Fixing the blind spots of the EU’s circular economy with a plan for just and sustainable resource management

It is hard to overstate how much the European Green Deal represents a major gamechanger compared with the decade before. The European continent suffered years of painful and pointless austerity policies, leading to severe underinvestment in essential infrastructure and stagnant living standards for low-income households. Equally importantly, the Green Deal and the Next Generation EU stimulus package also indicated a major departure from the fragmented and piecemeal attempts at addressing the triple planetary crises of climate change, biodiversity loss and pollution.

With this new agenda, the understanding finally gained ground that a transformation of Europe’s economy and society on a sustainable path was not only the best remedy for the aforementioned polycrisis, but also a coherent strategy for improving the health, resilience and well-being of citizens while creating new economic opportunities for businesses and employment.

The circular economy especially is the area where all of these objectives intersect and interact with each other.

Threats to environment, equity and economy

It is crystal clear that increasing resource use is the main driver of the triple planetary crisis: 90% of global biodiversity loss and water stress, 50% of global greenhouse gas emissions, and over 30% of air pollution health impacts are caused by resource extraction and processing. Despite making up an ever smaller part of world population, the EU is still one of the largest consumers of resources in the world. Europeans have a material footprint of 14,9 tonnes per person on average, which is twice the level considered sustainable by the UN International Resource Panel.

When people and countries in the global south blame western powers for their extractivism and overconsumption, they have a point. High-income nations are responsible for 74% of global excess material use, driven primarily by the US (27%), and the EU (25%). China is responsible for 15%, while low and middle-income countries are responsible for only 8%. Meanwhile, the major dependency on resource imports weakens the Union’s resilience in geopolitically turbulent times. Countries may decide to emulate the way Russia weaponized the EU’s fossil fuel dependence, for instance.

The EU shifts into a higher gear

The response of the European Commission to this cocktail of threats was brought together in the second EU circular economy action plan.

This 2020 update sang a much more ambitious tune than its predecessor. Its fourfold objectives aim to (i) accelerate the transition towards a regenerative growth model that gives back to the planet more than it takes; (ii) to keep its resource consumption within planetary boundaries; (iii) to strive to reduce the EU’s consumption footprint; and (iv) to double its circular material use rate in the coming decade.

Some of the 35 key actions to achieve these objectives have landed relatively unscathed from the negotiations between Parliament and Council. One notable example is the ground-breaking ecodesign for sustainable products regulation, which will introduce product requirements for a wide range of products making them more durable, repairable, sustainable and much more. These interventions will potentially push businesses to radically overhaul their business model. Other laws, such as the packaging and packaging waste regulation, have been severely mutilated. Corporate interests managed to kill the proposals on increasing reuse of packaging and much more, for instance.

Blind spots remain

Despite such setbacks, the past mandate has been a step change for a more circular economy. The right question to ask at this point is: will this be enough to sufficiently tackle the manifold challenges mentioned above? A report by the European Court of Auditors gives a sobering outlook, stating that “there is limited evidence that the circular economy action plans […], were effective in influencing circular-economy activities in the member states.” And although resource productivity has increased, even the Commission says “faster progress is needed to meet EU resource-efficiency targets, ensure sustainable use of materials and enhance strategic autonomy.”

There is a fundamental flaw in the EU’s approach.

The key actions mainly look at improving resource efficiency, while overlooking the highest rung of the circularity ladder, which seeks to minimize product and resource demand through more systemic interventions.

The mobility sector is a case in point. While it is crucial that vehicles are electrified and that its batteries and components are designed for reuse and have longer lifetimes, we see an increasing trend towards car obesity and greater need for resources. The most cost and resource efficient strategy to provide high quality mobility options for all income levels consists of more and better public transport, bike infrastructure, and shared vehicles in urban areas.

An upgrade is necessary

As the example above shows, current policies are blind to rebound effects that effectively cancel efficiency gains.

That is why the EU needs an upgrade from a circular economy action plan to a system for sustainable resource management.

One that goes beyond efficiency measures at product level, and also incentivizes demand side solutions at the level of society at large. This requires at least three things.

The first one follows the example of the targets in EU climate law, which have been critical for awareness and investments into relevant sectors. Similarly, there is a need for a law with a clear and binding EU target for resource use for 2035 and 2050 at the least, complemented with differentiated targets for sectors and member states to take different contexts and starting points into account. They need to be equitable inside and outside the EU, and in line with planetary boundaries.

Second, again following the climate law example, an EU Scientific Advisory Board on Sustainable Resource Management should monitor progress and provide independent recommendations. Third, EU and member states should develop plans containing strategies to achieve the targets. These can be integrated with national climate and energy plans, as Flanders has done in the Belgian plan with its voluntary material footprint target of -30% by 2030, for instance.

Just transition: a win-win

Experience with targets in the Netherlands, Austria, Finland and Flanders confirm that only binding targets carry the political weight to direct system change.

The European Parliament has asked for such a binding approach in an 2021 own initiative report on circular economy. In 2022, member states and Parliament have asked to bring material and consumption footprints in line with planetary boundaries as soon as possible in the 8th Environment Action Plan. And an early version of the 2020 circular economy action plan included a target to halve the EU’s material use by 2030.

We should seize this occasion to finally take the next logical step when it comes to resource management in the EU. At the same time, we should ensure that people with low incomes also benefit from this redistribution in the use of resources. That means this policy programme is inevitably linked to an agenda that strengthens the pillar of social rights and provides far higher levels of increased social spending on essentials such as house renovation and public transport. This also leads to stronger local employment that cannot be outsourced and a far greater strategic autonomy. This win-win strategy is the only way to get everyone on board, which ultimately benefits everyone in society, regardless of income level, inside and outside the EU.