Circular economy

Introduction

In a circular economy, products and the materials they contain are highly valued. This contrasts with the traditional, linear economic model, which is based on a 'take-make-consume-throw away' pattern. In practice, a circular economy minimises waste through reusing, repairing, refurbishing and recycling existing materials and products.

Moving towards a more circular economy could deliver benefits, including reduced pressure on the environment; enhanced raw materials supply security; and increased competitiveness, innovation, growth and jobs. However, there are also challenges, such as finance, key economic enablers, skills, consumer behaviour, business models and multi-level governance.

Click on the graphics for more info

Materials

The economy uses raw materials which are either extracted domestically or imported. In a circular economy, raw materials can come from virgin or secondary sources secondary sources. More info: Material flows, Material stocks

Product design

Product design can contribute to a longer product lifespan and a more circular economy, thanks to ecodesign ecodesign and repair-friendly design. More info: Longer lifetime for products

Product use

To prolong and optimise product use, the shift from ownership of products to their usage (via rental, sharing or subscription models) should be considered. More info: Sharing economy

End-of-life

When they are discarded or no longer used, products reach the end of their life. In a linear economy, products become waste at this stage. In a circular economy, they can be repaired, reused, remanufactured or recycled. More info: Collection of municipal waste

Waste

In the EU, five tonnes of waste is generated per capita per year. From this, about a tenth comes from households. More info: Collection of municipal waste

Share

With a shift from ownership of products to their accessibility, more efficient consumption is possible. The sharing of goods (e.g. car-sharing or car-pooling) makes their use more efficient and reduces their environmental impact. More info: Sharing economy

Repair

Products are generally less durable and repairable than they were in the past. Enabling and promoting repair, for instance by making spare parts and information more easily available, can bring old products back to life.

Reuse

Products such as glass bottles can be reused a large number of times before being discarded.

Remanufacture

Products such as electronic goods can be rebuilt to the original manufacturer specifications using a combination of reused, repaired and new parts.

Recycle

Products such as metals, paper, glass or plastics can be recycled as a source of secondary raw materials.

Section 1

Materials

Material flows

The economy uses materials which are either extracted domestically or imported. These materials are processed to provide energy (for instance fossil fuels and food) and materials. Materials can either be consumed rapidly (e.g. packaging, newspapers or batteries) or kept longer in material stocks (e.g. electronics, furniture, buildings and infrastructure). Once short-lived products are discarded and material stocks are demolished, they become waste and may be recycled. After energy use (in the case of food and fuel) or final treatment (in the case of products), materials leave the economy as emissions and waste.

In the EU, roughly 0.7 gigatonne per year (Gt/y) of waste materials is recycled. This flow is modest compared to the 7.4 Gt/y of materials processed and 4.7 Gt/y of outputs.

?

Imported materials

Imported materials: net imports of materials to the EU.

?

Materials sourced in the EU

Materials sourced in the EU: materials extracted in the EU.

?

Recycling

Recycling: waste treated to generate secondary raw materials, which can feed into processed materials.

?

Materials processed

Materials processed: all materials used in the economy. This includes rocks, minerals, wood, fuels and food.

Construction materials

Industrial minerals

Waste rock

Metals

Fossial energy carriers

Biomass

?

Material use

Material use: all materials not used to produce energy. This includes minerals and the small amount of fuels or wood used to manufacture products such as plastic or timber.

?

Energy use

Energy use: all materials used for energy production. This includes fossil fuels and wood used to produce energy, as well as human food and animal feed.

?

Short-lived products

Short-lived products: consumables typically used within a year, such as newspapers or packaging.

?

Material stocks

Material stocks: products and infrastructure typically used longer than a year. This includes roads, means of transport (boats, planes, trains, heavy goods vehicles, and cars), buildings, furniture and other consumer goods. Materials may stay in stock for decades. Each year, materials added to stocks are about twice as high as materials subtracted from stocks. As a result, material stocks are growing.

?

Waste

Waste: discarded short-lived products and material stocks. This includes municipal and industrial waste, discarded boats and vehicles, as well as construction and demolition waste.

?

Material output

Material output: all wastes and emissions which leave the economy. This includes CO2 emissions and waste deposited onto land.

