Embedding circularity in the EU’s industrial strategy: Can the Circular Economy Act rise to the challenge?

Key Messages

• There is a shift in the way circular economy is approached in Europe, from a waste management and environmental strategy to a strategic lever to reduce dependencies and develop industrial value chains. This shift should be understood in a context in which European industry has lost control over key clean technology value chains and is heavily dependent on critical raw materials imports. 
   
• The Circular Economy Act’s focus on removing barriers to the single market for waste and secondary materials tackles an important issue, but risks missing the mark if significant blind spots remain: beyond ensuring sufficient volumes of secondary materials remain in Europe and boosting demand for circular goods through public procurement, questions of incentives such as recycled content targets or price signals arise, as well as challenges around quality of secondary materials for high-value recycling. 
   
• Embedding circularity at the heart of the EU’s industrial strategy is key to make it a lever for strategic dependencies mitigation and competitiveness. Industrial circular value chains need to be built at different scales, and with different actors and partners, depending on the material stream and the value chain. 
   
• In addition to supporting recycling, the Circular Economy Act should propose solutions to encourage the scaling-up of circular business models and introduce targets for material efficiency and material use reduction. 
   
• The investment framework should be revised to favour circular solutions and take into account material efficiency. It should be accompanied by the development of indicators and metrics allowing to identify and measure what is circular.