The new EU Circular Economy Act, expected to be published in 2026 is set to reshape how industries use resources, reduce waste, and compete globally. Proposed by European Commission President Ursula von der Leyen and led by Jessika Roswall, the Commissioner for Environment, Water Resilience, and a Competitive Circular Economy, this law will take on key challenges like resource shortages, waste problems, and global competition.
Curious about how this upcoming proposal could influence your business? Keep reading to learn more!
What is the EU Circular Economy Act?
At its core, the EU Circular Economy Act is not just about compliance. It’s about seizing opportunities. From stimulating innovation in electric vehicles and reusable packaging to boosting the production of solar panels, sustainable fuels, and wind turbines, the Act will ripple across every sector striving to achieve CO2 neutrality by 2050. The stakes are monumental: the EU must simultaneously protect its environment, maintain its competitive edge, and drive investment in transformative technologies.
Beyond its ambitious climate goals, it aims to establish the EU as a global frontrunner in the circular economy – outpacing superpowers like the U.S. and China in the race for industrial and environmental supremacy.
The EU Circular Economy Act builds on the EU’s earlier initiatives, particularly the 2020 Circular Economy Action Plan, which introduced key measures to boost recycling, reduce waste, and promote resource efficiency. A key priority of the EU Circular Economy Act will be harmonising circular economy policies across Member States, reducing regulatory fragmentation and simplifying legislation. This will create a level playing field where both start-ups and established businesses can grow and thrive. The Act will also focus on accelerating investment in circular infrastructure, such as recycling facilities and material recovery systems.
More concretely, the Act is expected to introduce measures that incentivise the use of secondary materials in manufacturing, helping to close the loop on resource use. Bringing circularity even more into play, businesses will need to rethink their product designs and suppliers. For instance, the EU Circular Economy Act is expected to align with existing regulations like the Packaging and Packaging Waste Regulation (PPWR), which mandates that all packaging must be reusable or recyclable by 2030. As a result, key sectors such as packaging, electronics, chemicals, construction, transportation, and textiles will be affected by the EU Circular Economy Act.
Why does the EU need a Circular Economy Act?
Environmental necessity
The current consumption patterns are unsustainable – by 2050, humanity will need three planets’ worth of resources at the current rate of consumption. Therefore, the EU’s transition to a circular economy is not just an environmental necessity but a prerequisite for achieving the EU’s 2050 climate neutrality target and halting biodiversity loss.
Why should your business care? The shift to a circular economy will drive organisations to rethink their resource use, focusing on sustainability and waste reduction. Do not hesitate to get in touch with us should you wish to better understand how this might impact your company or organisation.
The need for raw materials: critical and secondary
The new Act aims to scale up these efforts by establishing a Single Market for waste and secondary raw materials, as well as by placing a particular focus on strategic and critical resources such as rare earth elements, cobalt, gallium, copper, lithium, and magnesium. This aligns with the EU’s Critical Raw Materials Act, which was approved in 2023 and came into force in May 2024. These critical raw materials are vital for Europe’s green and digital transitions but are largely imported outside the EU from countries such as Australia, Chile, and China, making the EU susceptible to supply chain disruptions.
Why should your business care? The EU Circular Economy Act aims to reduce the EU’s reliance on third countries by enhancing domestic recycling and recovery, boosting strategic autonomy, and positioning Europe as a sustainability leader. Businesses operating in the EU may need to adapt by sourcing locally, investing in circular technologies, and aligning with sustainability goals to remain competitive.
Roswall’s role in the EU Circular Economy Act
The European Commissioner for Environment, Water Resilience, and a Competitive Circular Economy, Jessika Roswall, has been a vocal advocate for the EU Circular Economy Act. In her 2024 confirmation hearing, Roswall outlined her plans to integrate circular economy principles into broader EU policies through the EU Circular Economy Act, ensuring coherence between climate, industrial, and environmental regulations.