Click on the graphics for more info

The main challenge is linked with growing material stocks: Material stocks are growing at a high rate with net additions of 2.6 Gt/y (or 35 % of materials processed). Because of growing stocks, we would still need significant inputs from raw materials even if we recycled 100 % of materials discarded today. Material stocks are expected to continue growing in the coming decades and global material resource use is expected to double between 2010 and 2030.

Material stocks

Global Steel production

1040 million tonnes/year

93 Mt/y Cars and light trucks 9%
27 Mt/y Trucks and ships 3%
27 Mt/y Electrical equipment 3%
137 Mt/y Mechanical equipment 13%
150 Mt/y Infrastructure 14%
433 Mt/y Buidings 42%
134 Mt/y Metal goods 12%
9 Mt/y Packaging 1%
29 Mt/y Domestic appliances 3%
8 Mt/y Cars and light trucks 18%
3 Mt/y Trucks 7%
6 Mt/y Electrical equipment 14%
3 Mt/y Mechanical equipment 7%
11 Mt/y Buidings 24%
6 Mt/y Packaging 13%
3 Mt/y Domestic appliances 7%
5 Mt/y Other 11%

Global Aluminium production

45 million tonnes/year

Raw Material Supplies

The supply of raw materials is associated with risks, such as price volatility, availability, and import dependency.

The EU currently imports, in raw material equivalents, about half the resources it consumes.

The EU is particularly exposed to risks related to the supply of the 27 non-energy and non-agricultural 'critical raw materials' identified by the European Commission. Many of these raw materials are essential in high-tech products. China is the biggest producer of EU critical raw materials. Several other countries also have dominant supplies of specific raw materials, such as the USA (beryllium) and Brazil (niobium).

The map displays countries extracting at least 20 % of global production for a given material. The share of global production may not reflect actual imports in the EU. As a result, some countries from which the EU sources significant shares of critical raw materials may not appear on the map (for instance Morocco, which extracts 13 % of global phosphate rock production, and from which the EU currently imports 31 % of its needs for this material).

Click on a country to see details

China

Antimony

87%

Baryte

44%

Bismuth

82%

Fluorspar

64%

Gallium

73%

Germanium

67%

Indium

57%

Magnesium

87%

Natural Graphite

69%

Phosphate Rock

44%

Phosphorus

58%

Scandium

66%

Silicon Metal

61%

Tungsten

84%

Vanadium

53%

LREEs

95%

HREEs

95%

Russia

Palladium

46%

France

Hafnium

43%

Turkey

Borate

38%

Rwanda

Tantalum

31%

Thailand

Natural rubber

32%

Democratic Republic of the Congo

Cobalt

64%

South Africa

Iridium

85%

Platinum

70%

Rhodium

83%

Ruthenium

93%

Brazil

Niobium

90%

United States of America

Beryllium

90%

Helium

73%
Section 2

Waste

Waste generation

In 2016, 2.5 billion tonnes of waste (or about 5 tonnes per capita) were generated in the European Union. While the greater part came from the construction (37 %), mining (25 %), and manufacturing (10 %) sectors, households represented 9 % of the total.

Of the 5 tonnes of waste generated per capita, 4.5 tonnes were treated.

Click on the graphics for more info

25%

Mining and quarrying

Materials moved to gain access to mineral resources, i.e., topsoil, overburden and waste rock.

Total does not add up to 100% due to rounding.

9%

Households

Household waste includes both mixed household rubbish and separately collected waste, such as paper and glass.

Total does not add up to 100% due to rounding.

19%

Other, including waste treatment

Materials discarded during waste treatment, for instance during sorting and recycling.

Total does not add up to 100% due to rounding.

10%

Manufacturing

Any materials disposed of during manufacturing processes. Manufacturing waste includes a wide variety of materials.

Total does not add up to 100% due to rounding.

37%

Construction

Materials discarded when old buildings are demolished or renovated, as well as material discarded during the construction of new buildings.

Total does not add up to 100% due to rounding.

Collection of municipal waste

Door-to-door collection implemented in EU Member States varies from one bin (only collecting residual waste and relying on bring-point systems for recyclables and bio-waste), up to six separate bins or sacks.

Strict separate collection usually leads to higher recycling rates. Among collection methods, door-to-door collection systems result in highest capture rates and yields of recyclables.

