In the coming months, the European Commission will publish the legislative proposal for the future Circular Economy Act (CEA), a regulation expected to become a key pillar of the Clean Industrial Deal and the Competitiveness Compass for the 2024-2029 mandate. Through this initiative, the EU aims to double the use of circular materials to 24% by 2030 and place circularity at the heart of the single market, industrial resilience, and Europe’s strategic autonomy. The Act will establish a common European framework to harmonise key definitions and regulations on waste, secondary materials, and producer responsibility, while simplifying legislation related to products, waste, and the internal market.

The CEA is expected to become a tool for competitiveness and should:

• – accelerate the EU’s transition from its current 90% linear economy towards a circular economy;
• – establish simpler, clearer, and more digital rules for secondary raw materials and waste in order to harmonise the European market and reduce costs;
• – increase separately collected waste volumes and improve the availability and quality of secondary materials;
• – boost the incorporation of secondary materials into products;
• – strengthen Europe’s collection, sorting, and recycling capacity;
• – and reduce waste generation.

The European Commission itself highlights the strategic relevance of the CEA, pointing to its potential to address challenges related to economic security, the environmental crisis, and industrial competitiveness.

Addressing the key challenges shaping Europe’s political debate

The circular economy model seeks to move away from the traditional “take-make-use-dispose” model by keeping resources in circulation for as long as possible. Its goal is twofold: reducing environmental impacts while increasing Europe’s economic resilience by lowering dependence on virgin materials and unstable global supply chains.

In this context, the Act will need to address several structural challenges currently at the centre of the European political debate:

• – Material security and critical raw materials. The EU remains highly dependent on third countries for strategic resources, placing it in a vulnerable position. For example, it imports almost 100% of its heavy rare earths, mainly from China. Although the European Critical Raw Materials Act sets a target for 25% of Europe’s strategic material consumption to come from recycling, current recycling rates for materials such as lithium and rare earths remain below 1%. The future Act will need to create the market conditions required to make the recovery of these materials economically viable.
• – Fragmentation of the single market. There is currently a lack of harmonised criteria to determine when waste ceases to be waste and becomes a reusable product or material. This lack of harmonisation creates legal uncertainty and hinders the circulation of secondary raw materials across Europe.
• – The need to reduce resource consumption. According to the State of the Environment 2025 report, waste generation and material consumption in the EU exceed sustainable limits. Despite progress in recycling, circularity cannot be achieved simply by recycling more: overall resource consumption must also decrease and become decoupled from economic growth.
• – The price and quality gap between virgin and recycled materials. Recycled materials are often more expensive than virgin materials or are perceived as being of lower quality. This weakens demand and undermines the economic viability of recycling. One of the major challenges of the Circular Economy Act will be making both the use and production of high-quality recycled materials economically attractive.
• – The governance of Extended Producer Responsibility (EPR) systems. These systems require producers to assume financial and/or organisational responsibility for managing products at the end of their life cycle. However, current models often prioritise cost reduction over environmental and circular outcomes.
• – Health risks associated with recycling. Recycling processes can also pose environmental and health-related challenges, such as chemical toxicity and microplastic emissions.

The CEA represents an urgent opportunity for European institutions and national governments to strengthen policies on competitiveness, industrial decarbonisation, and economic resilience in the years ahead.