Boost to recycling from EU Circular Economy Act

Jukka-Pekka Rantakokko

Director, Public Affairs

Europe has succeeded in making a significant transition in the energy sector away from fossil fuels towards renewable energy sources. Although the work is still ongoing, we are moving in the right direction. Now, the same transition away from fossil raw materials is also needed in the materials we use in our everyday lives.

Boost to recycling from EU Circular Economy Act

However, despite many speeches and numerous strategies, the transition to a circular economy has been slow.

In 2010, recycled materials accounted for 10.7% of the materials used in the EU, and there has been little growth over the last 15 years: in 2024, the share was only 12.2%.

This is a key reason why the European Commission is preparing the Circular Economy Act for 2026. The aim is to strengthen the market for recycled materials by increasing the supply of high-quality recycled raw materials and creating demand.

As my UPM colleague Martin Ledwon writes in his blog, replacing fossil-based materials requires many different solutions. Since no recycling system can recover all the materials that are placed in the market, renewable bio-based materials are also needed alongside recycled materials.

There is much more that can be done to improve material recycling

There are numerous ways to strengthen material recycling in the Circular Economy Act:

Strengthen separate collection of materials and limit the scope for national exemptions.
Promote the adoption of best available recycling technologies in all EU countries through the Circular Economy Act so that outdated recycling infrastructure does not become a bottleneck for material innovation.
Harmonize extended producer responsibility fees and earmark them for the development of recycling infrastructure for the same material stream.

1. Better sorting at source and fewer national exceptions

Municipal waste is waste collected by municipalities from households and service and commercial operators, and it accounts for 27% of Europe's waste. Packaging materials and biowaste are its main components. The diverse composition and multiple sources of municipal waste make its treatment challenging.

EU legislation requires the separate collection of biowaste, paper and board, plastic, glass, metal, and textiles. Separate collection keeps different types and properties of waste streams apart, which facilitates further processing of the materials. According to a recent report by the European Court of Auditors, separate collection is the cornerstone of municipal waste recycling and, at the same time, its Achilles heel. The Commission's early warning reports show that the failure of separate collection is a Europe-wide bottleneck that jeopardizes the ability of many EU countries to meet their recycling targets.

The EU's common packaging waste labels, which will come into use in 2028, will help consumers sort their waste correctly. However, this is not enough.

Member States are still allowed too many national exceptions to separate collection, and it is essential that these be reduced.

Exceptions should only be allowed where separate collection is not technically feasible or would incur unsustainably high costs, for example in remote areas.

Furthermore, effective separate collection is also a question of cost. The better waste is sorted at source, the less expensive post-sorting of mixed waste is required. In particular, keeping biowaste separate from other materials would help prevent contamination of other materials.

2. Development of recycling infrastructure

In recent years, EU legislation has focused on regulating the characteristics required of products and packaging to improve their recyclability. The requirements of the EU Ecodesign Regulation will in future require investment in the recyclability of almost all goods sold in the EU. The EU Packaging and Packaging Waste Regulation, on the other hand, requires that all packaging used in the EU must be recyclable by 2030.

To phase out the use of fossil materials and promote new, sustainable alternatives, recycling infrastructure must also be developed. Inconsistent collection and sorting systems and outdated recycling facilities limit innovation in materials and packaging solutions and slow down the development of the circular economy. The Circular Economy Regulation is an opportunity to promote the adoption of the best recycling technologies in all EU countries.

To phase out the use of fossil-based materials and instead promote new, sustainable alternatives, recycling infrastructure must also be further developed.

Fragmented collection and sorting systems, together with outdated recycling facilities, limit innovation in materials and packaging solutions, and slow down the development of the circular economy. The Circular Economy Act presents an opportunity to promote the deployment of best available recycling technologies across all EU member states.

If European circular economy legislation is prepared based on the capabilities of the weakest recycling facilities, recyclers will lose the economic incentive to improve their systems.

This will also remove the competitive advantage enjoyed by operators using the most advanced recycling technology, which stems from their ability to recover a larger proportion of recyclable materials.

3. Cost-effective ways to finance infrastructure

Recycling infrastructure requires investment, but there are effective ways to finance it.

The first step is to identify innovations in recycling technologies and encourage their adoption through extended producer responsibility (EPR) fees. Fees should reflect the recyclability of materials based on the best available recycling technologies, rather than outdated recycling practices.

Secondly, it must be ensured that the collected EPR fees are earmarked for the development of recycling infrastructure for the same material stream and for covering its costs. This will ensure that, for example, fees collected from fiber packaging are not used to finance plastic recycling infrastructure. The Circular Economy Act should also examine the possibilities of channeling EU funding into the development of recycling technologies.

Thirdly, cost-effectiveness must be ensured. Although EPR fees are paid by material producers, consumers ultimately foot the bill in the product prices. Fees must be cost-based and should not cover more than the actual costs of separate collection and recycling. For the same reason, state-run producer responsibility organizations (‘PROs’) should be avoided in Europe to prevent the temptation to supplement the state budget with EPR fees.

For more of UPM's views on the EU Circular Economy Regulation, see our statement, which you can find here in English.

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