As Europe aims to boost its competitiveness, a truly circular economy can unlock unique benefits for both people and businesses, at the lowest environmental cost, write Roberta Arbinolo and Marco Musso.
Since the last EU elections, in an increasingly challenging economic and geopolitical context, ‘competitiveness’ has become a mantra in Brussels. Yet, competitiveness is an elusive concept and can hardly be a goal in itself. How can the EU harness its competitive strengths in a way that benefits everyone? If we are looking for long-term leadership that ensures people’s needs are met and sustainable businesses thrive within planetary boundaries, then circularity policies offer a key opportunity – if done right.
As the Commission gears up to deliver a new Circular Economy Act, now is the time to set the course in the right direction. A new set of recommendations published today by the European Environmental Bureau (EEB), Europe’s largest network of environmental organisations, helps chart the path.
Progress, but too slow
Over the past years, the circularity has been high on the EU agenda. From the new Ecodesign rules to policies on packaging, construction materials, electronics, vehicles, textiles, food waste, green marketing and eco-labelling, lawmakers have been working on a range of initiatives to reduce waste, make products more sustainable, and increase transparency for consumers.
Yet, concrete progress remains insufficient. Too often, EU circular economy policies have lacked the teeth to tackle the root causes of the environmental and climate crises: Europe’s systemic overconsumption and overdependence on raw material extraction. These issues not only carry a high social and environmental cost, but also expose the EU to geopolitical vulnerabilities, and threaten the long-term competitiveness of European industry.
Prevention is better than cure
A decisive shift towards genuine circularity would help Europe reconcile resource consumption with planetary boundaries, reduce material dependencies, decarbonise the economy and create opportunities for innovation. But where should we start?
Today, the main obstacle to this transition is an economic framework that still incentivises a linear, wasteful economy – one that fuels pollution, nature degradation, and climate breakdown.
Taxation and incentives too often work against sustainability pioneers and circular business models, while continuing to reward polluting and wasteful practices. For instance, while resource use goes largely untaxed, high labour taxes incentivise companies to minimise the use of human capacities, even if this means increasing the use of materials and fossil fuels. Making the sustainable choice the easy choice for people and businesses – by leveraging circular taxes, incentives and public procurement – should thus be a key priority for the new Circular Economy Act.
At the same time, circularity is too often reduced to recycling. But while recycling is essential to recover materials, it should be a last resort. Far greater economic and environmental benefits can be gained by acting earlier in the process, before products and materials turn into waste. After all, prevention is better than cure.
For example, reducing Europe’s material footprint by addressing overproduction and consumption would lower material and energy costs while decreasing dependence on raw material imports. At the same time, it would pave the way for innovations in the circular economy space, where Europe can build a clear competitive advantage – in areas such as ‘product-as-a-service’ and ‘materials-as-a-service’ systems, rental, leasing and sharing models, and reverse logistics for value retention and maintenance.
Similarly, investing in reuse and repair would help secure local jobs, promote European craftmanship, and strengthen local second-hand markets. And some measures are just common sense: banning the destruction of unsold goods and reducing reliance on single-use products would keep resources in the economy without additional production costs.
A strong business case
By focusing on reducing resource use and keeping products and materials in the loop as long as possible, circularity can enhance the EU’s strategic autonomy, resilience and economic security, while helping both citizens and businesses.
In an increasingly unstable geopolitical landscape, resource efficiency and sufficiency are the fastest ways to de-risk the European economy, by reducing dangerous resource dependencies and shielding the EU from volatile commodity prices.
At the same time, there is a compelling business case for European companies to provide citizens with safe, high-quality, affordable and durable products and services, while creating quality jobs. But supporting innovative circular business models requires the right incentives, regulatory certainty, and a EU regulatory framework which drives a race to the top.
The EU must support the many businesses that are already leading the transition towards a toxic-free, resource-efficient and climate-positive future. Europe is poor in natural resources and should not compromise its values in a delusional attempt to compete globally on sheer volume of cheap products produced at the lowest cost. On the contrary, genuine circularity can support the transition to a more resilient, resource-efficient and high-value added economy, enhance long-term competitiveness and create quality jobs. This is already happening in repair and reuse: the European remanufacturing sector is projected to generate half a million new jobs by 2030, contributing to a more sustainable reindustrialisation of Europe.
Time to take resources seriously
The transition towards a truly circular economy is not only an opportunity to boost competitiveness and strategic autonomy by playing on Europe’s strengths – it also essential for delivering on the EU Green Deal.
Serious action on how we extract, consume and discard natural resources is the only way to achieve our climate, pollution and biodiversity goals, while ensuring fairer distribution of economic prosperity.
Climate neutrality cannot be achieved without taking on overconsumption. Resource extraction and processing account for over half of global greenhouse gas emissions, significant health impacts, and most of biodiversity loss, due to land-use change.
The upcoming EU Circular Economy Act has the potential to reconcile economic prosperity for all with the finite boundaries of our planet by focusing at the forefront on targets for sustainable resource management. Now is the time for Europe to seize this opportunity. Only tinkering at the edges of waste policies won’t cut it.