Click on a country to view the primary systems used in the country to collect municipal waste.

Click on a country to see details

Overview of collection systems in place in the EU-28 capital cities.

Treatment of municipal waste

Wide differences exist between Member States regarding the treatment of municipal waste. Municipal waste and its various fractions are generally landfilled, incinerated (i.e., burnt, in most cases with energy recovery), recycled (for instance paper, glass or metal) or composted (turning garden waste or food waste into compost or biogas). Some waste management options are preferable to others. For instance, recycling and composting are generally preferred over incineration. Landfilling is the least preferred option. See the 'waste hierarchy' segment below.

The share of recycling and composting among waste treatment methods ranges from 67 % in Slovenia to 8 % in Malta (the EU average is 46 %); eight Member States landfill less than 5 % of their municipal waste, while eight Member States landfill over 60 % of their municipal waste (the EU average is 25 %).

The amount of municipal waste per capita per year is another important indicator. It varies from 261 kg in Romania to 777 kg in Denmark (the EU average is 483 kg).

Breakdown of treatment methods

Annual waste per year Kg/Capita

  • <300
  • 300-400
  • 400-500
  • 500-600
  • 600-700
  • >700

Click on a country to see details

Treatment of packaging waste

Measured by weight, packaging accounts for over 3 % of all waste generated in the EU. Packaging is made up of paper and cardboard (41 %), plastic (19 %), glass (19 %), wood (16 %) and metal (5 %).

In 2016, 67 % of packaging was recycled in the EU-28, although recycling rates for specific materials varied a great deal: 85 % for paper and cardboard packaging; 78 % for metallic packaging; 74 % for glass packaging; 42 % for plastic packaging; and 40 % for wooden packaging . There are wide variations in recycling rates for specific packaging materials across Member States.

Section 3

Smarter use of resources

In EU law, the 'waste hierarchy' is a guiding principle for waste management. It sets an order of priority for waste prevention and management options:

Prevention

Preventing waste generation, e.g. by reducing packaging or making products last longer. Prevention is more related to product design and consumption than to waste management.

Preparation for reuse

For instance, reusing packaging through deposit schemes, or remanufacturing electronics (phones, set-top-boxes).

Recycling

For instance, ferrous metal, non-ferrous metal (e.g. aluminium, copper), glass, paper and cardboard, rubber, plastic, wood and textile wastes, whether hazardous or non-hazardous.

(Energy) recovery

Burning waste in incinerators; in most cases, the energy produced is used to generate electricity and/or heat (used for instance in industrial processes or district heating systems).

Disposal: landfilling

Another important guiding principle is the 'polluter pays' principle. This ensures that the costs of preventing, controlling and cleaning up pollution are reflected in the cost of goods.

Opportunities

Socio-economic impact

Despite increased waste sorting, collecting and recycling costs, higher positions on the waste hierarchy have a positive overall economic impact.

Cost savings for businesses

The circular economy could bring EU companies annual net material cost savings, ranging from €250 to €465 billion – or from 12 % to 23 % of their material costs.

Quality jobs

Higher positions on the waste hierarchy create higher quality jobs.

Climate action

Greenhouse gas emissions are reduced as waste management moves up the waste hierarchy. This is mostly because landfilling releases methane, a powerful greenhouse gas. Current European Commission proposals to improve waste management would deliver savings of 30 million tonnes CO2 equivalent per year (under 1 % of current emissions).

Challenges

Prevention

Steps need to be taken to tackle the lack of effective waste prevention measures and lack of appropriate data on waste prevention. This includes looking at the design, production and consumption of goods.

Reuse vs recycling

The market share of reusable household packaging is decreasing. There are also potential conflicts between packaging reuse schemes and recycling schemes.

Recycling vs incineration

The investment required for a large incineration capacity may create overcapacity and have a lock-in effect which could be a disincentive to recycling. Recycling generally remains a better waste management option, provided that material quality is maintained.

Non-toxic recycling

Protecting consumers from toxic substances which can be found in waste, and ensuring that toxic substances are not present in recycled materials.

Sharing economy

Sharing of human and physical resources

The sharing economy provides a new dimension to consumption. It is based on the sharing of human and physical resources, such as creation, production, distribution, trade and consumption of goods and services.

