Written by Marc Lütz
Dear reader,
Brussels is settling into autumn, and the promises of a simpler, more competitive Europe are meeting the practicalities of delivering one. September brought big speeches, fresh proposals and a growing chorus of businesses asking what the rules actually mean for them.
In this edition, we look at the Circular Economy Act’s limited airtime in the State of the Union, despite its relevance to many of the priorities outlined. Meanwhile, pressure to ease packaging EPR obligations is gaining traction in Parliament and Council, the ETS review is reopening questions about industry’s transition, and public procurement could give circular solutions a stronger foothold. Data centres are also moving further into the sustainability spotlight, with new EU ratings prompting discussion about how best to measure their performance.
The spotlight
Circular Economy Act: a major file missing from the Commission’s narrative
One notable omission from President Ursula von der Leyen’s State of the Union address on 16 September was the circular economy. The speech focused heavily on competitiveness, resilience, security and reducing Europe’s strategic dependencies, but circularity was barely part of that narrative. This is striking given the importance of the upcoming Circular Economy Act (CEA), which is expected to become one of the Commission’s main files on resource security, secondary raw materials and reducing Europe’s dependence on virgin materials.
At the same time, work on the CEA is continuing behind the scenes. The proposal is currently expected on 11 November, after its original September publication was delayed following a negative opinion from the Regulatory Scrutiny Board. Environment Commissioner Jessika Roswall has indicated that one of the main criticisms was that the impact assessment did not sufficiently address demand-side measures. The Commission is now revising the assessment. Both Roswall and Executive Vice-President for Industrial Strategy Stéphane Séjourné are involved in preparing the CEA, with rumblings suggesting that Séjourné is seeking to take the lead on the file. This involvement from both the environment and industrial policy sides also shows how closely the CEA is linked to the Commission’s wider competitiveness agenda.
This makes the limited attention to circularity in the State of the Union all the more notable. Many of the priorities highlighted in the speech, including competitiveness, resilience and greater European independence, are closely linked to the objectives of the CEA. The proposal will therefore be an important test of how central the Commission really wants circularity to be within its wider industrial and competitiveness agenda.
Policy updates
PPWR implementation under scrutiny as EPR obligations put pressure on SMEs
On 16 September, the European Parliament debated the impact of the Packaging and Packaging Waste Regulation (PPWR) on SMEs, highlighting administrative costs and barriers to cross-border trade. MEPs criticised the burden of navigating separate national Extended Producer Responsibility (EPR) systems and appointing authorised representatives in each Member State where required, warning that these costs are prompting smaller businesses to restrict deliveries to other EU markets. Environment Commissioner Jessika Roswall acknowledged these concerns and urged Parliament and Council to swiftly approve the Commission’s proposed suspension of authorised representative obligations under the Environmental Omnibus.
Looking ahead, the upcoming Circular Economy Act is expected to address wider EPR fragmentation through simplification, harmonisation and digitalisation. The Council Presidency identified exemption thresholds and a potential EU-wide producer register as possible solutions, while MEPs called for a digital one-stop shop. Although there was broad support for reducing administrative burdens, views differed on whether relief should target micro-enterprises or extend to larger SMEs. The debate increases political pressure for changes but does not itself alter businesses’ existing obligations.
Member States reopen the door to simpler packaging EPR rules
EU Member States have agreed to resume discussions on simplifying Extended Producer Responsibility (EPR) requirements, following pressure from Germany and Poland to restart negotiations on the Environmental Omnibus. The discussions will focus on packaging and the requirement for companies selling into other Member States to appoint authorised representatives. Germany has proposed exempting businesses placing less than 10 tonnes of packaging on the market annually.
Support for reopening the discussion grew over the last month, with Czechia backing further relief for small operators and Slovenia calling for a proportionate approach, while France and Latvia remained more reluctant. On 30 September, Member States agreed that a targeted solution should be explored for EPR obligations under the Packaging and Packaging Waste Regulation, citing the possible disproportionate burden on small packaging producers. A broader revision of EPR schemes is still expected under the upcoming Circular Economy Act.
MEP seeks a smoother transition for industry in the ETS review
On 15 September, rapporteur Peter Liese MEP (EPP, DE) presented the draft ENVI Report on the ETS review. The report broadly supports the Commission’s proposal, while seeking a more industry-friendly pathway to 2040 without weaking the EU’s long-term climate framework.
The central change is a rebalancing of the post-2030 cap trajectory. Liese proposes a 3.4% annual reduction factor for 2031-35 and 2.3% for 2036-40, rather than the Commission’s flatter approach. He also strengthens protection against carbon leakage, including more free allowances for the most efficient installations and a KPI-based mechanism to address exposure in third-country export markets not covered by CBAM. Conditionality for free allocation would be phased in more cautiously, initially applying to the additional allowances created by the review and becoming stricter over time. The report further prioritises ETS revenues for domestic decarbonisation investment, seeks stronger safeguards against carbon-price volatility and expands targeted support for RFNBOs in aviation and maritime fuels.
Liese retains the Commission’s gradual 2031-34 inclusion of municipal waste incineration but deletes the proposed Member State opt-out until 2035. He argues that further national derogation would distort the single market, while calling for stronger circular-economy and landfill measures to prevent waste diversion. The amendment would preserve a harmonised EU-carbon price signal for waste incineration, therefore strengthening regulatory certainty and creating a more-level playing field for operators. The ENVI committee will discuss the draft report on 1 October, and MEPS will provide amendments until 6 October.
Public procurement aims to turn spending into circular demand
On 9 September, the European Commission published its proposal for a new Public Procurement Act, aimed at simplifying and modernising the EU’s public procurement framework. The proposal marks a shift away from a predominantly price-driven approach, giving greater weight to quality, sustainability, resilience and innovation. With public procurement representing around 15% of EU GDP, the Commission sees public spending as an important lever for advancing broader EU policy objectives.
Circularity is explicitly embedded in the proposal, with a dedicated provision allowing public buyers to consider criteria such as durability, repairability, reuse, refurbishment, recycled content and waste prevention throughout the life cycle of products, services and works. The proposal also encourages alternatives to purchasing new products, including circular business models such as leasing, sharing and product-as-a-service, potentially strengthening public procurement as a driver of demand for circular solutions across the EU.
However, how far the legislation should go in steering public purchasing towards circularity is already emerging as a key point of debate. Circular economy network RREUSE welcomes the stronger recognition of circular solutions but criticises the largely voluntary nature of the criteria. Meanwhile, BusinessEurope welcomes simplification and digitalisation but warns that additional policy requirements could increase complexity and reduce competition. As Parliament and Council examine the proposal, balancing circularity ambitions with simpler, more competitive procurement procedures will be the key challenge to watch.
EU data centre sustainability ratings advance amid calls for refinement
On 21 September, the European Commission published a delegated act on the establishment of common Union rating scheme for data centres. This act supplements and amends the first iteration adopted in 2024 and marks the start of the second phase of this data centre sustainability framework.
Moving beyond the 2024 data reporting framework, the new act proposes an active rating and electronic labelling scheme, mandatory for all new data centres with a capacity of 500kW or above (and voluntary for smaller sites). To address growing water concerns, with EU data centre water consumption projected to reach 5 billion cubic meters annually by 2027, the act introduces several updates, such as refined definitions and indicators, aiming to be aligned with the EU Water Framework Directive. However, reactions are mixed: water operators demand local water prioritisation and industrial reuse policies, while tech associations argue the methodology fails to account for regional climate variations.
The act is currently undergoing a two-month review by the European Parliament and the Council before entering into force, with the first official labels scheduled for release on 15 August 2027.
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