The document summarizes the European Commission's relaunched Circular Economy Package. The package aims to improve resource efficiency across industries by requiring products to be better designed for reuse and repair. It covers initiatives along the entire value chain from product design to waste management. Key aspects include strengthening requirements for extended producer responsibility, developing quality standards for secondary raw materials, and targeting specific materials like plastics, food waste, and critical raw materials. The success of the package will depend on industry investment in circular economy technologies and business models.

1. CRITICAL THINKING AT THE CRITICAL TIME™ FTI Consulting Inc. • 1
Today the European Commission relaunched the Circular Economy Package, which is aimed at
improving resource efficiency performances across manufacturing industries and along the whole
value chain. The new package will move beyond recycling targets, notably by requiring products to be
better designed for repair and reuse.
While the circular economy is a novel policy concept, business already recognizes its economic
potential. Therefore the circular economy is here to stay, yet the pace of Europe’s transition is
unknown and will depend on the level of ambition ultimately expressed by EU decision-makers.
Europe’s new sustainability project
The Circular Economy Package exemplifies the approach of the Juncker Commission
involving 16 Commissioners, led and driven by a smaller team of Commission Vice-
Presidents and key Commissioners.
The re-submitted package is broader in scope than its predecessor, which was
dropped because Vice-President Timmermans did not consider it ambitious enough
and believed it was unlikely to be approved by the Council. The previous package
focused on increasing recycling levels and tightening rules on incineration and landfill
but did not cover the full remit of a circular economy, namely encouraging the use of materials that create less waste and are easier to recycle.
The Circular Economy Package comes in a similar format as the other flagship initiatives of the Juncker Commission such as the Energy Union
and the Digital Single Market, namely a strategic vision and an action plan for the next 2-3 years including a focus on making better use of the
existing framework. While critics may see an action plan with a lot of dates and no solid proposals, there is a broad commitment within the
European Commission to deliver on its new chief sustainability project, generating both economic and environmental gains.
Towards a Circular Economy
Arne Koeppel is Head of
Research and Roeland is
Senior Director at FTI
Consulting in Brussels
2 December 2015

2. Towards a Circular Economy
CRITICAL THINKING AT THE CRITICAL TIME™ FTI Consulting Inc. • 2
Along the value chain
Despite its commitment to the waste hierarchy, EU waste legislation
is said to reward Member States and policies that concentrate on
recycling – rather than prevention and reuse at the top of the waste
hierarchy – and use of less energy and fewer materials than
recycling.
The Circular Economy Package seeks to promote resource efficiency
throughout the value chain, proposing targeted actions at each stage
including product design, manufacturing, usage and end-of-life
treatment.
Design
To date, Ecodesign efforts have largely concentrated on reducing
energy consumption during the use stage of electrical and electronic
products. However, the Commission is now committed to improve
material efficiency by developing product-specific criteria on
repairability, durability and recyclability under a review of the
Ecodesign Directive. Product design requirements for electronic
displays have already been adopted in order to increase recyclability.
Production
To address industry concerns, the Commission made it clear very
early in the process that it will not pursue a one-size-fits all approach
and that it is looking for the most suitable solutions foreach sector.
Defining best practices through the development of best available
technique reference documents (BREFs) that Member States may
have to take into account when issuing permitting requirements is
one action under consideration.
In order to help SMEs develop more efficient processes the
Commission plans to found a Resource Efficiency Excellence Centre.
The Commission also wants to promote innovative industrial
processes, such as industrial symbiosis, by clarifying the definition of
‘by-product’.
Consumption
As with Energy Union, the consumer is seen as a critical actor in
implementation of the policy changes. In order to enable consumers
to make sustainable choices the Commission wants to review the
Eco-label and fight false green claims. The Commission also wants to
tackle planned obsolescence of products and improve the
implementation of the mandatory two year guarantee for all physical
goods, including a possible longer period of reversal of the burden of
the proof.
Re-use of products will be promoted by a possible obligation on
manufactures to provide greater access to spare parts and repair
information; a reduced VAT rate on labour is also being considered.
The sharing economy moves increasingly into the spotlight and could
play an important role in the Circular Economy. The Commission
hopes that new business models will not only lead to longer product
lives but also the resurgence of the service economy and economic
growth. The EU’s R&D funding programme Horizon2020 will finance
projects that develop new business and consumption models.
Finally, the Commission wants to use the potential of Green Public
Procurement and prioritisation of circular economy friendly criteria
such as durability and recyclability.