New platforms

Matching demand and supply effectively. A multitude of new sharing economy platforms are changing consumption patterns and environmental concerns, empowering consumers to capitalise on their property and skills, by using them more efficiently. These new platforms, such as Uber, Lyft, Airbnb and eBay, match demand and supply of goods and services between peers – ranging from those renting second-hand wedding dresses and designer clothing, to platforms for renting private accommodation, office space, tools and other goods, and for trading services (e.g. a ride to work).

Less pollution

Reducing the environmental impact of consumption. It is argued that sharing economy is fostering new growth by using goods more efficiently as well as reducing the environmental impact of consumption (e.g. car-sharing or carpooling).

No ownership

Focusing on product use and accessibility rather than on ownership. The way forward to more efficient consumption could therefore be to focus on product use rather than on ownership, as the sharing economy model proposes. By way of illustration, product service utility business models, shifting responsibility for a product from the consumer to the producer, are also already emerging (i.e., electric car sharing, and the 'pay per lux' lighting scheme).

Section 4

Towards a circular economy / more with less

Raw material consumption tends to increase during periods of economic growth, but at a slower pace than Gross Domestic Product (GDP). As a result, material consumption is partially decoupled from economic growth. A significant drop in raw material consumption since 2008, partly due to the economic crisis, has pushed the increase in resource productivity to 2.4 % per year on average since 2000.

European Commission forecasts suggest that resource productivity will continue to increase under a 'business as usual' scenario, but at a slower pace (0.9 % per year or 15 % by 2030).

  • Gross Domestic Product
  • Material Consumption
  • Resource Productivity

Longer lifetime for products

In a circular economy, the way forward is clear: reduce, reuse and recycle as much as possible. Increasing product lifetime is an important step. Research shows that a minimal increase of just 1 % of value added by economic activities related to longer product lifetimes could have an aggregated effect of €7.9 billion per year across the European economy.

More info Less info

The shift towards a culture that values product durability and sustainability would require ensuring better, more durable product design, providing useful consumer information (potentially including expected or minimum product lifetime, usage price (i.e., expected cost per usage unit), or a product passport), technical standardisation to benefit consumers (for example, a standard mobile phone charger) and better, cost-efficient, reparability of products. Measures to improve the durability of products could include: adopting rules on consumer information about the availability of spare parts to encourage the culture of repair, systematically considering durability criteria in technical standardisation and examining some environmental tax measures to discourage marketing and selling short-lived goods that cannot be mended (e.g. pay-as-you-throw waste tax or a tax on disposable products). A ban on products with built-in defects designed to end the product's life, i.e., a ban on planned obsolescence could also be a part of the solution.

Prolonging the duration of legal product guarantees, reforming key EU product legislation (the Ecodesign Directive and the Directive on Waste Electrical and Electronic Equipment) or developing a horizontal approach under the Ecodesign Directive to address product durability systematically in all product groups has also been proposed by consumer organisations.

Research and development in this area could also focus on product ecodesign and the sharing economy, where the economy is centred on product use (i.e., the rental, leasing, or subscription model) rather than on ownership.

€332

Ecodesign saves consumers an average of €332 a year

Ecodesign saves consumers €332 each year from energy savings compared with a non-Ecodesigned world.

Data source: ANEC-BEUC Factsheet: How much can consumers save thanks to ecodesign, 2016

80%

of a product's environmental impact

The design stage is vital in minimising the product's overall environmental impact. The design stage determines 80 % of a product's environmental impact.

Data source: European Commission: Ecodesign Your Future

40%

of European greenhouse gas emissions

The Ecodesign Directive covers more than 40 product groups, including boilers, light bulbs, and fridges. Together, these product groups are responsible for 40 % of European greenhouse gas emissions.

Data source: European Commission, 2011

€110

Failing products cost the average German consumer €110 per month

While true economic costs are difficult to assess, some experts have estimated that failing products could cost the average German consumer approximately €110 per month.

Data source: Durable goods: More sustainable products, better consumer rights, BEUC, 2015

20%

Shorter product lifespan between 2000-2015

Data from the Netherlands shows that the median lifespans of certain product categories shortened between 2000 and 2015, with the lifespan for small consumer electronics and accessories decreasing by up to 20 %.

