The European Union has failed to increase its circularity rate beyond 12.2% in 2024, despite a decade of efforts. This stagnation is pushing Brussels toward an unprecedented strategy: creating a genuine unified market for secondary raw materials by 2026. A transformation that promises to double European circularity by 2030, but also reveals the structural flaws of an economic model still trapped in disposability.
Following the official launch of public consultation in August 2025, the Circular Economy Act is shaping up to be the most ambitious instrument ever designed to transform European waste into strategic resources. Facing a €29 billion trade deficit in raw materials and near-total dependence on China for rare earths, Europe is betting on the circular economy as both an economic and ecological shield.
Europe Transforms Geopolitical Urgency into Industrial Ambition
The Circular Economy Act is positioned at the heart of European industrial strategy, marking a break with previous purely environmental approaches. Europe imports nearly 100% of its heavy rare earths from China and more than 90% of the magnets needed for battery production. This strategic vulnerability transforms every piece of electronic waste into a potential critical resource.
The European Commission anticipates that the transition to circularity will generate up to 0.5% additional GDP and 700,000 jobs, primarily in the repair and recycling sectors. These projections rest on a tangible economic reality: the European circular economy already employs 4.3 million people.
European strategy is built around three complementary legislative pillars. The Commission is considering amendments to framework directives on waste and landfills, a revision of the directive on electronic waste, and the introduction of additional measures such as harmonization of environmental taxation.
Secondary Raw Materials Remain Economically Disadvantaged
Despite political ambitions, only three of the eight secondary raw material markets analyzed by the European Environment Agency function properly: aluminum, paper, and glass. These markets share common characteristics: longevity, international dimension, and significant share in total material supply.
The main barrier remains the unfavorable price differential between recycled materials and their virgin alternatives. This distorted economic equation discourages massive adoption of secondary raw materials, even when supply exists.
Supply suffers from insufficient specifications and the presence of hazardous substances in recycled materials, while demand suffers from a lack of confidence in quality. Reluctance to invest in technologies for integrating secondary raw materials combines with the absence of adequate information and market monitoring mechanisms.
The European plastic recycling sector illustrates these structural difficulties. In 2023, mechanically recycled plastic production fell by 7.8%, the sector’s revenues contracted by 12.5%, and investments were cut in half, dropping from €1 billion in 2022 to €500 million.
A Fragmented Market Facing Massive Imports
Europe finds itself caught between its circular ambitions and the reality of global trade flows. Uncontrolled increases in cheap plastic imports have weakened European recycling, with a surge in imports of virgin and recycled plastics from Asia, primarily from China.
This competitive pressure reveals a fundamental contradiction: how can a European circular economy be developed in a global market where environmental costs are not internalized? Analysis of societal costs shows that moving from landfilling to recycling would reduce total costs for European society, primarily through lower external costs, but requires taxes on landfills and incineration to make recycling economically competitive.
The European approach Europe Transforms Its Digital Regulation into a Weapon of Sovereignty finds new application here. The Commission is considering separate customs codes for virgin and recycled plastics, allowing customs and market surveillance authorities to enforce European rules on imported plastics.
Implementation Challenges Reveal the Limits of Voluntarism
With a recycling rate of 44% of waste generated in 2022, Europe is progressing toward its objectives, but several countries risk missing their targets without additional efforts. Progress is stagnating and has even reversed in some sectors, with packaging and electronic waste recycling rates declining over the past five years, while more than half of generated waste is still sent to incineration or landfills.
National disparities remain considerable: Germany achieves 69% municipal waste recycling compared to only 12% in Romania, with ten countries exceeding the 50% threshold. These gaps reflect differences in infrastructure, regulation, and recycling culture that complicate European harmonization.
Despite the implementation several years ago of extended producer responsibility in the EU, severe limitations persist in all member states: waste continues to increase, recycling stagnates, and circularity is hindered rather than encouraged.
The financial stakes remain considerable. Recycling construction and demolition waste with advanced technologies would save approximately 264 kg of CO2 equivalent per ton at a cost of €25 per ton, but requires substantial initial investments that the current market does not adequately remunerate.
Circular Economy as a Response to European Fragilities
The Circular Economy Act is part of a broader logic of European economic sovereignty. Europe Reveals the Limits of Its Budgetary Integration with 32% Absorption of the Recovery Plan but is now betting on regulation to create conditions for a unified secondary raw materials market.
Envisioned solutions include expanding existing policy tools, such as ecological modulation of fees in extended producer responsibility schemes, broadening green public procurement, and creating a level playing field between primary and secondary raw materials through raw material taxation or VAT reduction on secondary raw materials.
Following the Draghi report’s analysis, which emphasizes circularity as a key lever for European industrial competitiveness, the Commission adopts a two-stage approach: immediate pilot measures to support circularity, particularly in the plastics sector, then the Circular Economy Act in 2026 with horizontal measures.
Timeline remains crucial. The legislative proposal is scheduled for the third quarter of 2026, followed by the standard legislative process involving the European Parliament and Council. By then, Europe must demonstrate that its vision of a circular economy can withstand the economic and geopolitical pressures shaping global raw materials markets.
The stakes go beyond mere waste management: it is about proving that a developed economy can transform its environmental constraints into sustainable competitive advantages. Europe’s bet consists of turning imposed circularity into an engine for innovation and economic resilience. The coming years will determine whether this regulatory ambition can overcome the economic realities that keep Europe dependent on imported raw materials.