A new study examines how the transition to a circular economy can be made fair globally. Against this background, we evaluate the Clean Industrial Deal presented by the European Commission in February 2025.
The Clean Industrial Deal, presented by the European Commission on 25 February 2025, puts the circular economy at the center of the EU’s industrial strategy. This is a central and positive development, not only to make European industry less dependent on primary raw material imports, but also to reduce the EU’s disproportionately high demand for raw materials in global comparison. At the same time, the EU must not lose sight of the need for a globally just transformation, including with regard to the circular economy. In a study published on 7 March, the environmental and development organisation Germanwatch and the Heinrich Böll Foundation highlight the issues that need to be considered in the context of a globally just circular economy.
With regard to the measures proposed in the Clean Industrial Deal on the circular economy, this means that protectionist tendencies could further exacerbate global raw material injustices, that the announced circular economy partnerships must take into account the concerns of countries in the Global South, and that there should be more efforts towards reducing European industry’s consumption of raw materials.
The hint of protectionism regarding critical raw materials
If the EU continues on the protectionist path it has chosen, resources will not be effectively conserved.
In a leaked advance version of the Clean Industrial Deal, the Commission proposed to establish reciprocal restrictions on the export of scrap and waste streams of critical raw materials. In the final version, this is only indirectly suggested, and export fees for critical raw materials are considered. If the EU continues on the protectionist path it has chosen, resources will not be effectively conserved: On the one hand, recycling capacities in the EU are far from sufficient for many raw materials, so that in the worst case, fewer raw materials can be reused. Furthermore, although the availability of secondary raw materials on the European market would increase, this would not happen globally, meaning that fewer secondary raw materials would be available elsewhere. As a result, the demand for primary raw materials would merely shift to other countries.
This approach also poses problems for countries and industries in the Global South that are dependent on secondary raw materials, thus risking an intensification of the globally unjust distribution of raw materials. If these export restrictions affect countries in the Global South, their level of access to (secondary) raw materials will be reduced. Compared to the EU, they generally have a much smaller anthropogenic stock of raw materials that they can access. Even if export restrictions for specific waste streams and countries of the Global South may be useful in some cases for preventing environmental and health problems, (country- and region-specific) agreements are needed here, and they should be agreed in dialogue rather than decided unilaterally by the EU.
International partnerships for a circular economy
Another instrument proposed by the Clean Industrial Deal is circular economy partnerships. The study by Germanwatch and the Heinrich Böll Foundation makes a number of recommendations in this regard (see Chapter 5). For example, such partnerships should be used to expand high-quality recycling and processing capacities in countries in the Global South that import scrap and used goods. They should be designed in such a way that they support partner countries in recycling and processing waste and imports of used goods in line with the waste hierarchy and under high environmental and social standards, as well as support the respective local and regional circular economy strategies.
urthermore, circular economy partnerships should not only promote the re-export of recycled critical raw materials to the EU, but also take into account the local demand. This is the only way to create a partnership in the interests of both sides – something that is very important in today’s world, not least for placing trustworthy international cooperation on a stable footing. In addition, the well-established business models for the processing and reuse of products and their components in some countries can be strengthened. The funding programs that the EU has planned for the European circular economy industry should also be partially opened up to countries in the Global South so that they can play a decisive role in the global circular economy. This is also important from the EU’s point of view, since EU companies operate and network globally in the circular economy and are therefore dependent on a global strengthening of the circular economy.
Tentative approaches to reducing raw material consumption levels in the deal
Apart from that, it is crucial for a globally just circular economy – as well as for the sustainable resilience of European industry – that the demand for raw materials is reduced, and thus import dependencies are lowered. The ambitions of the Clean Industrial Deal in this regard are far too weak. For example, the strategy does not aim to reduce absolute resource demand. In addition, the strategy focuses heavily on recycling and leaves out other circular strategies that, for example, extend the useful lifespans of products and their components. The announced revision of the common VAT system to mitigate the tax burden for second-hand goods offers a positive starting point in this respect. This revision should also be used to remove the tax burden for circular economy services such as repairs.
- New study by Germanwatch and the Heinrich Böll Foundation:
Global Circular Economy: Reflections for a Just Transition - EU Clean Industrial Deal
This article first appeared here: www.boell.de
