Opinion piece by FEAD: Pull measures are crucial for a circular economy

Source: FEAD

Brussels — In Brussels, European Commission officials are working flat out to deliver the “more ambitious” Circular Economy package promised by Vice President Timmermans when the original waste proposals were withdrawn earlier this year. David Palmer-Jones has prepared an opinion piece where he explains why the European Commission`s revised Circular Economy package must contain credible and effective measures to boost demand for secondary raw materials. Palmer-Jones speaks as President of the European Federation of Waste Management and Environmental Services (FEAD) and CEO of SUEZ UK.

“FEAD sees the development of a revised and more comprehensive Circular Economy package as a golden opportunity for Europe to show leadership in this field. A truly forward-looking set of measures to promote resource efficiency would provide Europe’s industries with a firm foundation to invest and create much-needed jobs and growth.

Importance of pull measures not recognised

As ever, the devil will be in the detail. The revised proposals will need to include measures to incentivise the whole supply chain, and crucially they will need to strike a balance between the supply and demand for secondary raw materials. Based on my discussions with the Environment Commissioner and his senior officials so far, and on media reports, I am concerned that the Commission does not appear to recognise the importance of the demand side of the equation – the so-called “pull measures”.

The Commission’s original proposals on waste targets were mainly about the supply side. The proposals to ban recyclable waste from landfill by 2025, and to set a 70 percent recycling target for municipal waste by 2030 (which FEAD supported, subject to clarifying the definitions used and the method of calculating the recycling rate) that would vastly increase the supply of secondary raw materials.

In competition with raw materials

But where will the demand for these additional materials come from? Like the Commission, FEAD members would prefer to see European secondary raw materials being used by European re-processors and manufacturers, but this will not happen automatically simply by increasing the supply. Secondary raw materials compete with raw materials from primary sources. In some respects, such as homogeneity, secondary raw materials are at a disadvantage to primary raw materials. Recyclers also face challenges relating to the application of the REACH chemicals regulation. In other words, the economic and environmental advantages of secondary raw materials are not always reflected in current prices.

Falling prices for oil and other commodities are already having a negative effect on the recycling sector. Virgin plastic is now cheaper for manufacturers to use than recycled. Other macro-economic trends are also creating difficulties for recycling – for example the falling demand for recycled paper due to the growth in digital media. FEAD does not believe that Europe can rely on demand from China and other fast-growing economies to take up the slack indefinitely. Very soon, those countries will generate and use their own recycled materials.

More emphasis on demand side

Of course, markets rise and fall and businesses must adapt to survive. But if Europe truly believes in the wider economic, environmental and social advantages of a circular as opposed to a linear economy, it must recognise that market forces alone, even market forces bolstered by supply side measures, will not deliver a more Circular Economy. If the cost of collecting and sorting secondary raw materials outweighs the output value of that material, it could become uneconomic to collect and process much of Europe’s recyclable waste.

That is why FEAD is calling on the Commission to put much more emphasis on the demand side in its revised proposals. The key measures recommended by FEAD are:

  • Minimum recycled content requirements for selected products
  • Minimum green public procurement requirements at EU level to boost purchase of recycled products and materials
  • Eco-labelling rules to incorporate indications of recycled content and recyclability
  • Lower or zero rate of VAT on second hand goods and products with recycled content

Early indications are that Commission officials are reluctant to consider such measures due to their potential complexity. But I believe that without these or similar credible and effective pull measures, the opportunity to develop a sustainable Circular Economy in Europe is in jeopardy.“

Source: European Federation of Waste Management and Environmental Services (FEAD)