Waste
The new Circular Economy Package lowers the ambition for recycling
targets and landfilling, while providing 7 Member States1 with five
more years to attain their recycling targets. This would expedite
political agreement among Member States, putting the main focus
on how these targets could be best implemented. However, the
European Parliament maintains the view that recycling targets
should be more stringent and guide rather than reflect market
developments and technological recycling capabilities.
The EC argues that stronger focus on implementation, with an early
warning and reporting system if Member States are failing to reach
the target, will make this proposal more practical and outcome
oriented than its predecessor.
EC (old) EC (new) EP
Re-use and recycling
of municipal waste
70% by 2030 60% by 2025
65% by 2030
70% by 2030
Re-use and recycling
of packaging waste
80% by 2030 75% by 2030
Paper
Plastics
Wood
Ferrous metal,
aluminium, glass
90%by 2025
60% by 2030
80% by 2030
90% by 2030
75% by 2025
55% by 2025
75% by 2030
85% by 2030
Landfill ban No recyclables
by 2025 & max
5% by 2030
Max 10% by
2030
Full landfill
ban by 2030
Reduction food waste
generation
30% by 2025 No target
Resource efficiency 30% by 2030
Incineration or “waste to energy” will be hotly debated. The EC wants
to ensure that incineration only takes place when recycling is not
possible and will adopt a ‘waste to energy’ initiative in the framework
of Energy Union.
Extended Producer Responsibility
While the targets are less ambitious than in the previous proposal,
the renewed package strengthens requirements for extended
producer responsibility (EPR). In general EPR means that the
manufacturer of a product is responsible for its entire life-cycle,
especially for the take-back, recycling and final disposal. The EC aims
to have clearer rules and quantifiable targets in order to make EPR
schemes work at national and regional level.
Organisations that are set up to implement EPR need to have a
clearly defined scope in terms of geography and materials, have the
necessary operational and financial schemes and have an adequate
control mechanism in place. Member States will need to ensure that
the financial contributions paid by producers to comply with their
EPR obligations wholly cover the costs of waste management of their
products; Member States will also need to have a monitoring and
enforcement system in place.
Secondary Raw Materials Market
The ambition is to provide European businesses with cheaper and
more abundant raw materials than global competitors. To scale up
the secondary raw materials market, the focus will be on the
development of EU quality standards for secondary raw materials
through facilitating the traceability and risk management of
chemicals in the recycling process. This will be achieved by greater
1 Estonia, Greece, Croatia, Latvia, Romania and Slovakia

3. Towards a Circular Economy
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industry material flow, information sharing and possibly a review of
REACH, which could restrict the number of substances of very high
concern. The Commission will also step up efforts to remove
obstacles to cross-border trade.
Materials
The EC has specifically detailed targeted actions for the following
materials:
Plastics
Plastic has come under particular scrutiny, partly because it is the
principle contributor to marine litter. Therefore the EC wants to
improve collection and certification schemes for collectors and
sorters in order to divert plastics away from incineration and landfill.
The EC will develop a strategy on plastics to address the issues
throughout the value chain taking account of the whole life-cycle and
addressing hazardous substances alongside marine litter.
Food waste
Food waste is a new issue on the EC’s agenda and the EU is
committed to reducing food waste per capita by 50% by 2030.
Initially, the EC wants to introduce mechanisms to measure food
waste, develop material to raise awareness of the issue and create a
stakeholder platform to help Member States to meet the related
Sustainable Development Goals. Finally the Commission will look
into ways to promote better use of date markings on food.
Critical raw materials
Critical raw materials are of high economic importance and
vulnerable to supply disruption. Several years ago the security of
supply of these materials was a serious concern for EU industry and
improving the recycling of electronic waste, which often contains
these materials, is a priority. The EC aims to overcome barriers to
recovery and recycling e.g. through product design and possibly
recycling standards and improved information exchange. The EC will
prepare a report on this issue.
Construction and demolition
Despite existing mandatory targets the EC sees a lot of potential to
improve the management of one of the biggest sources of waste.
Actions include developing indicators to assess environmental
performance throughout building lifecycles.
Biomass and bio-based products
The EC proposes a cascading use of renewable raw materials with
several reuse and recycling cycles. To this end the EC will identify
and share best practices for national schemes such as extended
producer responsibility for wood packaging. The EC will also fund
innovative projects such as development of new bio-based materials
and re-use of bio waste.
Financing
The success of the package will depend on the development and
uptake of new technologies and innovations. To that end the
Horizon2020 work programme 2016-2017 includes a major
initiative on the circular economy for funding innovative
demonstration projects. Around €5,5bn will be devoted to circular
economy related investments from structural funds and The
European Fund for Strategic Investments (EFSI) can be used to fund
such investments.
