New circular economy package will mean changes for businesses

What is a circular economy?

Circular economy, as opposed to linear economy, tries to optimise usage of materials and resources to minimise the amount of loss throughout their life cycle. It can include ecodesign, industrial symbiosis, recycling and reuse, collaborative economy, new business models, etc.

Circular economy is a great opportunity to reduce emissions and costs, create jobs and develop innovation and technology, as well as reduce raw materials scarcity. In 2014 the EU published a package of targets and measures to develop a circular economy across Europe. This original package was scrapped with the promise that a more ambitious one would follow.

The new circular economy package, released in early December 2015, has disappointingly less teeth than its predecessor in terms of targets: the municipal waste recycling target has gone from 70% to 65% by 2030 and the commitment to reduce food waste by 30% between 2017 and 2025 has been removed altogether. A comparison of the two packages also shows potentially 110,000 fewer jobs will be created.

There is some good news: the new package wants to prevent programmed obsolescence of products – a topic that wasn’t tackled by the previous one. It also encourages more reuse of products like electrical appliances, textiles and furniture. Despite these new adjustments, it is a shame to see that a year of reflection has mellowed the Commission rather than spurred it to greater action.

But how will it affect business across the EU over the next few years?

Product-selling companies will no doubt need to adapt to forthcoming legislation in certain areas like packaging: in its timetable of actions, the Commission included measures on improved date marking on products (to be taken forward in 2017), increased recycling targets for packaging materials as set out in revised waste proposals, action on false green claims (to be taken forward in 2016), and product environmental footprints to communicate environmental information (to be taken forward in 2016 onwards).

The actual products themselves could be required to change, with plans for the substitution of hazardous substances support for SMEs (to be taken forward in 2018), increased recycled content in products and an independent testing programme on planned obsolescence (to be taken forward in 2018).

The package also calls for new incentives and requirements for Member States to provide economic instruments like taxation, so product prices reflect environmental costs.

Despite some disappointing figures, the package still represents a great opportunity for businesses and sets out funding that should help with the transition, and support new projects to come off the ground: important research and innovation funding will become available and the Cohesion Policy funds will provide support to improve production processes, product design and SMEs.

The package will now be reviewed by the European Parliament and European Council along with other legislative proposals to amend the Directive on Waste, Directive on Landfill, Directive on Packaging Waste and Directive on Waste Electrical and Electronic Equipment to reach an agreement over the course of the next year. It is still possible – and to be hoped – that the European Parliament will call for more ambitious measures in its review.

Read the official communication on the EU’s webpage: http://ec.europa.eu/environment/circular-economy/index_en.htm

Sources:
http://www.theguardian.com/sustainable-business/2015/dec/03/eu-circular-economy-plan-waste-targets-weak-critics

http://www.euractiv.com/sections/sustainable-dev/circular-economy-package-waste-job-opportunities-320134

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