EC’s Clean Industrial Deal paves way for 2026 Circular Economy Act

The Clean Industrial Deal, presented by the European Commission today (26 February), has outlined plans to make EU industry “a front runner in circularity”.

The Deal, which also covers affordable energy, lead markets, financing, global markets and partnerships, and skills development, identifies two main barriers to circular economy efforts in the EU. These are the absence of scale and the lack of a single market for waste, secondary raw materials and reusable materials.

The EU’s Circular Economy Act

The Deal offers an outline of what the planned Circular Economy Act will look like, which is scheduled to be adopted in 2026. The act is intended to provide a legal framework for the movement of circular products, waste and secondary materials within the EU’s single market to keep raw materials in the economy as long as possible.

The key provisions outlined in the Deal suggest that the Act will also aim to:

• Facilitate the supply of high-quality recyclates
• Lower feedstock prices
• Revise rules on e-waste to recover more critical materials
• Harmonise “end of waste” criteria
• Simplify, digitalise and expand extended producer responsibility (EPR) schemes
• Provide incentives to increase the use of scrap metal
• Mandate the use of new raw materials like recycled and bio-material materials

The Commission has said it is committed to working on additional measures that will make recycling of critical raw materials waste more attractive than export. This could include more effective separate collection, export restrictions, and partnerships with external countries.

Specific challenges in the battery recycling sector are identified, caused by the shortage of black mass, a battery recycling intermediate, which is currently being exported out of the EU. The document states the Commission’s intention to “adopt specific measures regarding black mass”.

However, no policies for chemical or hazardous material regulation were mentioned in the Deal, despite the focus on plastic and waste electrical and electronic equipment (WEEE) recycling. 

Investment in infrastructure and recycling

To scale up recycling infrastructure, the Deal outlines a plan to establish Trans-Regional Circularity Hubs. These hubs will aim to identify strategic projects based on proposals by groups of Member States and/or industrial actors, enabling cooperation across the EU.

Additionally, the Commission intends to launch research into the current procurement and recycling practices of raw materials, and assess whether more cooperation between industry players is needed.

Ursula von der Leyen, President of the European Commission, commented: “The demand for clean products has slowed down, and some investments have moved to other regions.

“The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”

However, the support for infrastructure may not go far enough, according to the European Recycling Industries' Confederation (EuRIC). Julia Ettinger, Secretary General at EuRIC, added: "Recyclers urgently need support as they battle skyrocketing energy prices, weak demand and excessive red tape. There can be no decarbonisation and competitiveness without circularity, and  no sustainable future without a strong recycling industry.”

Reuse and remanufacturing market

The Clean Industrial Deal also identifies economic potential in remanufacturing, with the market in Europe projected to grow more than threefold from its current value of €31 billion to €100 billion by 2030, and create 500,000 new jobs.

For second-hand products, the Commission plans to review the rules on the second-hand scheme contained in the VAT Directive as part of a broader “green VAT initiative” to address the issue of embedded VAT in such items.

Deal needs ‘stronger incentives’

The EC’s plan has been met with a muted response by environmental network Zero Waste Europe. Aline Maigret, Head of Policy, commented: “The Clean Industrial Deal sets a high-level framework that does not go far enough in unlocking the potential of the circular economy.

“Circularity measures, and the Deal in particular, should serve as a guiding compass for transforming how we consume and produce, empowering communities, and building resilient economies through job creation in circular sectors. The impact of the CID will hinge on the details that emerge next.”

The NGO also questioned whether the target to increase the circular material use rate to 24 per cent by 2030 is achievable without stronger economic incentives.

Theresa Mörsen, Waste and Resources Policy Officer at Zero Waste Europe, stated: “Without strong economic incentives to drive the use of secondary raw materials over virgin ones, it remains unclear how this target can be achieved.”

FEAD President, Claudia Mensi, added: "Ensuring a truly level playing field between recycled and virgin materials will require strong policy measures to create a competitive recycling sector, incentivise demand, and support industry needs such as energy cost reduction."