15 demands for circular value creation “Made in Europe“
Demands of the BDI Circular Economy Initiative for 2024 to 2029
September 2024
Themembersof theBDI Circular Economy Initiative pursue the commongoal of developingthe circular economy into the main pillar of sustainable, defossilized industrial value creation. They have determined that our economic activities must also focus on using, recycling and reusing high-quality products and raw materials in cycles for as long as possible. At the same time, it will be necessary to support this ambition with new and innovative business models and circular services. It is also undisputed that stable access to sustainably sourced primary raw materials must be guaranteed for the supply of raw materials to industry in view of the transformation challenges it faces. This is the only way to ensure a secure overall supply of raw materials in Europe and to provide the necessary technologies for the global protection ofnatural resources andthe climate. Themembersof theBDI Circular Economy Initiative see themselves as shapers of the development towards a circular economy and stand for competition, openness to technology and innovation. Taking these principles into account, thetransition toa circular economicmodel requiresa holistic andambitious policy that creates a secure framework for closing loops on the basis of new instruments.
The fact that the President of the European Commission, Ursula von der Leyen, continued to classify the circular economy as central to industrial policy in her political guidelines for the years 2024 to 2029 in July 2024 is therefore correct. However, for the circular economy to become a real success factor for Europe as a business location, the following fundamental conditions must also be taken into account:
- The framework conditions for Europe as an industrial location, including competitive energy costs, swift approval procedures and digital infrastructure, must be designed in such a way that companies can also produce, invest and innovate in the EU in the global competition between locations.
- Companies must be put in a position where circular strategies can also be implemented as business models in a free European internal market. This may also require the establishment of green lead markets.
- The desired product and material cycles must be supported by a coherent legal framework which, on the one hand, provides consistent definitions and specifications and, on the other hand, defines the interfaces between product, waste and material legislation in such a way that cycles are enabled and not prevented.
- The European model of a holistic circular economy must be anchored in international trade and climate protection policy as well as standardization work in order to strengthen the competitiveness of European companies.
15
demands on European policy 2024 to 2029
1. Circular products as a starting point
1.1 For a functioning internal market and legal certainty for companies, the EU should review the various product-specific regulations and directives for coherence in terms of definitions (especially for R-Economy terms outside of waste legislation such as repair, refurbish, remanufacture, etc.) and harmonize them where necessary. Basic definitions should be defined across the board at a central point (e.g. Ecodesign Regulation), unless otherwise justifiable from a thematic perspective. There also needs to be a clear demarcation of the areas of application of the regulations and directives as well asa cycle-promoting interlinking of waste, product and substance legislation.
1.2 Whendeveloping requirements for circular productdesign, the Commission shouldensure that the stakeholders (companies, associations, etc.) are involved in a transparent and structured manner. Only in this way will it be possible to develop practical requirements for marketable circular products.Sofar,forexample,there isno freelyaccessible overviewof whichdelegated and implementing acts on the circular economy as a whole are being developed and when, and how and when stakeholders will be involved
2. Functioning markets for raw materials in the circular economy
2.1 When establishing instruments to promote the use of raw materials in the circular economy, such as minimum recycled content, economic instruments, producer responsibility systems or quality standards, the impact of different market requirements on supply and demand must be thoroughly examined as part of impact assessments. This allows the appropriate measures ("push" or "pull" measures) to be identified for the respective material flow. If, for example, use quotas for a mandatory recycled content for plastics are established in different legislation (in the Single-Use Plastics Directive, the Packaging Ordinance and the End-of-Life Vehicles
Ordinance, etc.), these potentially address an identical material base (a waste stream). The same applies to the effects of requirements for preparing for reuse on the availability of waste for recycling. Furthermore, it is imperative to establish a free internal market without complex notification procedures for waste for recycling with a high level of protection throughout the EU.
2.2 The provisions of the Waste Framework Directive on by-products (Art. 5) and the end-of-waste status (Art. 6) should be reviewed to determine whether they sufficiently meet the purpose of establishing circular value creation in the EU and the European understanding of a circular economy in accordance with the Green Deal in terms of material flows. The transition from waste law back to product and material law is crucial for the success of raw material cycles and must be legally secure and manageable for companies. More specific requirements for the end of waste status must therefore be examined on a material-specific basis and, if necessary, designed together with the economic players.
