Envisioning the Future of the Circular Economy: A Legal Perspective

3.1.1 Binding targets

Policy plans on circular economy most often lack concrete, measurable and verifiable targets in comparison to other policy areas. Although conservation and sparing use of resources have been on the European agenda and some national agendas for at least 15 years and were already addressed in the first version of the Waste Framework Directive in 1972, 43 comprehensive long-term targets are not included. There is no overall strategy, neither at European level nor at a global level. One reason might be that while figures on energy use and CO2 emissions are relatively easy to calculate and to communicate, figures on the use of resources are more diverse. Furthermore, no internationally agreed limits for the use of resources have been established. Standards and aims for air quality or greenhouse gas emissions are not hard to develop and they constitute a quantifiable benchmark that helps to steer public and private action towards realizing them. Most circular economy plans do not have such benchmarks yet. The EU Action Plan 2020 for example states that the EU wants to ‘double its circular material use rate in the coming decade’. 44 It does not, however, clarify what this means exactly. For instance, what is the current ‘circular material use rate’? Does this aim apply to all kinds of products and materials alike? Is reuse treated in the same way as recycling for the ‘circular material use rate’? And why should the ‘circular material use rate’ be doubled? EU law does, however, provide a range of targets related to circular economy, most of which have to be met by the member states.

According to article 11(2)(b) Waste Framework Directive (WFD), 70 % (by weight) of the construction and demolition waste (CDW) should be recovered. According to article 11(2)(a), in 2020, 50 % of household paper, metal, plastic, glass, and comparable streams had to be recovered. In 2025, 55 % of municipal waste as a whole should be re-used or recycled, which figure increases up to 65 % in 2035. Recycling and recovery targets can also be found in directives or regulations for specific products or groups of products, for example the Directive on packaging and packaging waste (Directive 94/92/EC, article 6). This directive comprises recycling targets for packaging in general as well as targets for different packaging materials like paper and cardboard, plastics, or aluminum. Other examples include targets for separate collection (article 7) and recycling (article 11) in the Directive on waste electrical and electronic equipment (WEEE, Directive 2012/19/EU) as well as collection targets (article 10) and targets concerning recycling efficiency (art. 12) in the Directive on batteries and accumulators (Directive 2006/66/EC). However, an overall target has not yet been established. Furthermore, it would be good to know how specific targets, like those mentioned above, relate to an overall strategy and to the aim of a transition to a circular economy.

Some countries do have concrete overall targets, for example The Netherlands, that wants to be ‘fully circular’ in 2050. 45 Unfortunately, it is not clear what this means exactly. The interim goal for 2030, though, is much clearer and more measurable. The Dutch government wants to reduce the consumption of virgin materials (minerals, fossils and metals) by 50 % . This aim is, in principle, measurable and verifiable. It can be broken down into similar goals per product (group) or per type of virgin materials. In doing so, one can also differentiate between goals for certain materials or products and put extra emphasis on, for example, critical raw materials. Such concrete, measurable, binding goals have some great advantages. They can serve as basis for establishing interim goals, checking whether policy is on track, and stimulating action if it is not.

If such targets were introduced on EU level and in other regions and countries worldwide, the question would arise why exactly each of these targets was selected, what aim it serves, and whether it is effective in doing so. These may seem quite obvious and perhaps superfluous questions, but it would be a mistake to think so. The answers to these questions are not easy to give. The effect of better air quality on human health and ecology is clear. The same can be said about the reduction of greenhouse gases in order to limit global warming and its predicted effects on the climate. The effect of a ‘higher degree of circular use’ or of a reduction of the use of virgin materials is less clear and does not automatically lead to more sustainability. Besides for critical raw materials, the use of which has to be reduced or stopped because their availability is critical, there is no benchmark or ultimate global limit of sustainable resource use. For developing such ‘global limits of resource use’, modelled global resource scenarios, like the one developed by the UNEP International Resource Panel 46 and studies on biodiversity and ecosystem services 47 can be used. These can serve as building blocks to establish ‘safe operating spaces’ for natural resource use. The thresholds for such a ‘safe operating space’ will prevent the use of resources from exceeding planetary boundaries and from leading to the breakdown of life-sustaining functions and thereby impairing sustainable livelihoods across countries. 48 Whilst the concept of ‘safe operating space’ raises many questions, for instance where the thresholds should be set if planetary boundaries have already been exceeded, it may nevertheless be a practicable approach to establish well-argued concrete targets, the existence of which is crucial in governing the transition process.

