EU circular economy – a global affair 

Written by Marianne Kettunen, Institute for European Environmental Policy

Summary

The shift to a circular economy in the EU will not be sustainable by default. It will only be so if it reflects the implications both within and outside the EU. 

As the recent global saga of plastic waste recycling illustrates, if not carefully thought through, the EU’s internal policies can lead to adverse impacts outside the EU, including negative environmental and social impacts on developing countries.

On the other hand, several positive developments are also possible. For example, an EU-led push to implement clear and appropriately stringent product standards and criteria to support circularity can lead to the elevation and standardisation of circular economy related standards globally.

Ensuring sustainability of circular economy actions on a global scale requires cooperation between three key policy domains: circular economy, trade and development cooperation. The science-policy community has an important role to play in facilitating the dialogue between these different domains.


The EU is going circular …

The adoption of the EU Circular Economy Action Plan in 2015 set the European Union firmly on the path towards the circular economy with a view to reduce the EU’s dependency on primary raw materials and to demonstrate global leadership in – and gain competitive advantages through – such transition. 

Shifting from a linear to a circular economy has also been identified as one of the foundations for future sustainability in the EU and globally, including as means to curtail the negative impacts of EU consumption (e.g. carbon footprint).

The European Green Deal, forming the blueprint for EU policy- and decision making for the upcoming five years, reconfirms the key role of circular economy in the EU’s future trajectory for a more sustainable future. 

Published in December, the deal promises to put in place a policy framework that modernises the EU’s economy building on the opportunities of the circular economy domestically and globally. A key aim of the future policy framework will be to stimulate the development of lead markets for climate neutral and circular products, in the EU and beyond.

… but what does that mean globally?

The transition to a more circular economy in the EU will inevitably have implications on a global scale. 

So far, these implications have not exactly been ones to make the EU proud. On the contrary, they have highlighted how, if not carefully considered, the EU’s internal policies aimed at promoting circularity can lead to adverse impacts outside the Union, including negative environmental and social impacts on developing countries.

The negatives 

The first push for circularity in the EU resulted in its Member States delivering policy targets by exporting waste for recycling. The increase in waste imports left several developing countries to deal with large amounts of waste – low-quality plastic waste, in particular – while lacking the proper infrastructure for processing and recycling. This finally caused many importer countries to close their ports for plastic waste shipments, starting with China in 2017; and India, Thailand, Vietnam and Malaysia following the suit.

While processing waste into secondary raw material can be important to developing countries' economies, weaker environmental regulations in the waste importing and processing countries mean that workers – as well as the environment – are exposed to risks and suffer from negative impacts. This is particularly the case with electronic waste (e-waste) exports to the developing countries.

In addition, waste importing countries are also suffering impacts from the low quality of recyclable waste, which often leads to higher costs of recycling and can also result in undesirable activities in importing countries, such as landfilling or incineration. Such practices feed the vicious cycle of downcycling, giving secondary raw materials a bad reputation and lowering the potential for the development of a circular economy in general.


The positives

Differences in regulations and product standards (e.g. on recycling and re-use) differ across geographic areas, such the EU and its trade partner countries. This represents an obstacle for the uptake of circular economy opportunities on a global scale.

The EU’s push to implement clear and appropriately stringent standards and criteria within its own territory will be an important factor determining the quantity and quality of recyclable waste and secondary raw material going out and coming into the EU through trade. This in turn can encourage EU trade partner countries to match their criteria and standards with those of the EU, supporting the elevation of circular economy related standards globally.


The unknowns

A shift to circular systems results in changes to primary and secondary resource flows, including the demand for and trade in these resources. Further down the line, all these changes can translate into opportunities – or obstacles – for sustainable development in third countries.

Shifting to a circular economy means both keeping the value of products in the economy for longer and increasing the use of secondary raw materials in the EU. Consequently, it influences trade flows on primary raw materials, including possibly also the extraction of such materials in third countries. This may have impacts on developing countries’ ability and pathways for sustainable development.

From an environmental point of view, a reduction of the demand for resources could reduce the pressure on the environment in third countries with positive implications on environmental sustainability. On the other hand, the export of raw materials still plays a central role in the development pathways of several trade partner countries. Consequently, these countries are likely to be impacted by a decline in exports, with possible implications for their (economic) development. At the same time, lessening the export of raw materials may generate opportunities to grow domestic markets in the developing economies, as the development of higher-value downstream processing is encouraged.

Circular economy is a multi-policy affair

The above clearly highlight that the shift to a circular economy in the EU will not be sustainable by default; it will only be so if it reflects the implications both within and outside the EU. This requires cooperation between three key policy domains: circular economy, trade and development cooperation.

Identifying and addressing the global implications of the EU circular economy policy needs to play an integral role in the Union’s plans to deliver the 2030 sustainable development agenda, including a shift to sustainable production and consumption of resources at a global scale. This includes improving the integration of circular economy considerations into the EU trade policy, both to prevent any negative external impacts but also with a view to supporting the uptake of circular economy-related opportunities in the trade partner countries.

Development cooperation – and Aid for Trade schemes in particular – can help to support the shift to a sustainable circular economy at a global scale. The EU’s Aid for Trade schemes can support the uptake of sustainable and equitable circular economy-related trade opportunities within the context of EU trade agreements. They can play a catalysing and supporting role in third countries’ shift to a more circular economic model, this way also supporting circularity at the global scale and vis-à-vis the EU. However, more consolidated efforts are needed to ensure that the schemes are coordinated with the needs arising from the further shift to circularity within the EU and the trade-related opportunities and risks associated with that.

More dialogue, better policy coherence

Hot on the heels of the European Green Deal, the updated EU Circular Economy Action Plan is scheduled to be published in March. As anticipated, it is already the talk of the town in Brussels, with a leaked version of the plan being passed around and enthusiastically discussed by stakeholders. If the rumours and draft text hold true, there is indeed cause for excitement, with the new Action Plan including a range of concrete policy actions and even some interesting new openings from the Commission, including on the global arena.

The science-policy community has an important role to play in supporting the implementation of the Action Plan. In 2019 the Institute for European Environmental Policy (IEEP) and Finnish Ministry of Foreign Affairs convened a project that aimed to both highlight the need for better policy coherence for circular economy and bring together stakeholders of the different sectors to improve collective awareness of the issue, including provide evidence-based policy advice for ways forward. The established multi-sectoral community, ranging from the experts of EU and international institutions to civil society and businesses, is therefore in place to support the much-needed dialogue bringing together the different policy areas.

The need to improve policy coherence between circular economy, trade and development cooperation policies to ensure sustainability on a global scale is true not only for the EU but also other countries and regions aspiring for circularity. Consequently, it is important that the future dialogue does not remain only focused on the EU, carried out primarily by the EU actors, but expands to encage with a wider global audience. Reaching out to countries that are demonstrating leadership taking forward the circular economy and resource efficiency agendas will be of key importance in the future, helping to established clarity and common understanding of standards and definitions required to deliver the promises of circular economy at a global scale.


This blog post builds on a policy paper by Kettunen et al. (2019), for more information please find the full report here. 

Opinions expressed in the article are the author’s own.



Mitsue Guerrero