We need more enabling regulation to unlock the full potential of industrial side streams

Taru Päiväläinen

Manager, Environment, UPM

In addition to renewable, bio-based products addressed in the blog posts by my colleagues Martin Ledwon and Jukka-Pekka Rantakokko, UPM produces significant amounts of industrial side streams, ranging from organic residues such as bark, wood residues and sludges to inorganic streams like ash, green liquor dregs and lime. Most of these are already utilized for energy, earth construction, or fertilizer applications.

However, the utilization of industrial side streams is heavily regulated by complex and partly overlapping rules, which limits their full potential.

We therefore welcome the EU’s Circular Economy Act, which aims to remove barriers to circularity and promote the market for secondary raw materials through simplified procedures and reduced administrative burden.

We need more enabling regulation to unlock the full potential of industrial side streams

Steps forward both in the EU and Finland

In parallel with the EU-level regulatory development, Finland is preparing several national regulatory measures to facilitate side stream utilization:

A national circular economy law is under preparation.
The UTU legislation, designed to facilitate the productization of secondary raw materials, has progressed to parliamentary handling, with related risk assessment guidelines under consultation.
The MARA regulation that allows the use of selected secondary raw materials in certain earth construction applications through a notification procedure is being revised.
Preparation of the MASA regulation, that would e.g. allow soil stabilization with secondary raw materials, continues, though badly delayed.

Ambition and practice are not always aligned

Despite strong intentions at both EU and national levels, complex and partly overlapping regulations create practical challenges. This is most notable in environmental, waste, fertilizer, and chemical legislations. Productization of side streams is difficult, environmental permitting processes are lengthy and uncertain, and authority decisions can be inconsistent.

While the regulations have good intentions to protect health and the environment, excessive complexity often overlooks the benefits of replacing virgin raw materials with secondary ones.

More permissive regulation and smoother administrative practices would enable replacing virgin materials and nutrients with industrial side streams, which often have a lower carbon footprint.

The twists and turns of circular economy regulation

Utilizing waste

Problems start with the waste status: if a side stream is classified as waste, its use requires an environmental permit - a process often too lengthy for single applications. Finnish law includes some exceptions, such as the utilization of certain wastes in earth construction or in fertilizer applications, if they comply with all the requirements. Although these exceptions facilitate the utilization of side streams, they are not sufficient. For example, green liquor dregs, a side stream from chemical pulping, is excluded from both, even though it is REACH-registered for fertilizer and earth construction use. In fact, it cannot be used in fertilizers at all, as it is not on the Finnish Food Authority’s list of ingredients, and the EU Fertilizer Regulation does not allow its use either. Despite this, landfill tax will apply to green liquor dregs from 2027 to encourage utilization.

The fertilizer regulation sets requirements for both component materials and products, and fertilizer products can be formed by mixing different component materials. While the earlier mentioned exceptions allow the use of certain waste streams in fertilizer applications without an environmental permit, some authorities interpret mixing of waste-based component materials as professional waste handling, which still requires a permit, watering down the benefits from the exemptions.

Productizing waste

Another way to avoid the lengthy environmental permitting process is to productize the waste through the by-product or End-of-Waste procedures as defined in the Waste Framework Directive. However, these processes are complex, and as a global company we see that the interpretations vary between the EU Member States and even within Finland.

Proving that the intended use of the material does not cause risk to health or the environment is particularly challenging. Once product status is granted, waste rules no longer apply, but product regulations such as REACH registration obligation do. It is thus confusing that some REACH-registered materials still fail to be granted a by-products or End-of-Waste status – one regulation considers them as products, whereas another regulation still treats them as waste. REACH registration is done for specific uses, including exposure scenarios and related risk management measures for each use. Unfortunately, this seems to play a little role when fulfillment of by-product or End-of-Waste criteria is assessed in the context of waste and environmental legislation.

Capturing synergies between regulations without compromising environmental protection

We at UPM welcome the EU Circular Economy Act and other ongoing regulatory initiatives to enhance circularity and reduce administrative burden. We see them as an excellent opportunity to take a holistic approach to the various regulations governing side stream utilization. Clarifying their interfaces and capturing synergies - across waste, environmental, fertilizer, and REACH regulations - could simplify requirements and reduce administrative burden without compromising environmental protection.

Questions to consider:

Could REACH registration serve as sufficient evidence that a material does not harm human health or the environment in its registered use?
Could a fertilizer component material automatically receive a by-product or an End-of-Waste status for fertilizer use if it meets the Fertilizer Regulation criteria?

We believe that through a holistic regulatory review and capturing synergies, barriers to circularity can be reduced, advancing the objectives of the EU Circular Economy Act.

For more of UPM's views on the EU Circular Economy Act, see our position paper here.