Aim: A Market-Driven Circular Economy in Europe

The European recycling industries have evolved by modernizing and constantly innovating to turn more waste streams into new resources.

By doing so, the sector has contributed to the development of new technologies and automated equipment made in Europe and exported around the globe. “The European regulatory framework has accompanied these changes thanks to ambitious targets and a meaningful waste hierarchy,” the European Recycling Industries’ Confederation (EuRIC) says on its homepage. The association also advocates positive measures to ensure a consistent implementation of existing legislation across Europe.

However, there remains a need and potential of further improvements to reach the goal of a genuine circular economy: According to EuRIC, the recycling sector continues to be subject to a complex and ever-growing EU regulatory framework, which affects its activities. To ensure a competitive European recycling sector, which is part of a global industry, the European confederation advocates clear, effective and smart European policies which:
■ incentivize recycling across the value chains;
■ minimize regulatory burdens on recyclers, in particular on small and medium-sized enterprises (SMEs);
■ guarantee an open and fair competition within Europe and with the world to foster a recycling market.

“Global Recycling” has asked Michael Schuy, President of the European Recycling Industries’ Confederation (EuRIC), how the vision of a market-driven circular economy in Europe could become reality.

Michael Schuy (Photo: EuRIC)

Mr. Schuy, the Members of the European Parliament’s Environment Committee voted on 24 January this year for increasing the draft EU recycling and landfill targets that had been lowered by the EU Commission in its postponed Circular Economy Package. Do you think a recycling target for municipal waste in the amount of 70 percent as well as a waste landfill target restricted to 5 percent is achievable by 2030?

Recycling targets alongside with the waste hierarchy set at European level have played an important role in steering investments in recycling for years. Nevertheless, far too much emphasis is granted to the 5 percent increase of the target for municipal waste voted by the Environment (ENVI) Committee of the European Parliament. Firstly, because, as proposal acknowledged itself, municipal waste constitutes approximately between 7 and 10 percent of the total waste generated in the Union. Secondly, because as a practical person, given today’s baseline, it would already be a much welcome achievement if the 65 percent target proposed by the European Commission was attained by 2030 throughout Europe. And last but not least, as a recycler, I am well-placed to know that any waste with a positive value is already recycled to a large extent and recyclers are champions in valuing into new resources what others see as a waste. So, as I will explain, current problems will not solely be solved by increasing recycling targets.

Regarding landfill we can go a step further. Naturally, lowering the target for landfilling is positive but a progressive landfill ban for all recyclable materials would have been more efficient.

There is hope that the Circular Economy Package will pave the way for more than 800,000 jobs created across Europe by 2030. In which sectors would this happen, if the European Parliament and the Council of Ministers agree on the Package with higher targets?

The Circular Economy Package often comes with fabulous estimates on job creation. They usually stem from the significant job potential in recycling which, to turn waste into quality new raw materials, provides local, non-outsourceable jobs and a genuine network for waste collection and treatment throughout Europe. Nevertheless, for these job estimates to become true, certain framework conditions – not only targets – need to be fulfilled. In the current package, many of these conditions are not fulfilled. In particular, recycling companies are facing significant administrative burdens directly linked to European legislation which hampers their day-to-day operations and an increased competition from public-owned entities which benefit from special rights including fiscal advantages and monopolies over collection.

For instance, in certain regions, bulky household appliances must be collected by municipalities, although hundreds of scrap yards in Europe, which constitute an unmatched infrastructure, are much better equipped and often closer to the consumer. For decades, they did a great job in collecting scrap from households – free of charges for the society – and often are no longer permitted to do so. In addition, the benefits of recycling in terms of CO2 and energy savings, despite being well-documented, are still not reflected in prices. As a result, currently, recycling cannot realize its full potential in Europe as a number of recycling businesses, many of them SMEs, see their growth and job creation potential hindered by these obstacles. This is why EuRIC calls for practical actions and measures to address each of them.

Mr. Schuy, EuRIC advocates for a market-driven circular economy in the European Union. Is it possible to enforce such a way of economics considering the different interests in Europe?