Data source: Products that last, 2013

Opportunities

30%

Jobs and growth

Increasing resource productivity by 30 % by 2030 (i.e., doubling the expected increase of a 'business as usual' scenario) would increase GDP by 0.8 % and create two million new jobs in the EU.

20% to 90%

Energy and costs savings associated with increased resource efficiency

Using secondary raw materials instead of virgin raw materials in metal, glass and paper production, produces energy savings of 20 % to 90 %, as well as significant water savings.

Environmental impacts

Manufacturing that uses fewer resources (i.e., energy, water, land and materials) would have positive impacts on the climate, marine littering, and biodiversity.

Enhanced security of supply of raw materials

Risks associated with the supply of raw materials, such as price volatility, availability and import dependency, would be mitigated using secondary raw materials.

Challenges

Finance

Mass market development of radical innovations entails considerable transition costs (e.g. research and development, and asset investments, subsidy payments to promote new business models), for which appropriate financial tools are lacking.

Missing key economic enablers

These include pricing systems that incorporate the full environmental cost; incentives for producers and recyclers to work together to improve performance of specific value chains; and markets for secondary raw materials.

Missing skills

The workforce currently lacks technical skills. This is especially problematic for SMEs.

Limitations of recycling

Some materials cannot be recycled indefinitely, due to the build-up of impurities in recycled materials, such as metals, and glass, or the degradation of fibres which occurs when paper is made using repeatedly recycled material.

Section 5

EU actions

Ambitious goals

The EU hast set itself ambitious goals:
'In 2050, we live well, within the planet’s ecological limits. Our prosperity and healthy environment stem from an innovative, circular economy where nothing is wasted and where natural resources are managed sustainably.'


European Commission

In 2015, the European Commission pledged to take action:

  • New legislation: e.g. waste, fertilisers, water reuse, and product design.
  • Communications and reports: e.g. waste-to-energy, plastics strategy, and critical raw materials.
  • Implementation and enforcement: e.g. waste shipments, end-of-life vehicles, food donation, and use of former foodstuffs for animal feed.
  • Guidance: e.g. integrating waste management and resource efficiency in standards on industrial activities.
  • Voluntary standards: e.g. developing standards for recycling of electronic waste and batteries, and promoting voluntary standards for the recycling of construction and demolition waste.
  • Indicators: e.g. developing indicators to measure food waste and to assess the lifecycle environmental performance of buildings.
  • Considering possible future options: e.g. the non-toxicity of recycled materials, the bioeconomy contribution to the transition, the improvement of date labels on food, and financial support for the transition to a circular economy.


European Parliament

The European Parliament called for EU and national targets to increase resource efficiency by 30 % by 2030 compared to 2014 levels, and for a 'dashboard' of indicators to measure various aspects of resource consumption. It also requested: a review of ecodesign legislation and relevant product-policy legislation; to gradually include mandatory resource-efficiency requirements; measures promoting the development of markets for secondary raw materials; compulsory green public procurement; and mobilisation of EU funds for resource efficiency. Parliament also pointed out that education and training policies would have to take the 'green skills' needed in the shift towards a circular economy into account.

In December 2015, the European Commission put forward a Circular economy package containing an action plan (see section above) and legislative proposals on waste management, which were adopted in 2018. The European Parliament is closely monitoring the implementation of the action plan.

EU funding

Committed funds until 2020:

€35 bn

European Structural and Investment Fund

European Structural and Investment Funds: €35 billion allocated to 'Environment and resource-efficiency', including €5.5 billion for waste management. This €5.5 billion is divided into three parts:

€2.1bn prevention and recycling
€2.8bn incineration and thermal treatment
€0.6bn hazardous waste management

€650 m

Horizon 2020 (research)

€24 billion

European Investment Bank financial support for research and innovation

Estimated funding needs

€40 bn

€40 billion until 2020 to fully implement current EU legislation (EIB).

3% of GDP

3% of GDP per year from now until 2030 to finance a transition towards a circular economy (Club of Rome).

€123 bn

€123 billion was spent on feed-in tariffs to renewable plant operators from 2000 to 2013 to finance the renewable energy transition in Germany alone (Ellen MacArthur Foundation).

