Circular economy in the EU: Creating a sustainable and resilient future

14 June, 2020

On 11th March 2020, the European Commission presented the new Circular Economy Action Plan (CEAP): a comprehensive roadmap building on the former Commission’s efforts to transition towards a new production and consumption model for Europe and its citizens. In essence, the main objective of the Action Plan is to address the bloc’s resource consumption and reduce its ecological footprint. Therefore, the EU’s innovative Plan attempts to tackle the shortcomings of a traditional linear model. While current circumstances and economic costs are hindering the CEAP’s further development, now is the time to rebuild the economy by transitioning to a circular model—and finally achieving the EU’s sustainability objectives.

The ABC’s of a Circular Economy

To better understand the features and objectives of the EU’s latest CEAP, it is first important to outline the basics of a ‘circular economy’—or its ABC’s.

A refers to the EU’s Acknowledgement that it is necessary to Abandon the traditional linear model of ‘take-make-dispose’ and to Address the current unsustainable depletion of natural resources.

B introduces the ultimate aim underlying the EU’s strategy: Becoming a more resilient and sustainable economy, which ensures protecting biodiversity and the environment. Indeed, scientific evidence highlights that our current production and consumption behaviours continue to cause irreparable damage to natural resources and are already trespassing two out of nine planetary boundaries in the EU (i.e. land system change, and phosphorous and nitrogen biogeochemical flows).

Lastly, C is for Comprehensiveness. To shift to a completely new production and consumption paradigm that respects the health of our environment, it is crucial that the EU’s intervention covers all productive sectors, while simultaneously addressing consumer behaviours.

Why do we need a new paradigm? The limits of the traditional ‘take-make-dispose’ model

Currently, Europe is not living within the planetary boundaries and, based on the EU’s production and consumption rates, continues to exceed them. Specifically, the European Environment state and outlook 2020 reports that ‘activities such as agriculture, fisheries, transport, industries and energy production continue to cause biodiversity loss, resource extraction and harmful emissions’. For instance, agriculture is a major driver for biodiversity loss and pollution of air, water and soil since massive cultivation (which relies on chemicals and other hazardous materials) destroys these ecosystems.

Likewise, consumption patterns are alarmingly high: a publication by the Institute for European Environmental Policy reveals, for example, that the ‘EU has an ecological “footprint” of 4.7 global hectares (gha) per person, to compare with the global biocapacity of 1.7 gha per person’, meaning that one single European citizen consumes as if they were three persons.

Trade further drives unsustainability; since Europe heavily relies on several natural resources extracted from abroad (e.g. water and biomass) to meet its high levels of consumption, this leads to greater energy use for transportation and, consequently, more air and water pollution.

This data illustrates the dangerous shortcomings of the traditional business model’s sections of ‘take-make-dispose’. Therefore, a new circular model should be quickly developed and implemented that meets sustainability standards and contributes towards the restoration of our environment.

The EU’s Circular Economy Action Plan: Scope and features

Conscious of the current business model’s limitations and its unsustainability, the European Commission recently published an updated version of the 2015 CEAP under the umbrella of the European Green Deal. This plan revamps the EU’s commitment to delivering on (among others) the 2030 Agenda for Sustainable Development by means of a comprehensive strategy that aims to decouple economic growth and prosperity from the consumption of finite natural resources. Specifically, it announces initiatives along the entire life cycle of products, targeting for example their design, promoting circular economy processes, fostering sustainable consumption, and aiming to ensure that the resources used are kept in the EU economy for as long as possible’.

In comparison to the 2015 Plan, this new strategy is more ambitious, as it aims to enact new legislation in multiple sectors (e.g. textiles, packaging, and food), while striving for more consumer rights. Hence, it is evident that the new strategy endeavours to revolutionise Europe’s economic paradigm by implementing this new circular model across all levels and stages of productive sectors.

At the same time, there is still space for amelioration to the CEAP, as many stakeholders’ responses highlight. Among the views and recommendations that should be either introduced or further implemented to perfect the Plan are, for instance, improving many existing policies across all sectors, with re-defining key concepts, and introducing sector-specific binding targets. Economic and fiscal measures have also been put forward, such as subsidies for small and medium enterprises, as well as increased funding for R&D. Lastly, the importance of transparency and certainty was expressed in the call for enhanced uniformity and availability of information for consumers. Nonetheless, the CEAP has been praised as an adequate roadmap that should be implemented.

COVID-19: An opportunity or threat to the EU’s Circular Economy Action Plan?

However, the COVID-19 pandemic has caught everyone by surprise and forced us to reinvent our daily habits. Economic sectors have also gone through rapid changes, with productivity rates plummeting for many, and demand suddenly increasing in others (e.g. food). Nonetheless, all sectors have one commonality: in light of the crisis, the current business model is inherently fragile, unequal and environmentally unsound. For instance, in Northern Italy, where the majority of its national industries operate, the lowest levels of air pollution were registered during the lockdown and with the slowdown of the economy; at the same time however, unemployment rose with many now struggling to survive.

So, to face these obstacles and limit the negative impacts of the pandemic as much as possible, the EU set forth a series of measures to protect healthcare systems and the economy. This package also includes an ambitious strategy to reboot the bloc’s economy by making it more resilient to future shocks. However, regrettably so far, the EU’s Circular Economy Action Plan has received little attention from European Institutions. After its publication at the beginning of March, it does not appear to be included in any of the EU’s announced recovery plans—despite its great potential to actually ensure economic recovery. At present, the proposed actions only reiterate a general willingness to improve the economy and without any specific mention of incorporating the circular strategy as a guiding principle.

The only explicit reference was by European Commission Vice President Frans Timmermans in his Op-Ed with EurActiv in April 2020, where he declared that there is an alternative path to re-establishing the old linear model. He points towards ‘a circular, sustainable and highly competitive economy’ based on the replacement of ‘old and polluting infrastructure with a modern, clean and efficient one, across all sectors–water, energy, construction, mobility, agriculture and industrial processes to name but a few’. The global challenge of implementing the CEAP can be a critical starting point to finally create an overarching EU policy—enabling the shift to a circular green economy that presents with many advantages. First, prioritising renewable energy, rather than fossil fuels, can help mitigate the harmful effects of climate change. Second, given its broad and comprehensive scope to reduce greenhouse gas emissions along the whole value chain—from design to waste—will hasten the achievement of the EU’s Paris Agreement commitment to remain within the 2°C temperature increase.

Lastly, it is also worth considering the economic gains from a circular model since a circular economy is founded on the principles of sustainability and the elimination of loopholes along the value chains. It can, therefore, be a powerful tool that strengthens the market and its competitiveness while producing less waste. Thus, the benefits of implementing a circular economy are clear as it creates new sectors for job growth, builds more competitive and resilient industries, and fosters a safer and healthier environment.

Concluding remarks and recommendations

In light of all these considerations, it is advisable that the European Union concentrate its efforts on the development and implementation of the CEAP in order to effectively tackle, not only challenges brought by a global pandemic, but also the ongoing climate predicament.

Indeed, a recovery that continues the traditional ‘take-make-dispose’ model would be a missed opportunity to create a more robust economy—especially given the traditional model’s many limitations that were dramatically exposed during the current crisis. On the contrary, the time has come for the EU and its Member States to seriously consider the implementation of a circular model, which will not only create a more resilient and efficient economy, but also a more sustainable one that ensures the people’s and the Earth’s health and future.

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