Yes, because it is precisely what Europe did years ago with the free movements of goods by removing obstacles to trade, ensuring a level playing field and fair competition allowing operators to make business. Applied to recycling, this means making sure that legislation, alike recyclers, sees waste as a resource and not anymore as a risk. In practical terms, there is a thorough simplification exercise to be made. First, simplify the rules defining what a waste is and what it is not, as well as the rules linked to waste classification. Some draft laws currently discussed which align the waste legislation with the chemical one could result in re-classifying certain waste streams as hazardous with huge impacts on their recyclability. Second, simplify and harmonize the rules linked to waste shipment procedures which is instrumental for the realization of an internal market for recycling. Third, put in place true price signals at European level; to increase the costs of landfilling and incineration of recyclables and to internalize in prices through market-based mechanisms the environmental benefits of recycled materials incentivize their use. If we take the example of steel scrap, it is well-known that using recycled steel scrap can save up to 64 percent of CO2 emissions when comparing with primary production. However, nothing today rewards this environmental benefit.

Last but not least, EuRIC will continue to fiercely advocate for free and fair international trade, simply because the circular economy cannot stop at Europe’s borders and because closing markets is not good for any business activity. Taking again the example of steel scrap, there is annually on average 10 million tons more scrap than the EU demand from steel mills. If it was not exported to make new steel, the solutions left would be to stockpile or landfill which would make little sense from an environmental and economic viewpoint.

How could a way of doing business that is determined by the conditions of the market look like? What does push and pull measures mean in practice regarding the supply and demand of recycling products?

No need to re-invent the wheel. “Push” measures aim at fostering the offer of raw materials from recycling and “pull” measures are to incentivize the demand of recycled materials. Regarding the former, the European Union has over the last decades played a crucial role in laying down push measures through for example recycling targets or the waste hierarchy or landfill restrictions.

The key word for push measures is better enforcement. Regarding the latter, we are lagging behind as too little has been done to pull the demand for recycled materials. This is why EuRIC calls, at EU level, for market-based incentives rewarding recycled materials environmental benefits, targets on recycled content for certain resource streams, eco-design requirements on resource efficiency and green public procurement. The European Union sets up measures to incentivize the shift towards renewable energies. The same should be done for recycling.

Would “green“ procurement, fiscal easements for recycled materials and other rewards (e.g. for an increased amount of recycling) be enough in order to give market dynamics a boost?

Clearly, they would make a difference as the economic crisis and its aftermath told us. When raw materials prices are low, recyclers for example of plastics can sometimes hardly compete on price with virgin materials, which have a very different cost structure and environmental impacts than recycled materials. Hence, there is a need for market mechanisms to correct these externalities and ensure that the benefits of using recycled materials is correctly reflected in prices. As public authorities should lead by example, making sure the way they procure goods and services matching the objectives of the circular economy is obviously important especially since “public authorities in the EU spend around 14 percent of GDP on the purchase of services, works and supplies”.(1) One should not forget the importance of eco-design. The European Commission is taking the lead by proposing criteria to ease re-use and recycling when products reach end of life stage. EuRIC naturally strongly supports it simply because “more than 80 percent of the environmental impact of a product is determined at the design stage”.(2)

Are additional measures of the European Member states necessary to unlock a market driven circular economy? Which ones would they be?

Sweden for example has just enacted a reduced VAT rate for repair activities. This is a positive step forward which would benefit from being extended to recycled materials at European level.

According to your opinion, when would it be possible to achieve the goal that competition and internal market rules become integral parts of this way of doing business?

As soon as policy-makers will truly see waste as a resource and not mainly as a risk to manage, this will open the door to the application of the same recipe to waste and recycling markets as the one applied to the internal market, which put free movement and fair competition at the heart of its completion. This is a matter of perception and there is still room for improvement.

Mr. Schuy, thank you very much for this interview.

(1) Public procurement introductory webpage https://ec.europa.eu/growth/single-market/public-procurement_en
(2) Ecodesign your future – How ecodesign can help the environment by making products smarter, European Commission, 2012 http://bookshop.europa.eu/en/ecodesign-your-future-pbNB3109210/

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About EuRIC

The European Recycling Industries’ Confederation, founded in 2014, is the umbrella organization for European Recycling Industries and represents nearly 6,000 private companies which provide about 300,000 jobs and recycle approximately 150 million tons of a variety of waste streams. Owing to its network of member associations, EuRIC acts as interface between the industry and the European Union and serves “as a platform for information, cooperation and exchange of best practices on all European recycling matters”.

According to the information, EuRIC and its members support a value chain approach and strive “to nurture constructive relationships at all levels with stakeholders benefiting from recycling activities, including public authorities, manufacturers, producer responsibility schemes, academia and NGOs”.

www.euric-aisbl.eu

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Photo: FotoCuisinette / fotolia.com

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