Circular economy

Circular economy

On 2 December 2015, the European Commission put forward a package to support the EU's transition to a circular economy. In a circular economy the value of products and materials is maintained for as long as possible. Waste and resource use are minimised, and when a product reaches the end of its life, it is used again to create further value. This can bring major economic benefits, contributing to innovation, growth and job creation.

Circular economy offers an opportunity to boost our economy, making it more sustainable and competitive in the long run. Action at EU level can drive investment, create a level playing field, and remove obstacles stemming from European legislation or its inadequate enforcement.

A circular economy will preserve resources, some of which are increasingly scarce, subject to mounting environmental pressure or volatile prices, and will save costs for European industries. It will unlock new business opportunities and help build a new generation of European businesses which make and export clean products and services around the globe, and create innovative, more resource efficient ways to provide services or products to customers. It can create local low and high‐skilled jobs for our citizens and opportunities for social integration and cohesion.

Areas of action

The EU Action Plan for the Circular Economy is composed of a set of both general and material-specific actions. While some obstacles to a circular economy are generic, different sectors and materials face specific challenges due to the particularities of the value chain.

The following are actions to be undertaken by the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs in co-operation with other relevant Directorates-General.

General measures

Product design

Better product design is key to facilitating recycling and helping to make products that are easier to repair or more durable, thus saving precious resources. At the same time, current market signals are not always sufficient to make this happen, meaning incentives are needed. Additionally, the Commission has proposed an improved labelling system for the energy consumption of household appliances to help consumers to choose the best performing products.

The Commission will:

  • Support repairability, durability, and recyclability of products in product requirements under the Ecodesign Directive, taking into account specific requirements of different products. The Ecodesign working plan 2015–2017 will identify product groups that will be examined to propose possible eco-design and/or energy labelling requirements. It will set out how ecodesign can contribute to the objectives of the circular economy. As a first step, the Commission will propose requirements for electronic displays, including requirements related to material efficiency.
  • Propose the differentiation of financial contributions paid by producers under the Extended Producer Responsibility scheme on the basis of the end-of-life management costs of their products. This provision under the revised legislative proposal on waste creates economic incentives for the design of products that can be more easily recycled or reused.
  • Examine options and actions for a more coherent policy framework for the different strands of work on EU product policy in their contribution to the circular economy.

More on ecodesign

Production process

Production processes can be improved to use resources more efficiently and produce less waste and thus increase the competitiveness of European industry. Practices such as industrial symbiosis (where the waste or by-products of one industry become the inputs for another one) or remanufacturing should be encouraged. This can create business opportunities and boost innovation, at the same time as preserving our environment. The measures will be introduced at a pace that gives industry time to adapt and exploit the opportunities.

The Commission will:

  • Include further guidance on best waste management and resource efficiency practices for industrial sectors in Best Available Techniques Reference documents (BREFs) as part of planned reviews.
  • Issue guidance and promote best practices on mining waste management (prevention, recovery and safe disposal).
  • Propose to clarify rules on by-products in the Waste Framework Directive to facilitate industrial symbiosis and create a level-playing field across the EU. The Commission already supports industrial symbiosis (Executive Summary, due to technical issues at the EU bookshop website, the study cannot be downloaded at the moment) and remanufacturing projects through Horizon 2020.


The choices made by millions of consumers can support or hamper the circular economy. These choices are shaped by the information to which consumers have access, the range and prices of existing products and the regulatory framework. Actions on clear and reliable labelling, improving reparability, upgradeability and durability of products are important in this context. Leveraging public purchasing power through green public procurement can be an especially important tool to boost the circular economy.

Innovative forms of consumption can be an area where new business opportunities will emerge in the course of the transition to the circular economy, e.g. sharing products or infrastructure (collaborative economy), servitisation and the increased use of digital platforms. These new forms of consumption are often developed by businesses or citizens, and promoted at national, regional and local level. The Commission supports these new business and consumption models through Horizon 2020 and through Cohesion Policy funding. As announced in the Single Market Strategy , the Commission will also develop a European agenda for the collaborative economy.

