Circular economy: lots of momentum, much remains to be done

From a niche idea to a central pillar of sustainability policy – this is how the rise of the circular economy in recent years can be briefly described. During this time, there has been a wide range of innovations. Digitalisation, automation and artificial intelligence are improving waste sorting, especially for plastics and textiles. And new processes enable even complex composite materials to be broken down, at least partially, into their constituent parts.

It was in March 2020, just as the COVID-19 pandemic was just beginning, that the European Commission presented its Circular Economy Action Plan. Anchored in the European Green Deal, it established the basis for a variety of specific initiatives. Today, five years later, it has become a complex set of rules. It ranges from eco-design requirements and recycling quotas to bans on single-use products. It has been supplemented by sector-specific regulations, for example for batteries, textiles and packaging.

In 2023, Brussels followed up on this with the Critical Raw Materials Act. The aim was to reduce dependence on critical raw materials, promote their recycling and thus secure long-term supply. The member states also followed soon after. In Germany, the Circular Economy Roadmap was created, accompanied by a national strategy for resource efficiency. The circular economy is increasingly being understood not just as waste management, but as a holistic transformation model. The aim is to keep resources in circulation for as long as possible, to design products that are repairable and recyclable, and to avoid waste.

Progress: From urban mining to product-as-a-service

Across Europe, companies and research institutions have spent the last few years working to make recycling smarter. The change is particularly visible in the construction sector, which is the giant among waste producers, accounting for more than half of all waste. But instead of demolition excavators and landfills, a different approach is slowly gaining ground: “urban mining”, in other words the recovery of raw materials from old buildings. Pilot projects are showing that concrete, steel and wood can be reused many times over. Germany is considered a pioneer in this field, not least because of its strong waste disposal and recycling industry.

Business models are also changing. Repair and reuse platforms and product-as-a-service models are becoming increasingly important. In the latter case, the customer pays for the use or function that a product provides. The company remains the owner of the product and is therefore interested in making it durable, repairable and resource efficient.

Society: Between aspiration and reality

The issue has also reached the public. Repair cafés are booming, second-hand shops are breaking records, and even large corporations are advertising the “recycled components” in their products. However, everyday life paints a different picture: in Germany, each person produces an average of almost 500 kilograms of household waste per year – and the trend is rising. Packaging waste is on the rise, fuelled by online shopping and the to-go culture. So, although recycling rates are high, it has so far been virtually impossible to reduce resource consumption in absolute terms. This is because rising consumption and short product life cycles are negating the successes of recycling.

In future, waste prevention will therefore have to play an even greater role. In many cases, product design is crucial in this regard. Numerous products are still difficult to repair or consist of combinations of materials that are difficult to separate. As long as so-called design-for-recycling principles are not consistently implemented, a genuine cycle will remain difficult to achieve.

This also applies when demand for recycled raw materials stagnates. Many recycled products are unable to compete with inexpensive primary raw materials due to fluctuating quality and high costs. Recycling companies are under constant pressure, particularly in the plastics sector, when there is insufficient demand for recycled materials. This also makes investment decisions difficult, as innovative recycling plants and new business models are capital-intensive. A lack of financial incentives or unclear political guidelines slows down momentum.

Harmonisation would help in many cases. This is because there are major differences between European countries in terms of collection and recycling systems. Even within Germany, there is a lack of uniform standards. In addition, digital traceability systems are still in their early stages.

Outlook: Ambitious plan or practical reality?

The EU has set ambitious targets: by 2030, recycling rates are to increase, the use of recycled materials is to become mandatory, and products are to become more durable and longer-lasting. Germany will play a key role in this, both through its strong recycling industry and through its political influence within the EU. But experts warn that without clear guidelines, minimum quotas and financial incentives, the momentum could be lost. “The circular economy is an opportunity of the century – but it must be supported by political measures,” says the Circular Economy Status Report 2024.

To summarise, the past five years have brought Europe and Germany a long way forward in terms of the circular economy. Politically, the issue is on the agenda; technologically, impressive progress has been made; and socially, awareness is growing. However, as long as waste volumes continue to grow and products remain difficult to recycle, the circular economy is more of an ambitious plan than a practical reality. Consumers also have a role to play: reusable bottles, repairable appliances and avoiding single-use products should become part of a broad social transformation. The next five years will show whether this vision will truly become part of everyday life.

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