Jessica Roswall’s efforts will be supported through collaboration with other Commissioners, including Wopke Hoekstra, Commissioner for Climate, Net-Zero, and Clean Growth; Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy; and Teresa Ribera, Executive Vice-President for Clean, Just, and Competitive Transition. This cross-sectoral approach is essential for addressing the current fragmentation in existing policies, a key barrier to systemic transformation. It could also strengthen alignment with existing European legislation, such as the Waste Framework Directive (WFD) and the EU Eco-design, ensuring that policies complement rather than conflict with one another.
The EU Circular Economy Act will also be one of the pillars of the highly anticipated Clean Industrial Deal, which focuses on creating lead markets for circular products, simplifying regulatory processes, and encouraging investment in key sectors, with the end goal of decarbonising the European industry while remaining competitive with non-EU countries. Together, these initiatives aim to strengthen Europe’s position as a global leader in sustainability.
The impact of the EU Circular Economy Act on businesses
As the EU Circular Economy Act takes shape, businesses potentially in the scope of the legislation must start preparing now, as this Act may present both opportunities and challenges, including:
Regulatory compliance
With the EU Circular Economy Act, we expect potential new proposals and requirements, such as right-to-repair obligations, mandatory green public procurement criteria, sustainable product design standards, enhanced consumer information requirements, and stricter waste management regulations.
Deregulation and regulatory perks
The EU Circular Economy Act could introduce streamlined regulations to incentivise innovation and reduce bureaucratic barriers for businesses adopting sustainable practices. Companies prioritising circular business models – such as recycling, reuse, and remanufacturing – might benefit from simplified permitting processes and exemptions from certain waste management obligations. For example, pilot projects or startups in green tech may be fast-tracked under special programs designed to encourage experimentation and reduce administrative burdens. Additionally, industries investing in circular solutions could see more harmonised standards across EU Member States, making it easier to expand operations and access new markets.
Funding, subsidies and fiscal incentives
The Act is likely to include significant financial support for businesses embracing the transition to a circular economy. Companies could access grants, low-interest loans, and tax breaks for investments in sustainable product design, advanced recycling technologies, and circular supply chains. Public-private partnerships may emerge as a key funding mechanism, enabling businesses to co-develop projects with EU bodies. Fiscal incentives, such as reduced VAT rates for circular products or services, could further drive market demand and offset initial costs for early adopters.
Business model transformation
New legislation and requirements will force organisations to adapt their business model to the new reality. This could potentially include strategies with product-as-a-service models (PAAS), mandatory product repairability standards, extended producer responsibility (EPR) obligations, and environmental performance tracking with a digital product passport implementation. Such initiatives can drive new markets for circular products and services while ensuring compliance with enhanced sustainability standards.
Providing sector input
The EU Circular Economy Act proposal is expected to be presented by Commissioner Roswall within the first 100 days of the new European Commission, with the draft currently being developed also thanks to the input from relevant industries. This presents an opportunity for businesses to engage with the European Commission and contribute with your input and ensure that future measures are aligned with your business needs.
Next steps for the EU Circular Economy Act
The European Commission is making the EU Circular Economy Act a top priority. This landmark initiative will address critical barriers to circularity while unlocking significant economic and environmental gains. With a formal proposal expected in 2026, businesses should not wait – action is needed now.
The changes will reshape how products are designed, manufactured, and disposed of, placing unprecedented demands on supply chains and compliance strategies. Companies that fail to adapt, risk falling behind competitors who seize the first-mover advantage. It’s also crucial to ensure that the European Commission hears your sector’s concerns and accounts for your business’ specific challenges during the policy drafting phase.
At Publyon, we specialise in helping businesses anticipate and respond to these game-changing policies. Whether you need insights into compliance requirements, strategies to influence EU decision-making, or guidance to leverage upcoming opportunities, our team is here to support you.
Don’t wait for the rules to be finalised – contact us today to secure your competitive edge and ensure your voice is heard in shaping the future of EU regulations!
