Unlocking industrial decarbonisation through the circular economy

FEAD strongly welcomes the proposal in the call for evidence for the upcoming Industrial Decarbonisation Accelerator Act to assess incentives for uptake of clean carbon feedstock, including recycled waste and recovered energy. The geopolitical climate, disruptions to global supply chains, and increasing competition for critical inputs have exposed Europe’s dependence on finite resources. At the same time, environmental and climate targets demand a shift away from extractive models toward circular, low-carbon alternatives.

The potential of the circular economy in contributing to decarbonisation has been acknowledged by the EU in several communications, such as the Commissions communication on Europe’s 2040 climate target and the Commissions communication on the Clean Industrial Deal. The European Environment Agency has also clearly stated that the circular economy is an important approach to reduce greenhouse gas emissions through more efficient material flows.1 Better use of waste as a resource can help reduce emissions in other sectors, for example, by promoting the use of recycled materials in energy intensive sectors.

A 2019 report titled ‘Completing the picture: how the circular economy tackles climate change’ and produced by the Ellen MacArthur Foundation in collaboration with Material Economics, shows that a circular economy offers a systemic and cost-effective approach to tackling the challenge of emissions associated with making products that cannot be reduced with clean energy and efficiency improvements.2 The paper shows that when applied to four key industrial materials (cement, steel, plastic and aluminium) circular economy strategies could help reduce emissions by 40% in 2050.

Despite the overwhelming evidence, emissions savings from the uptake of recovered materials and energy from waste are not fully recognised in the EU decarbonisation framework. The upcoming Industrial Decarbonisation Accelerator Act is a big opportunity to correct this and can be an essential complement to the Circular Economy Act to boost demand for European recovered materials and energy.

Boosting demand for recovered materials and energy from waste must be a priority to decarbonise industry, reduce dependencies and enhance resilience. However, in order to succeed, a number of framework conditions must be in place. Based on its 10 recommendations for the Circular Economy Act, FEAD notes the following elements that are required to ensure coherent policy in the uptake of recovered materials:

