Circular economy – the high road to strategic autonomy

EU Commissioner for Environment, Oceans and Fisheries Virginijus Sinkevicius explains how transitioning to a more circular economy will reduce our demand for primary resources and energy used for production and consumption. It can also reduce vulnerabilities and susceptibility to supply chain shocks and disruptions like those caused by COVID 19, and more recently the Russian invasion of Ukraine. The need for greater EU ‘strategic autonomy’ is now widely understood – a more circular economy is indispensable to achieve it.

For the EU, strategic autonomy is an evolving concept. The risks associated with our over-reliance on these external sources have recently become starkly apparent. This is particularly true for critical raw materials (CRMs) that are economically important and essential for the transition to a green and digital economy. Most of these cannot be mined in Europe, and supply risks are high as they are often found in politically unstable areas. We are also dependent on some entire components and technologies, e.g. photovoltaic panels, which do not contain such a large amount of CRMs after all, but are manufactured in China in a large proportion.

The pandemic revealed the extent of the EU’s vulnerability, and the potential for economic disruption. Russia’s invasion of Ukraine has now reinforced the need to take more ambitious steps towards strategic autonomy, to mitigate our dependence on Russia for fossil fuels and fertilisers. This is why strategic autonomy is now at the forefront of the EU agenda.

We refer to it as ‘open’ strategic autonomy, recalling the EU’s commitment to open and fair trade based around well-functioning, diversified and sustainable global value chains. The goal is to build up the EU’s ability to make its own choices, while still playing a leading role on the global stage, maintaining our strategic interests and promoting our values.

In building up this strategic autonomy, the circular economy will be essential, not least because of the evident potential for recycling materials from waste. When we follow the principles of the circular economy, we use materials and resources as efficiently as possible, we maximise the value of products, they are kept functional for as long as possible and their use is optimised. In this way EU economic growth is decoupled from resource use, while minimising waste and pollution. Circular economy is central to meeting our climate, biodiversity and zero pollution objectives, but as part of the European Green Deal, it is also central to the EU growth and recovery strategies.

For all these reasons, it will free us from our dependence on imports of energy and other resources. More specifically, it will allow us to reduce our demand for primary resources, lowering energy use for production and consumption. It does this by making every day products consume less energy, by using them more efficiently and for longer, and by relying on recycled materials instead of primary raw materials.

To take one concrete example, during the early phase of the pandemic, the supply of chips was disrupted, giving Europeans a glimpse of the possible dangers ahead. Specialised media in manufacturing echoed the tricks sometimes used by car manufacturers to keep production lines moving. Carmakers are using semiconductors taken from washing machines, rewriting code to use less silicon, and even shipping their products without some chips while promising to add them in later. As it stands, this value chain today is clearly vulnerable.

Similar critical value chains are those of most renewable energy technologies. To counter the problem of scarce components and elements, electric vehicle batteries could potentially be reused for energy storage in households equipped with photovoltaic panels. Rare earth elements inside permanent magnets from old generation wind turbines might be reused and recycled within the motors of electric vehicles.

In 2020, before the Covid pandemic hit, the EU’s new Circular Economy Action Plan was already paving the way to increased circularity. Two years on, the Commission has now delivered many important initiatives contained in that Plan.

The proposal for an Ecodesign for Sustainable Products Regulation adopted in March of this year is particularly significant. Building on the success of the previous Ecodesign Directive, which led to remarkable energy savings for EU consumers, the new Regulation will ensure that an ecodesign approach is applied to a far wider range of products, going beyond energy efficiency to improve circularity and environmental sustainability. New physical design requirements will ensure that products last longer (via upgrading, reuse, repair. There will also be requirements to ensure that products are easier to recycle, and contain more reused and recycled components and materials.

One innovation in the proposed regulation is a new European Digital Product Passport, which will require products to be tagged, identified and linked to data relevant to their circularity and sustainability. This will make it easier to identify products that contain these valuable critical raw materials, facilitating optimal use and appropriate treatment when they reach the end-of-life stage.

This combination of physical and data requirements should make a valuable contribution to mitigating EU dependencies on external sources of energy and materials.

The new regulation complements other existing and on-going actions that also target critical raw materials. In the revised Batteries Regulation, now in the final stages of legislative adoption process, recycled content should become mandatory for lithium, cobalt, nickel and lead, each of which are particularly important for these technologies. The recycled content targets will be accompanied with ambitious collection, recycling efficiency and material recovery targets.

Looking forward, the Critical Raw Materials Act announced by President Ursula von der Leyen will respond to calls from the European Council in the Versailles Declaration of March 2022 and the European Parliament Resolution on critical raw materials of November 2021. It should seek to diversify sourcing of virgin CRMs, and manage them better, and it will also recognise the enormous potential of circular approaches to achieving strategic autonomy.

Europe is not an island – we are a trading block, and we will always be happy to trade with external partners. But we need to build up our domestic capacity, not just for recycling, but for reuse, repair, and remanufacturing as well. The certainties of recent decades are falling away. We have to face this new reality, and consolidate the foundations we need for the green and digital transitions. Circularity is the strategic choice to safeguard that future.