The Circular Economy: Potential and Challenges within the European Context

[Illustration by Matilde Morri]

In the European Union, more than 2.5 billion tons of waste are produced annually. This unimaginably large quantity of trash is a pressing issue for several reasons, one of which is of course its disposal. To tackle the problem, the EU is updating and modifying its legislation on waste management, with the aim to promote the transition to a circular economy as an alternative to the current economic and linear model. But what exactly is the circular economy? And what are the reasons driving this change?

Circular economy, what is it?

The circular economy, as defined by the European Union, is a “model of production and consumption that involves sharing, lending, reusing, repairing, reconditioning and recycling existing materials and products for as long as possible.” This not only extends the life cycle of products and goods, but also helps to minimize waste generation. Once the product has completed its function, in fact, the materials that constitute it are reintroduced, when possible, into the economic cycle, so that they can be continuously reused within the production cycle, thus generating additional value.

The principles of a circular economy contrast with the traditional model of a linear economy, which, conversely, is based on the classic scheme of “extract, produce, use and throw away”. This economic model depends on the availability of large quantities of readily available and cheap materials and energy. On the contrary, in a sustainable economic system, everything that is not assimilated naturally must be recycled, that is, transformed into materials, called secondary materials, to be reused in production processes and consumption to avoid a loss of utility. It is therefore recycling that transforms the traditional open economic system into a closed circular economic system, in which all the indicators of sustainability are considered.

Waste management and pollution

The concepts of waste and pollution may not be as straightforward as it seems. EU Directive 2008/98/EC defines waste as “Any substance or object which the holder discards or intends or is required to discard” (in other words, production and consumption residues), and pollution as “the direct or indirect introduction, as a result of human activity, of substances, vibrations, heat or noise into the air, water or land which may be harmful to human health or the quality of the environment, resulting in damage to material property, or impairment or interference with amenities or other legitimate uses of the environment”.

In summary, since not all waste is harmful (organic waste, for example), it can be said that pollution consists in certain types of waste, and by emissions to air, water or soil of vibration, heat and noise at defined harmful levels. In the circular model, harmful waste is, wholly or in part, transformed into productive resources or secondary materials. Since waste is the result of production and consumption activities, the European Union has decided to adopt the circular model and to create a European recycling society, which is summarized in the motto, “reduce, recycle, reuse”.

Closing the Loop

The goal of the circular economy is very ambitious. Concretely, it means changing and correcting the spontaneous behaviour of the current economic system through legislation, therefore forcing the community to change not only its consumption habits, but also its production processes. The European Commission presented an initial package regarding the circular economy in July 2014. In February 2015, however, it withdrew the legislative proposal on waste included in the package to make way for new proposals. On December 2, 2015, the European Commission presented the new package containing a report and four legislative proposals on EU waste policy, aptly named “Closing the loop”.

The action plan for the circular economy “Closing the loop” aims to complement the measures contained in the legislative proposals and to contribute to the realization of the United Nations Sustainable Development Goals adopted in 2015, notably Goal 12 on sustainable consumption and production. The action plan highlights several areas for action in addition to waste management. This integrated approach is aimed not only at preventing pollution, but also at reducing the amount of waste produced, with the aim of protecting the environment as a whole. An integrated approach entails “the prevention of emissions to air, water and land, and, otherwise, the management of waste in order to minimize them; energy efficiency (in order to reduce emissions); and the prevention of accidents”. The integrated approach also seeks to avoid the transfer of pollution from one area or one nation to another.

This approach, and the related conception of the economy, will involve the revision of all existing legislation on waste management in order to achieve a social and economic system that innovates and designs goods whose components can be reused when their life cycle is over. Consumers and stakeholders must also be educated to think that products should be used as long as they can meet their needs. Today, only 40% of European household waste is recycled, and part of the separate collection of waste still ends up in landfills, because the demand for secondary materials is not yet well developed due to their poor quality. Insufficient demand ends up discouraging producers from using secondary materials in their products.

The future strategy of the European Union

Continuing along the lines sketched in 2015, in 2020, the Commission launched the EU Circular economy action plan. Based on pollution prevention and on the “polluter pays” principle, the plan is intended to guide the creation of new legislation aimed in particular at reducing the amount of waste in landfills to 10%, increasing the recycling of packaging, glass, paper, plastic (currently only 25% is recycled), metals, wood and electronic waste, and establishing quality standards for secondary materials to increase demand for them. Applying the “polluter pays” principle means that the cost of waste disposal must be borne by the producer or holder of the waste. The application of this principle may, therefore, require the payment of taxes resulting from and relating to the polluter’s obligation to clean up the polluted site, therefore significantly contributing to the success of the plan.

In strictly economic terms, the aim of this strategy is to create the necessary conditions for the creation of an efficient market for secondary materials that absorbs the entire quantity of recycled waste. The ambitious circular economy model that will be applied to the European economic system aims to achieve GDP growth through the development of the waste recycling sector, as well as a reduction in the use of natural resources for production and consumption, which will be replaced by secondary materials and production processes that use them.

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