The way forward
The relaunched circular economy package is a test for the
Commission’s ability to deliver on objectives and new working
methods.
Critics will continue to argue that lower recycling targets and absence
of a full landfill ban do not match the promise of a “more ambitious”
package.
The European Parliament will not only push for more stringent waste
targets but could possibly leverage its demand for consideration of
additional initiatives including the development of binding resource
efficiency indicators or a product passport to hold companies
accountable for their resource efficiency performance.
While the focus is on “push” measures which drive the collection of
secondary raw materials, the European Parliament may call for more
“pull” measures to create demand for secondary raw materials, for
example calling for the consideration of minimum recycled content
requirements.
Europe’s transition to a more circular economy faces a number of
barriers and challenges. The Dutch Presidency has already
expressed its desire to position Europe as a forerunner in the circular
economy race, but it remains questionable whether a quick political
agreement with the European Parliament can be struck. Several
Member States will still find it hard to meet even the lowered and
more flexible targets. Ultimately it will depend on the countries
whether the waste targets will be implemented successfully.
The EC made clear that the Circular Economy is as much about the
economy as it is about the environment. It can only succeed if
industry is on board and invests in technologies and business
models that contribute to the Circular Economy. The voice of industry
therefore remains critical in the debate in order to achieve a
balanced and practical outcome. Indeed until now business showed
very much interest and is seeing the Circular Economy as an
opportunity rather than a threat.
However, the sharing economy demonstrates that the Circular
Economy will be disruptive and there will be winners and losers. It
will be the companies that understand the political changes and
adapt quickly who will be among the winners.

4. Towards a Circular Economy
CRITICAL THINKING AT THE CRITICAL TIME™ FTI Consulting Inc. • 4
Arne Koeppel
+32 2 289 0939
Arne.koeppel@fticonsulting.com
Roeland Van der Stappen
+32 2 289 0495
Roeland.vanderstappen@fticonsulting.com
About FTI Consulting
FTI Consulting Inc. is a global business advisory firm dedicated to helping organisations protect and enhance enterprise value in an
increasingly complex legal, regulatory and economic environment. FTI Consulting professionals, who are located in all major business
centres throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges in areas
such as investigations, litigation, mergers and acquisitions, regulatory issues, reputation management and restructuring.
CRITICAL THINKING
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2016
• Circular economy aspects in product
requirements under the Ecodesign directive
• Implementing regulation on televisions and
displays (end 2015 early 2016)
• REFIT of Ecolabel
• Proposal for revised fertilisers regulation
2017
• Legislation setting minimum requirements for
reused water for irrigation and groundwater
recharge
• Guidance on circular economy into BREFs for several industrial sectors
• Pan-European network of technology infrastructures for SMEs to
integrate advanced manufacturing
• Action on false green claims & guidance on unfair commercial practices
• Exploring use of Product Environmental Footprint
• Integrate circular economy requirements in Green Public Procurement
• Stepping up enforcement of Waste Shipment regulation
• Initiative on waste to energy
• Identification of good practices in waste collection
• Development of quality standards for secondary raw materials
• Action on water reuse, including guidance and inclusion in BREFs
• Measures to facilitate intra EU waste shipments
• Common indicators to measure food waste
• Stakeholder platform to achieve SDGs on food waste
• Clarify legislation in order to facilitate food donation
• Improve information exchange between manufacturers and recyclers of
electronic products
• Recycling standards for electronic waste
• Voluntary recycling protocol for construction waste
• Various actions to support financing of circular economy projects
2017
• Examine improvement of Eco-Management and Audit Scheme
(EMAS)
• Analysis and policy options on relation between chemicals, products
and waste legislation
• Strategy on plastics in the circular economy
• Explore options for date marking on food
• Report on critical raw materials and circular economy
• Best practices for recovery of critical raw materials from mining
waste and landfills
• Pre-demolition assessment guidelines for construction sector
• Core indicators for lifecycle assessment of buildings
• Development of a monitoring framework
Circular Economy Timeline
Legislative actions
2016
Non-legislative actions
2015
• Ecodesign work plan 2015-2017
• Improved cooperation for better implementation and combatting illicit
waste shipments
2015
• Revised legislative proposal on waste
• Ecodesign work plan 2015-2017
• Better enforcement of existing guarantees on
tangible products and reflection on improvements
in the context of proposal for online sales
2018
• Options for more coherent framework for EU product policy
• Guidance and best practices in mining waste management plans
• Analysis of repair information requirements in Ecodesign
• Planned obsolescence assessment of possible testing programme