When defining targets or striving to ‘maximally close material loops’, it should be kept in mind that substitution of as many virgin materials as possible by secondary materials is not always the most sustainable solution. It may cause more emission, cost more energy or bring about higher risks for human health and ecology. Potential negative health impacts may result in particular from the management of chemicals of concern, that can, for example, be found in e-waste, food packaging, and in fire retardants in a variety of products. 49 It should therefore be discussed whether and to what extent concrete benchmarks and targets to enhance circularity should be related to more holistic sustainability benchmarks, like the environmental footprint of materials, products or buildings. Such a more holistic benchmark can be operationalized by using Life Cycle Analyses (LCA’s) and similar calculating instruments. This would ensure that focussing on, for example, the reduction of the use of virgin materials, does not lead to the increase of other features, detrimental to sustainability. Such holistic standards should not completely substitute circularity goals, but should rather interact with them. Single issue benchmarks make much sense in the case of critical raw materials, fossil fuel-based materials and materials the delving of which necessarily causes a very high ecological impact. In other cases, circularity aspects should be integrated into broader sustainability benchmarks.

3.1.2 Product law

As discussed in section 2.2, the most prominent aim of the EU’s CE Action Plan 2020 is to ‘establish a strong and coherent product policy framework that will make sustainable products, services and business models the norm’. 50 The action plan recalls that up to 80 % of products’ environmental impacts are determined during the design phase 51 and, logically, emphasises that EU product law should be further developed, mainly by enlarging the scope of the Ecodesign Directive and determining product standards that foster circular use of products and enhance the chances to close material loops, as discussed above. Without doubt, this is a right thing to do. 52 However, holistic product norms face a dilemma. Either they are quite detailed, addressing all kinds of criteria mentioned in the annexes of the Ecodesign Directive individually. In this case they may be an obstacle to innovation and these norms are not easily kept up to date. Or they are composed in more general terms. Consequently, their effectiveness may be limited. A way out of this dilemma could be found in the use of models where all the different criteria for use of secondary material, reparability, GHG emissions, emissions of other substances and so on are translated into the same unit and then aggregated. The sum has to stay below a certain threshold. This is, for example, done in BREEAM, a Building Research Establishment Environmental Assessment Method, which is used in some EU member states on a voluntary basis. With this method, building projects can be integrally assessed on their sustainability. Another advantage of this type of holistic ‘summation’ criteria is that they can be set on a progressive scale. If, for example, the sum of the sustainability effects of a certain project is ten at a maximum, this maximum can be required to go down in years to follow. Producers then can find innovative solutions that address and in time reduce the negative environmental effects of their products in the most cost-effective way.

However, such product design requirements have to be determined, on the basis of LCAs and similar assessment methods, for each single kind of product. This is a time-consuming and work intensive process. To a certain extent, this problem can be addressed by defining priorities, amongst others on the basis of criteria like whether they contain critical raw materials, are sold in big volumes (and therefore can make a difference), have high impacts on certain sustainability factors, may quite easily be improved, to name a few. However, substantially improving circularity by prescribing a circular and sustainable product design will be an enormous task. Furthermore, the law maker is always at least one step behind. Newly developed products have to be assessed after entering the market. Ecodesign requirements for all kinds of specific products could therefore be complemented by a tandem of two other features.