2.3 The contribution to greater supply security and resilient supply chains made by circular economy raw materials can - depending on the global market price and availability of materialscost more than the use of primary raw materials. The EU should therefore hold a strategic discussion on the value it wants to attach to a stable supply of raw materials from circular sources, including corresponding investment security for companies in circular structures, for example in green lead markets. This also includes the development and recognition of procedures for balancing the proportion of circular economy raw materials in the basic materials industry (e.g. mass balances), which allow clear evidence of the stages of the waste hierarchy (recycling, other recovery). The role of binding criteria in the context of public circular procurement must also be included in this discussion
3. Circular economy as a prerequisite for more climate protection
3.1 The EU should work at international level - for example at the World Climate Conferences - to ensure that the effects of circular value creation on greenhouse gas emissions can be measured and accounted for in a standardized way. The focus here mustbeonmethods thatenable a perspective across value creation stages in the Scope 3 area.
3.2 The recycling of waste already makes an important contribution to avoiding greenhouse gas emissions. However, around 20 percent of municipal waste in the EU is still disposed of in landfills. This means that a significant proportion of the raw material potential of European municipal waste remains unused. The disposal of untreated municipal waste should therefore be ended quickly throughout the EU in order to exploit the material and energy potential.
4. Digital circular value creation
4.1 As part of the Green Deal, digital product passports (DPPs) or labels have been established in numerous legal acts (Ecodesign Regulation, Battery Regulation, Construction Products Regulation, Packaging Regulation, etc.). When implementing these projects, the EU should ensure that the respective digital product passports are technically compatible with each other and that no duplication is triggered when aggregating information.
4.2 The desired establishment of DPP can only be successful if all relevant stakeholders for the data cycle also have simple and free access to the necessary digital infrastructure and are informed in good time about product-specific information obligations. The Commission should therefore work with the Member States to develop information and support instruments in particular to involve small and medium-sized enterprises (SMEs). The same applies to actors that are part of value creation stages that are located outside the EU in order not to jeopardize international trade relations.
4.3 For the implementation of DPP and the use of digital technologies for circular economy strategies, data spaces are needed that enable the seamless transfer of data across different stakeholders and national borders. Gaia-X is an initiative of European partners with the aim of establishing a secure and competitive data infrastructure in Europe. Through projects such as Catena-X and Manufacturing-X, the aim is to further expand this infrastructure so that the standards developed can be applied to specific industry consortia. There will be a need for further funding in the coming years in order to establish data spaces for the circular economy in the long term.
5 Governance and stakeholder involvement for good regulation
5.1 The focus in the design of framework conditions for circular value creation is increasingly shifting to requirements for products and companies. Accordingly, the role of standardization is also becoming increasingly important in the design of circular markets. The EU should therefore ensure that framework legislation and standardization in the EU and internationally are interlinked in such a way that harmonized specifications and sufficient flexibility in the technical development of products are guaranteed
5.2 In order to be able to establish the European understanding of circular value creation as an export model, companies are dependent on the connectivity of theEuropean regulatory framework to international processes. The EU should therefore promote the involvement of companies in international standardization bodies and at the same time play an active role in
international standardization policy. To this end, the European standardization strategy must focus on the circular economy.
5.3 The uniform enforcement of circular economy regulations and functioning market surveillance, particularly for imported goods, are essential for fair competition. The EU should therefore develop strategies together with the Member States to provide sufficient capacity for these tasks. The use and integration of DPP data should also be considered for improved enforcement.
5.4 In the framework legislation on the circular economy from the Green Deal, it was decided to draw up and adopt numerous delegated and implementing acts. The regulations in these legal acts will be decisive for the success of entrepreneurial circularity. The EU should therefore ensure the greatest possible transparency in the drafting processes and provide for broad stakeholder participation.
5.5 In recent years, the EU Commission has increasingly used standardization mandates to CEN and CENELEC to further develop the regulatory environment of the circular economy (e.g. M/584 or CEN/CLC JTC 24 DPP/ESPR). The experience and organizational knowledge gained there should be used for future commissions. The aim should be to systematically and effectively anchor future standardization mandates in the Commission across DirectoratesGeneral in order to bring together the perspectives of harmonized product specifications for the functioning of the internal market and the ecological perspective of waste legislation.
Imprint
Federation of German Industries (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu
T: +49 30 2028-0
Lobby registration number: R000534
Editorial team
Dr. Claas Oehlmann
Managing Director Circular Economy Initiative
T: +49 30 2028-1606 c.oehlmann@ice.bdi.eu
BDI document number: D1987