Europe’s circular economy must be renewable to be truly sustainable

Martin Ledwon

Vice President Marketing, Sustainability and Communications, UPM Biorefining

Europe stands at a crossroads. It has committed to climate neutrality, circularity, and strategic autonomy, yet its industrial competitiveness is under unprecedented strain, particularly in the chemical sector. High energy prices, dependence on imported fossil feedstocks, and intensifying global competition are eroding one of Europe’s traditional economic engines. Against this backdrop, the EU Circular Economy Act will be a defining moment. It must not only improve resource efficiency but also determine whether Europe can reconcile sustainability with industrial strength.

No recycling system can recover all materials originally placed on the market

UPM has invested ahead of the trend in an industrial scale biorefinery and is entering the market as a producer of biobased chemicals. Yet, we strongly support ambitious circularity objectives. Recycling, reuse, and repair are essential pillars of the circular economy and vital for a shift towards a more sustainably economy. However, circularity must be grounded in physical reality. No recycling system can recover 100% of the materials originally placed on the market. Material losses are unavoidable, even in the most advanced systems.

As a result, Europe will continue to require significant volumes of virgin materials to meet functional and safety requirements across applications in sectors such as packaging, construction, healthcare, or automotive.

Sustainable virgin materials will enhance circularity and drive growth

The critical question the Circular Economy Act must address is therefore not whether virgin materials will be needed. The question to answer is: what kind of virgin materials. Continuing to rely on fossil-based feedstocks would undermine Europe’s climate objectives and perpetuate strategic dependencies. A credible circular economy strategy must explicitly integrate renewable, non-fossil inputs produced with technologies that enable efficient resource use, reduce emissions, and strengthen Europe’s industrial base.

This is why we advocate Renewable Circularity. It complements mechanical and chemical recycling by systematically replacing fossil virgin materials with renewable, bio-based and, in the future, potentially also Power to Liquid alternatives where recycling reaches its limits. Bio-based chemicals enable steep decarbonization at the source while delivering the performance required by modern value chains.

Without the renewable dimension, the Circular Economy Act risks becoming a recycling strategy that leaves Europe locked into fossil dependence.

The stakes are particularly high for the chemical industry. Once a cornerstone of Europe’s competitiveness, it is now under existential pressure as production capacity declines and investment shifts abroad. Meanwhile, global competitors are rapidly integrating bio-based materials into their industrial strategies, recognizing renewable circularity as a source of both climate advantage and economic growth. Europe cannot afford to hesitate.

Biorefineries demonstrate what renewable circularity can deliver today

Operating at industrial scale, innovative biorefineries convert sustainably sourced biomass into high-value chemicals and materials, cut emissions at the source, create skilled jobs, and anchor new industrial ecosystems locally. They strengthen resilience by reducing reliance on imported fossil feedstocks and should be recognized as strategic assets for Europe’s future.

For the Circular Economy Act to succeed, it must be aligned with and build on the EU Bioeconomy Strategy. Binding targets, predictable market demand for bio-based materials, secure access to sustainably certified biomass, and recognition of biorefineries as critical infrastructure are essential to unlock investment and scale.

This alignment is not optional. It is a strategic choice. Done right, the Circular Economy Act can help establish a globally leading European circular economy that achieves climate goals while revitalizing the chemical industry and strengthening industrial resilience. Renewable Circularity offers Europe a clear path forward - and the moment to act is now.

This offers only one perspective on the matter that our company, UPM, a material solutions company, can offer. We take our role as a responsible player for the benefit of the European economy and advancing sustainable solutions globally seriously, through our innovations and products but also by actively engaging to shape policies that enable growth and foster sustainability.

This is one important angle to UPM Circular Economy Act position paper. More experienced opinions to come, stay tuned.

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