)proceedinlegislating

economic,aswellasenvironmentalbehavior?Theseissueswill influenceboththeimplementation

andfurtherpolicyformulationwithintheEUintheyearstocome.

32ThisisespeciallythecasewhenoneoftheleadingCEproponents,theEllenMacArthurFoundationadvocatesthisCEdefinition.

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