Is the EU’s New Circular Economy Package Reasonable?

Hermann Erdmann, CEO REDISA, discusses the mixed reaction to the EU Circular Economy Package recently announced and what it means for waste recycling

By Hermann Erdmann, CEO REDISA (Recycling and Economic Development Initiative of South Africa)

On the 2nd December, 2015 the European Commission’s new Circular Economy Package was announced. Predictably, it received a mixed reaction, some welcoming it and others criticising it on the grounds that so far from being “more ambitious”, they maintain it is less ambitious.

The argument for saying the revised package is less ambitious stems from the fact that certain targets have been reduced, notably in municipal waste re-use and recycling in packaging, and packaging waste, and the 2014 proposed ban on landfilling recyclable waste by 2025 has been changed to a maximum of 10 percent by 2030.

Are targets more important than action plans?

Targets are easy to set. Realistic targets and a plan on how to achieve them are much harder. In our opinion, the Commission has revised the Circular Economy Package (CEP) with significant steps in the right direction, and it is far better to have lower targets backed with actions to support the achievement of them than simply to set optimistic targets that look good but are unlikely to be met. In that respect, there is much to commend in the revised package.

Fundamental in the Commission’s thinking is the focus on opportunities rather than on problems. Waste is indeed a major problem for all nations, but the CEP recognises “the potential to create many jobs in Europe, while preserving precious and increasingly scarce resources, reducing environmental impacts of resource use and injecting new value into waste products”. In their communication on “Green Products”, they state that “improving the resource-efficiency of EU economies could lead to the creation of up to 2.8 million jobs by 2020”. We see the same opportunities in South Africa, and indeed amplify the view by adding the massive opportunities for creating new businesses and developing a new industry sector around managing waste streams as resource streams.

The CEP identifies measures that will actively support the development of these opportunities, amongst which we firstly highlight the development of quality standards for secondary raw materials derived from recycling.

Too much recycling produces lowest common denominator material, fit only for purposes that accept lower grade materials. For example, high-quality steel from motor vehicle recycling is contaminated by pollutants and through mixing of different alloys, rendering it unfit for its original purpose and rather used as lower-grade structural steel. Plastics are mixed together and turned into a lower-grade material. Glass cullet is devalued by mixing types of glass. Recycling operations that take a line of least resistance produce lower-value product. The outcome of this is that potential users of recyclate are wary of inconsistent quality, and hence the market value of recyclates is reduced. For recycling to be sustainable, we need to have standards that recyclers can work to and that consumers of recycled product can rely on.

Secondly, is the need for economic incentives for greener products; in other words, for designing for the Circular Economy. This means not only initial design, but encompasses the entire life cycle from design though manufacture, use, disposal and re-use, recycling and recovery. In the words of the Commission: “current market signals are not always sufficient”, or to put it more bluntly, if it is more profitable for a producer to ignore green factors, many, even most, will.

Extended Producer Responsibility

Extended Producer Responsibility, or EPR, receives a lot of attention in the CEP. A key measure put forward is to “propose the differentiation of financial contributions paid by producers under an Extended Producer Responsibility scheme on the basis of the end-of-life-costs of their products”.

The proposed amendment to Directive 2008/98/EC on waste notes that EPR schemes “form an essential part of efficient waste management”, and highlights that they must “ensure a level playing field” (many EPR schemes in many countries are primarily voluntary, and not surprisingly suffer from free-riders).

Significant in the proposed amendment is the emphasis on the need for regulation to ensure comprehensive participation, and the full covering of the end-of-life costs of products.

The Commission’s Action Plan document rightly identifies a general problem with achieving the closed loops that drive the Circular Economy: when the interests of producers, users and recyclers are not aligned. Successful ERP schemes must be set up so that they can operate in the interests of all stakeholders, not just one sector.

South African readers will note with perhaps a trace of satisfaction that we are way ahead of the EU with the Waste Tyre Plan approved by the Department of Environmental Affairs in November 2012 and managed by REDISA, which embodies the principles the EU is now proposing.