Towards A Single Market For Circularity: What The Circular Economy Act Is Likely To Deliver.

Have you ever thought of the lifecycle of your office chair?

Funnily enough, it’s rather straight forward - once the raw materials are extracted and the chair is manufactured and distributed, it will be used for 5-10 years (if you are lucky), and then into the trash it goes.

That’s just a small example of the traditional “take-make-waste” model which has been deemed as unsustainable and the transition to a circular economy has become increasingly urgent for Europe - a system designed to eliminate waste and keep resources in use for as long as possible.

In response, the EU Ministers responsible for Environment and Climate have expressed strong support for the Circular Economy Act, which is expected to become an official legislative act in 2026 and aims to:

• Strengthen European competitiveness and economic resilience;
• Align environmental and industrial policies;
• Remove regulatory barriers to circular business models;
• Improve policy coherence and implementation across the EU;

Evolution of the EU Circulatory Policy and Foundations:

The first step of the European Union towards the Circular Economy was the “Closing the Loop action plan” which was introduced by the European Commission in 2015, aiming to transition Europe towards a more sustainable economy by promoting the reuse, recycling and recovery of materials and products.

In 2019, a major step was taken by the EU with the introduction of the European Green Deal, which elevated the circular economy from a standalone initiative to a central element of the EU’s overall economic and environmental strategy.

Between 2020 and 2025, Europe faced significant geopolitical and economic pressures, exposing vulnerabilities in energy security, supply chains, and dependence on external resources, while highlighting the need for greater industrial resilience and competitiveness. Thus, the Clean Industrial Deal was introduced in 2025 seeking to turn decarbonization into a driver of industrial growth by supporting energy-intensive industries, clean technologies, affordable energy, circularity and investment.

The Circular Economy Act:

The Circular Economy Act (the “Act”) is expected to become an official legislative act in 2026, building on and solidifying the existing circular economy initiatives.

The Act’s most important objective is the establishment of a single market for secondary raw materials. The European Commission wants to harmonize the “end of waste” criteria and make cross-border movement of recycled materials easier, in order to meet the goal of doubling Europe’s circularity rate from 12% to 24% by 2030.

Perhaps most importantly, a key aspect is to reduce the dependence on imports from countries outside of Europe, aligning closely to Europe’s strategic industrial and foreign affairs to become an independent global power regarding circular economy policies and energy infrastructure and avoid dependance on other major powers.

The Circular Economy Act is not a standalone environmental law. It is designed to be the legislative bridge between the European Green Deal and the Clean Industrial Deal, as they are all connected by the same vision. The European green deal sets the overall objective of making the EU climate-neutral by 2050 and the Circular Economy Act is implementing that pillar by introducing concrete legal measures to reduce waste, increase reuse and recycling, and improve resource efficiency.

Possibly, the Act could sit at the intersection of industrial policy and environmental policy while also becoming the legislative tool that delivers both strategies.

Structural Gaps in the Existing Circular Economy Framework:

Overall, product sustainability obligations are scattered across multiple instruments in the EU. These include batteries, textiles, vehicles, and consumer law. This current fragmented framework creates inconsistent and uneven obligations, while there is a lack of a single market framework for secondary raw materials and there seems to be no unified EU wide legal framework that allows secondary raw materials to circulate like primary materials.

With an inconsistent end of waste criteria between Member States and generally a lack of a harmonized standard of quality. By establishing a single market for secondary raw materials, this would result in a clarification of their legal status and would enable the cross-border circulation of these materials.

On this matter, enforcement and implementation do not appear to be prioritized in Member States, and the Commission’s monitoring demonstrates large disparity in recycling rates and inconsistent separate collection systems. Member States risk not reaching the 2030 and 2035 waste targets. According to the European Environment Agency (EEA) and the EU Commission’s 2023 early warning report, Member States are at risk of missing both municipal waste (55%) and packaging waste (65%) recycling targets in 2025 (with notable examples including Bulgaria, Croatia, Cyprus, Greece, Hungary, Lithuania, Malta, Poland, Romania, and Slovakia). Circularity cannot function as a market principle if there is varying regulation and enforcement across jurisdictions.

These gaps demonstrate that the existing framework is structurally incomplete, displaying a need for a coherent circular economy framework. A lack of binding circularity targets means that circularity remains aspirational as opposed to a legally operational goal. The act would embed circularity metrics such as circular material use rates, residual waste reductions, directly into legislation. This would create legally enforceable obligations for Member States and potentially for economic operators.

Conclusion:

The Circular Economy Act is expected to deal with some of these key matters. Either through its expected ability to create legally enforceable obligations for Member States and potentially for economic operators, or by aligning sustainability requirements across all sectors which will transform the distinct sectoral obligations into harmonized market standards – it has the potential of creating a unified legal backbone for circular sustainability, which will ensure that these requirements will apply consistently across all value chains and product groups.

This Act would codify and consolidate the circular economy into a single market, resulting in circularity being a core legal parameter for doing business in the EU. The Circular Economy Act represents a transformation of a scattered set of measures into a single strategic framework that will drive a coherent and competitive EU Circular Economy.

Co authored by Ralf Bernaba, Summer Intern and Iliana Terry, Summer Intern.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.