First of all, the law, for example the Ecodesign Directive, could define general principles of sustainable product design that apply to all products. Necessarily, these principles will be quite general. They could nevertheless play an important role in the transition to a more circular economy as all producers of all goods would have to think and argue if and why their products meet these general principles. The EU Commission considers introducing such principles. 53 Without trying to be comprehensive, one could think of the following requirements for sustainable product design:

Products should be designed as follows:

durability, reusability, upgradability and reparability are facilitated as much as possible;

These principles guide sustainable design of products only to a certain extent, as they are still general in character, and need to be elaborated with regard to specific products. They do not substitute specific product design requirements that are to be developed in regulations on the basis of the (broadened) Ecodesign Directive or other EU secondary law, like the Construction Product Regulation 54 and others, but complement these specific product laws, especially for those (groups of) products for which there are no specific requirements yet.

Secondly, in order to increase the effect of the general principles, they could be combined with a general requirement for producers to reduce their total environmental impact, measured in easily applicable key criteria, with a certain percentage in a given period. Such quantifiable criteria help to facilitate the proper monitoring and enforcement of sustainable product design, which is key to achieving the circularity objectives. France has introduced a similar instrument, which will be discussed below, in its Circular Economy Act. If the policy aims - ‘becoming circular’ at a certain date and using only half as much virgin materials in 2030 - are taken seriously, they can only be realized if the environmental impact of all products sold on the market is reduced significantly. The introduction of general principles of sustainable products, combined with the requirement for producers to demonstrably reduce the environmental impact in a certain timeline with a certain percentage, is a logical component of such a policy goal. These two instruments combined have a leg up on detailed product requirements in ecodesign regulations for specific products, as they do not restrict the innovative potential of producers. They can decide for themselves how they will reduce the total environmental impact of their products, as long as they comply with the reduction percentages and timelines and respect the general principles of sustainable production.

EU Product Law also encourages self-regulation as an alternative to legislative measures. The current EU Ecodesign Directive and the proposed Ecodesign for Sustainable Products Regulation allow industry sectors to propose a voluntary agreement as an alternative to EU ecodesign requirements. Economic operators have to submit evidence to the European Commission that the self-regulation measures meet the criteria of the Ecodesign Directive (or in future: Ecodesign for Sustainable Products Regulation) and the Commission will assess the measures proposed by industry. 55 The idea is that self-regulation measures may help achieve ecodesign objectives faster and at lower costs than legal requirements. 56

3.1.3 Room for manoeuvre for national lawmakers

In regional economic organizations with a harmonized market, the parties to such an organization, such as the EU member states, are not allowed to conclude national product requirements and restrict trade of products that do not meet such national standards. So, in general, product law is a competence of the regional economic organization. However, some room for manoeuvre is left for national lawmakers. In the EU, French law provides interesting approaches to make the most of this space. The French Act on Circular Economy requires producers to draw up and implement a prevention and eco-design plan for their products, aimed at reducing the use of non-renewable resources, increasing the use of recycled materials and increasing the recyclability of their products. 57 The plan has to be revised every five years and describes the objectives as well as the prevention and eco-design actions that will be implemented in the next period. Producers can do this individually or collectively by establishing an ‘eco-organization’ that can subsequently develop such plans on their behalf. While, in principle, product-related requirements in the internal market can only be set in EU law, this French legal provision can be seen as an innovative national tool, which has special added value when EU product requirements regarding circularity on specific products are lacking.

In other areas than product law, the role of national regulators is much more extensive and important. EU directives have to be transposed and all EU law has to be operationalized, applied and enforced by national authorities. In general, EU environmental law only provides for minimum requirements, leaving national regulators some leeway to go beyond EU requirements. For example, one can refer to the minimum requirements for extended producer responsibility in art. 8 and 8 bis of the Waste Framework Directive and in other directives concerning specific (groups of) products. Whilst, for example, art. 8 bis (4) (sub b) Waste Framework Directive encourages member states to apply differentiated fees for producers falling under the scope of an EPR-scheme, depending on the suitability of a product for circular use, the member states have to operationalize this and have to determine whether and to what extent differentiated fees are to be applied. Furthermore, they are allowed and encouraged to introduce EPR schemes for (groups of) products where this is not required on the basis of EU law. This goes to show that, outside the area of product law, the member states have a huge responsibility to adapt circular economy policies and to provide the legal instrumentation needed.