• The definition of recycled content must be protected. This means ensuring that only post-consumer waste is counted and biobased materials and pre- consumer waste are excluded from the definition of ‘recycled content’. Biobased materials cannot be classified as recycled unless they result from actual waste recovery processes, and their recyclability must be proven according to the state of the art in existing technologies. Pre-consumer, post-industrial waste and by- products, which are already part of controlled industrial loops, cannot be equated with post-consumer waste. Post-consumer waste must be collected from dispersed sources, requiring the commitment of consumers and municipal systems, and is more prone to pollution, loss of traceability, and contamination. Its treatment is therefore significantly more complex and costly and cannot compete.
• Sustainability criteria based on carbon footprint must be introduced. Binding sustainability criteria that rank and prioritise materials, especially polymers, both virgin and recycled, based on the carbon footprint should be a guiding principle of the upcoming Industrial Decarbonisation Accelerator Act. These criteria should also account for the environmental performance of different recycling technologies to promote low-carbon circular solutions.
• A clear framework for green public procurement. To increase the demand for recyclates and recovered materials therefore advancing industrial decarbonization, it is essential to establish a clear framework for green public procurement. By prioritizing products with high recycled content in public tenders, government supports the circular economy and reduces dependency on virgin raw materials. Green Public Procurement can play an essential role towards more sustainable, carbon-efficient industrial practices.
• Prioritise European recycled and recovered materials in product policy and procurement. To support a strong internal market for recycled materials, policies such as recycled content targets, ecodesign, ecolabels, and GPP criteria should give preference to recycled materials sourced and processed within the EU. This approach would recognise the higher traceability and environmental control of European waste management value chains.
• A competitive market for recycled materials is needed. While boosting demand is critical, Europe must also address the persistent barriers limiting the availability and competitiveness of recycled materials. High energy costs, regulatory fragmentation, and lack of investment incentives have created structural disadvantages for recycled materials compared to virgin raw materials. As a result, many recycling operations struggle to scale, and manufacturers continue to rely on primary inputs. Concrete recommendations are made under point 2 of FEAD´s 10 policy recommendations for the Circular Economy Act. 
• End-of-waste criteria are crucial. One of the most persistent regulatory obstacles facing the uptake of recycled materials is the fragmented and inconsistent approach to End-of-Waste (EoW) criteria across the EU. Despite the objective of establishing a true Single Market for recycled materials, recycled materials are still often treated as ‘waste’ even after full processing. This undermines cross-border trade, adds legal uncertainty and costs, inhibiting investments in recycling capacity. Concrete recommendations are made under point 3 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Fair competition in trade must be ensured. Fair and transparent market conditions are needed to boost the uptake of recycled materials. While EU recyclers are subject to high environmental, quality, and traceability standards, imported materials and products, often with lower sustainability credentials, frequently bypass these rules. This undermines both the environmental goals of the EU and the economic viability of domestic recycling. Global trade in waste and recycled materials must be governed by principles of environmental equivalence and mutual accountability. At the same time, it must be ensured that no new trade barriers are created that would impair the competitiveness of the European recycling industry. Concrete recommendations are made under point 4 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Fair competition in trade must be ensured. Fair and transparent market conditions are needed to boost the uptake of recycled materials. While EU recyclers are subject to high environmental, quality, and traceability standards, imported materials and products, often with lower sustainability credentials, frequently bypass these rules. This undermines both the environmental goals of the EU and the economic viability of domestic recycling. Global trade in waste and recycled materials must be governed by principles of environmental equivalence and mutual accountability. At the same time, it must be ensured that no new trade barriers are created that would impair the competitiveness of the European recycling industry. Concrete recommendations are made under point 4 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Regulations, permits and waste shipments must be simplified. The complexity and fragmentation of regulatory frameworks across Member States continue to act as major barriers to the efficient operation and scaling of circular activities. In particular, lengthy and inconsistent permitting procedures and burdensome waste shipment processes delay infrastructure development and discourage investment in recycling. Moreover, while the Waste Shipment Regulation has recently been revised to strengthen environmental safeguards, its implementation still faces delays and administrative bottlenecks at national level. Boosting the uptake of recycled materials depends on a regulatory environment that is predictable, transparent, and streamlined across the Union. Concrete recommendations are made under point 5 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• The growing challenge of substances of concern in waste must be addressed. To ensure the safety, credibility, and marketability of recycled materials, EU policy must address the growing challenge posed by substances of concern in waste streams. These substances threaten the quality of recycled materials, complicate treatment processes, and pose risks to human health and the environment if not properly managed. Ensuring the safe circulation of materials requires both upstream action at the design stage and building capacity for safe treatment at end-of-life. Concrete recommendations are made under point 8 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Implementation, enforcement and market governance must be strengthened. Even the most well-designed policies will fall short if implementation is weak, enforcement is inconsistent, or markets are distorted by unequal treatment of operators. While the EU has made important strides in setting ambitious waste and recycling targets, uneven transposition, regulatory interpretation, and monitoring across Member States continue to undermine results. The EU must ensure that rules are properly enforced, that markets remain competitive, and that waste is managed in line with environmental and economic best practices. Concrete recommendations are made under point 9 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Fire risks from batteries in waste management facilities must be reduced. The misplacement of lithium batteries in waste streams is causing a sharp rise in fire incidents across the European waste management sector. These fires pose a growing threat to worker safety, destroy critical circular infrastructure, and undermine the financial viability of waste operators. With lithium batteries now embedded in a wide range of consumer products, and often disposed of incorrectly, this issue is intensifying unless decisive action is taken. Current regulatory efforts under the Battery Regulation and guidance on removability are welcome, but insufficient. The scale of the problem requires additional targeted instruments. Concrete recommendations are made under point 10 of FEAD´s 10 policy recommendations for the Circular Economy Act.
• Barriers to unlock biomethane deployment must be addressed. Biomethane from waste offers a renewable alternative to fossil gas while also contributing to the circular use of organic waste and residues. In addition, recycling nutrients from organic waste and sludge is essential for reducing Europe’s reliance on imported mineral fertilisers, closing the nutrient loop and reducing greenhouse gas emissions from waste disposal and fertiliser production. However, despite the ambitious 35 billion cubic metre target set under the RePowerEU plan, biomethane production remains far below potential. To unlock biomethane deployment, the EU must address several critical barriers such as the lengthy and inconsistent permitting procedures, the lack of harmonised certification systems, limited access to investment finance, and the absence of a true internal market for cross- border biomethane trade. The IDAA should fast-track permitting and ensure the integration of biomethane into the EU gas market and the cross-border mutual recognition of guarantees of origin. In addition, a harmonisation and clarification of the existing patchwork of legislation applying to the biogas production is needed.
• The supply of industrial waste heat or process steam from waste-to-energy plants must be supported to contribute to the decarbonisation of Energy Intensive industries (EIIs). Waste incineration with energy recovery (Waste-to- Energy, or WtE) is a well-established method for managing non-recyclable residual waste from households, businesses, and industry. Its primary function is the safe and hygienic treatment of waste, but it also captures the energy contained in the waste to generate electricity and heat for local energy networks. WtE plants are capable of supplying process steam or heat directly to nearby industries through industrial heat networks. Although this waste heat is already available, greater support and investment are needed to build the infrastructure required to connect it with industrial users. To maximise the benefits of WtE, industrial decarbonisation strategies and infrastructure planning should include a mandatory assessment of available waste heat and its potential uses. Furthermore, the development of industrial heat networks linking different facilities should be actively promoted and supported. WtE provides a local energy source that is partially renewable and low in carbon emissions, making it an effective way to reduce reliance on fossil fuels in industrial processes. It is especially valuable for sectors that require medium- temperature heat. However, many EII decarbonisation projects face significant delays due to complex and lengthy permitting processes – particularly for projects involving new energy connections. Streamlining these procedures and removing barriers to shared infrastructure, such as industrial heat networks, is essential. WtE has the potential to bridge the gap between energy systems and industrial demand, yet this opportunity remains underexploited due to a lack of coordination, investment, and support for industrial symbiosis and energy integration.
   

1https://www.eea.europa.eu/publications/capturing-the-climate-change-mitigation

2https://circulareconomy.europa.eu/platform/sites/default/files/emf_completing_the_picture.pdf

FEAD 10 recommendations for the upcoming Circular Economy Act

FEAD is the European Waste Management Association, representing the private waste and resource management industry across Europe, including 20 national waste management federations and 3,000 waste management companies. Private waste management companies operate in 60% of municipal waste markets in Europe and in 75% of industrial and commercial waste. This means more than 500,000 local jobs, fuelling €5 billion of investments into the economy every year.