The Circular Economy Act: a test case for a Single Market that delivers

The EESC Opinion on the Circular Economy Act lands at a defining moment. As Europe confronts fragility in supply chains, intensifying competition for raw materials and the hard lessons of geopolitical dependency, circularity has become an industrial strategy. The legislation that should be out before the end of this year is expected to deliver on competitiveness, resilience and environmental goals at the same time. 

The geopolitics of resources

In the context of growing global competition for materials, supply chain disruptions and rising resource demand, the Circular Economy Act should be positioned as a strategic instrument for European resilience, competitiveness and open strategic autonomy.

Today, only 12.2% of materials used by European industry come from recycling – a measure of excessive material waste and strategic vulnerability. Every tone of virgin material imported could become exposed to price shocks, export controls, or geopolitical leverage. Circularity, intended as retaining and recirculating high-value resources within the European economy, is the most durable hedge available.

The circular economy becomes a structural response to market failures and supply chain risks that industry itself has been navigating for years. The focus must be on managing resources in a more strategic and intelligent way, starting with markets for secondary raw materials toward systemic resource governance and value networks.

The Single Market is the starting point

What makes the Circular Economy Act distinctive is that it is one of the few legislative initiatives where competitiveness, resilience and environmental objectives are genuinely mutually reinforcing. There is no trade-off to manage here, just that market does not exist yet at EU scale. National regimes for extended producer responsibility, diverse End-of-Waste criteria, inconsistent waste classification rules: together, these create artificial internal borders for resource flows. A material classified as a product in one Member State is treated as waste in another. 

This is the Single Market part the Circular Economy Act must fix. Harmonised extended producer responsibility (EPR) architecture, EU-level End-of-Waste criteria, and common rules for cross-border material flows - preconditions for commercially viable secondary raw material markets, to match supply and demand. 

What we expect from Circular Economy Act 

Public procurement criteria that go beyond recycled content to assess full lifecycle performance, well-calibrated fiscal measures for products with higher circularity performance, and targeted support for secondary raw material markets, are essential to building a genuine business case for circularity.

Closing the €82 billion circular investment gap, as estimated by the European Investment Bank, requires long-term policy reliability for investors and industrial operators to make investment commitments. 

The level playing field dimension is equally critical. Online marketplaces directing sales into the EU market must be held responsible for EPR compliance for third-country sellers. European producers already bear the full costs of product design and end-of-life obligations. 

Ambition at work

The EESC Opinion reflects a broad-based consensus that the stakes are high, and the moment is right, but ambition must be matched by workability. The Circular Economy Act must be proportionate and evidence-based and must safeguard the operational autonomy of producers in meeting their obligations, rather than replacing competitive market mechanisms with administrative prescriptions.

Done right, the Circular Economy Act could be remembered as the moment European industrial policy and environmental policy delivered prosperity together and used the Single Market as a backbone. 

By Adelina Dabu, EESC Employers' Group member and Study Group member of Opinion NAT/986 Circular Economy Act - Circular economy and responsible resource consumption within planetary boundaries.