Single Market strategy

From waste to resources (secondary raw materials)

Secondary raw materials still account for only a small proportion of materials used in the EU. There are important barriers to their uptake in the economy, for example due to inadequate collection systems or the uncertainty of their sources, composition, quantity and quality. We need a better insight into raw materials stocks and flows in the EU. In many cases it is too administratively complicated to transport waste from one EU country to another. Clear end-of-waste rules and/or standards may be needed to build trust and to enable secondary raw materials to benefit from the internal market.

For example, nutrients from organic waste (food waste, used water and manure) can be returned to the soil as organic fertilisers, reducing the need for mineral-based fertilisers. The circulation of these fertilisers is hampered by differing rules and quality standards across EU countries (see below).

Many chemicals have hazardous properties and EU legislation already has instruments to manage their risks. However, as more information becomes available as a consequence of scientific progress, previously unclassified substances may be designated as hazardous or have their current classification modified. A balance has to be struck between legislation which enables the recovery of materials from waste that may contain toxic constituents and the need to ensure that hazardous chemicals of concern are properly managed.

The Commission will:

  • Launch work to develop quality standards for secondary raw materials where needed – in particular for plastics.
  • Take measures to facilitate legal transport of waste between EU countries while taking further measures to bring down the number of illegal shipments.
  • Develop analysis and propose options on the interface between chemicals, products and waste legislation, including on how to improve the tracking of chemicals of concern in products. This will help industry secure a stable supply of raw materials by using recycled materials.
  • Further develop the recently initiated Raw Materials Information System and support EU-wide research on raw materials flows.
  • Further analyse the main obstacles to the establishment and proper functioning of EU-wide secondary material markets.

See also: Raw materials and Turning recycled raw materials into business opportunities

Innovation, investment and other cross-cutting issues

Research and innovation are key to enabling the transition to a circular economy and to boost the competitiveness of EU industry.

Public and private investment will be necessary to make it happen. Horizon 2020, COSME, the Structural and Investment Funds, the Fund for Strategic Investments and other EU programmes will be important support instruments. SMEs, including social enterprises, are particularly active in fields such as recycling, repair and innovation. They will play an important role in the development of a more circular economy.

The Commission will:

  • Help SMEs benefit from the business opportunities of increased resource efficiency with the creation of the European Resource Efficiency Excellence Centre
  • The Horizon 2020 Work Programme for 2016-2017 includes a major initiative on 'Industry 2020 in the circular economy' with funding of over €650 million and relevant topics on raw materials
  • Together with the EIB, and the European Investment Advisory Hub, encourage applications for funding and support the development of projects relevant to the circular economy, such as the planned European Minerals Investment Platform.

The Green Action Plan for SMEs adopted in July 2014 was designed to complement the circular economy package.

Actions for specific materials and sectors

A number of materials and sectors face specific challenges in the context of the circular economy. These challenges need to be addressed in a targeted way.


Plastics are complex and diverse materials that can contribute to the circular economy in many ways, e.g. by better preserving food or reducing weight of materials used in vehicles. However, due to this complexity and diversity, challenges remain in the area of recycling. Addressing these complex and important issues is an important priority for the Commission.

The Commission has:

  • adopted a strategy on plastics that addresses issues such as recyclability, biodegradability, and the presence of hazardous substances in certain plastics and marine litter
  • proposed a more ambitious target for the recycling of plastic packaging in the revised legislative proposal on waste

Read more on the European plastics strategy.

Food value chain

It is estimated that around 100 million tonnes of food are wasted annually in the EU. Food is lost or wasted along the whole food supply chain: on the farm, in processing and manufacture, in shops, in restaurants and canteens, and in the home. Apart from the related economic and environmental impacts, food waste also has an important social angle – donation of surplus food should be facilitated so that safe, edible food can reach those who need it most.

In September 2015, the United Nations General Assembly adopted Sustainable Development Goals for 2030 that included a target to halve per capita food waste at retail and consumer levels and reduce food losses along production and supply chains. The EU is committed to meeting this goal. The new waste legislative proposal calls on EU countries to reduce food waste at each stage of the food supply chain, monitor food waste levels and report back in order to facilitate exchange between actors on progress made.