US$2.2 tn

US$2.2 trillion to 2035 to replace ageing energy infrastructure and meet decarbonisation goals (IEA, quoted in Ellen MacArthur Foundation).

Outlook

Although the transition to a circular economy could deliver a number of opportunities, the road ahead is fraught with obstacles. The scope of the circular economy extends far beyond waste prevention and waste management. It is about using natural resources efficiently, increasing the use of secondary raw materials, securing access to strategic resources and reducing reliance on imports. What is at stake is Europe's environmental footprint, the competitiveness of the European economy, and ultimately the living standard of EU citizens.

To remain up-to-date with ongoing EU actions relevant to circular economy, visit our Legislative Trains website: New circular economy action plan | Directive on waste | Packaging waste directive | Landfill directive | End-of-life vehicles, batteries and electronic waste | Single-use plastics and fishing gear | Review of the fertilising products regulation | Minimum requirements for the re-use of wastewater | Revision of the Drinking water Directive | Reduction of food waste | Ecodesign for circular economy | Strategy for secondary raw materials | Strategy on plastics in the circular economy | Monitoring framework for the circular economy | Interface of chemical, product and waste legislation | Refit of Ecolabel Regulation

This infographic was updated in December 2018.

Share this article

To remain up to date with the EU’s approach to the circular economy, regularly visit the European Parliament’s blog. Or send us an email on eprs@ep.europa.eu.

Visit the European Parliamentary Research Service online
blog Think Tank @EP_Thinktank

Definitions

Circular economy

A production and consumption model which involves reusing, repairing, refurbishing and recycling existing materials and products to keep materials within the economy wherever possible. A circular economy implies that waste will itself become a resource, consequently minimising the actual amount of waste. It is generally opposed to a traditional, linear economic model, which is based on a 'take-make-consume-throw away' pattern.

Municipal waste

Waste from households and similar waste from other sources (such as offices). This may be collected by municipalities, on their behalf, or by private operators. Municipal waste includes bulky waste, but excludes waste from municipal sewage networks, municipal construction and demolition waste.

Domestic material consumption (DMC)

Total amount of materials directly used by an economy. This is calculated as the quantity of raw materials extracted from the domestic territory, plus physical imports, minus physical exports.

Raw material consumption (RMC)

Total amount of materials consumed by an economy. Calculated as the quantity of raw materials extracted from the domestic territory, plus the mass of raw materials needed for physical imports (calculated through modelling), minus physical exports.

Resource productivity

Indicator of how efficiently resources are used in an economy. Measured as gross domestic product (GDP) over raw material consumption (RMC) – or in some cases, domestic material consumption (DMC).

Critical raw materials

Materials combining a high economic importance to the European Union with a high risk associated with their supply. The European Union has identified 20 critical raw materials.

Secondary raw materials

Recycled materials which can be used in manufacturing processes instead of, or alongside, virgin raw materials.

The sharing economy

The sharing economy (also referred to as the collaborative economy, peer-to-peer economy or collaborative consumption), is based on the sharing of human and physical resources such as creation, production, distribution, trade and consumption of goods and services. For consumers, this stresses a shift from ownership to accessibility. The sharing economy takes advantage of new technologies by using internet platforms as well as information and communications technology applications, leveraging communities or crowds to rent, share, swap, barter, trade, or sell access to products or services. It is argued that the sharing economy reduces the environmental impact of consumption (e.g. car-sharing or carpooling).

Planned obsolescence

No overarching definition of the term 'planned obsolescence' exists. The term can be used interchangeably with programmed obsolescence, and may refer to either product or technology obsolescence. Described as the intentional production of goods and services with short economic lives, stimulating consumers to repeat purchases within a shorter period of time, or simply too frequently. The European Commission defines planned obsolescence as a commercial policy that involves deliberately planning or designing a product with a limited useful life so that it will become obsolete or non-functional after a certain period of time.

Ecodesign

The 2009 Ecodesign Directive establishes EU rules for improving the environmental performance of energy-related products such as household appliances, through ecodesign. It sets out minimum mandatory requirements for the energy efficiency of these products, helping to improve product quality and environmental protection. The 2010 Energy Labelling Directive complements the Ecodesign requirements with mandatory labelling requirements.