The Commission will:

  • Develop a common EU methodology to measure food waste and define relevant indicators
  • Create a platform, bringing together EU countries and all actors of the food chain, to help define the measures needed to achieve the Sustainable Development Goals on food waste and share best practice and results achieved.
  • Take measures to clarify EU legislation relating to waste, food and feed, and facilitate food donation as well as the safe use of former foodstuffs and by-products in feed production.
  • Examine ways to improve the use of date marking by actors of the food chain and its understanding by consumers, in particular the ‘best before’ label.

See also: EU actions against food waste

Critical raw materials

Critical raw materials (CRMs) are of high economic importance to the EU yet there is high risk associated with their supply due to the fact that production is concentrated in certain countries. CRMs are used in many industrial applications and everyday electronic devices. For example, a smartphone might contain up to 50 different kinds of metals, including CRMs. The very low rate of recycling of these materials means that significant economic opportunities are lost. Increasing the recovery of CRMs must be addressed in the move to a more circular economy. Because it can be difficult to recover critical raw materials in products that use them, better product design must be encouraged.

The Commission will:

  • Prepare a report on key data sources, best practices and options for further action at EU level.
  • Encourage action by EU countries under the Waste Framework Directive
  • Improve the exchange of information between manufacturers and recyclers of electronic products
  • Promote the development of European standards for material-efficient recycling of electronic waste, waste batteries and other relevant complex end-of-life products
  • Organise the sharing of best practice for the recovery of critical raw materials from mining waste and landfills.

More on critical raw materials

Construction and demolition

Waste originating from construction and demolition represents one of the highest volumes of waste in Europe. One ton of construction and demolition waste is produced per person per year – i.e. 500 million tonnes in the whole EU every year. Valuable materials are not always identified and recovered. Improving waste management in this sector is crucial for the circular economy.

The Commission will:

  • Take a series of actions to ensure improved recovery of valuable resources and adequate waste management in the construction and demolition sector, as well as facilitate assessing the environmental performance of buildings
  • Develop pre-demolition guidelines to boost high-value recycling in the sector as well as voluntary recycling protocols aimed to improve quality of and build confidence in recycled construction materials.
  • Propose in the revised legislative proposal on waste to require better sorting of construction and demolition waste.
  • As a concrete step, the Commission introduced the EU Construction and Demolition Waste Protocol in 2016. Its aim is to increase confidence in the C&D waste management process and the trust in the quality of C&D recycled materials.

More on the construction sector

Biomass and bio-based products

Bio-based material, such as wood, crops or fibres, can be used to manufacture a wide range of products, as well as bio-fuel and other energy uses. Apart from providing an alternative to fossil-based products, bio-based materials are also renewable, biodegradable and compostable. At the same time, these materials require special attention due to the need to minimise their lifecycle environmental impact, making sustainable sourcing an important priority. In a circular economy, a cascading use of renewable resources should be promoted together with innovation in new materials, chemicals and processes.

The Commission will:

  • Promote the efficient use of bio-based resources through a series of measures, such as the promotion of the cascading use of biomass and support to innovation in the bio-economy
  • Propose a target in the revised legislative proposal on waste for recycling wood packaging as well as a provision to ensure the separate collection of bio-waste.

More on biomass

Review of fertilisers legislation

Recycled nutrients are a distinct and important category of secondary raw materials, for which the development of safety and quality standards is necessary. Recycled nutrients from organic waste or by-products (food waste, used water and animal by-products such as manure) can be returned to the soil as fertilisers, reducing the need for mineral-based fertilisers and creating organic fertilisers for EU farmers and gardeners. The circulation of these fertilisers is hampered by differing rules and quality standards across EU countries.

The Commission will:

  • Revise the EU regulation on fertilisers. Once this revision has been approved by the Council and the European Parliament, it will facilitate the recognition of organic and waste-based fertilisers thus developing an EU-wide market. This is an opportunity to show how Single Market legislation can be reconciled to create business opportunities while benefitting the environment.

Roadmap for fertilisers

More information