What Might Full Circularity Mean for Europe?

A broadly adopted European circular market could generate over €1TN  (more than $1.0725TN) by 2040 and save 650 megatons (Mt) CO₂ equivalent (CO2e) a year – the combined emissions of Spain and France –according to a new report from European impact fund Summa Equity.

But the outcome of transitioning to a circular economy would go further, Michael Vollset, investment director, Summa Equity told Waste360.

“Our research indicates not only the opportunity to reduce material emissions by 55 percent in Europe, but to create hundreds of thousands of jobs. And it would enable supply of 80 percent of future material demand with end-of-life materials,” he says.

Achieving these outcomes calls for changes in production and consumption patterns and reevaluating waste treatment approaches. It would require deep investments in equipment, processing plants, and infrastructure, though current technologies exist to support the shift, according Vollset and the other contributors to the report, “Investing in a circular and waste-free Europe.”

Full circularity would drive “profound” changes for most European industries dealing with physical materials and products, they project. Look out for a shift from primary to secondary material production, new business models centered around reduction and reuse, and different end-of-life treatment practices.

Here are more key findings:

Looking at materials consumption, Europeans use about 2,200 kilograms (kg) of metals, cement, plastics, fiber, food, glass, wood, and paper a year. While the industries making these materials and products support millions of jobs, there are drawbacks.

About 135 Mt of end-of-life material is landfilled each year (amounting to about 25% of it) and another 170 Mt are burned. Of the portion that’s collected for recycling some is lost to exports. Add to the equation that overuse and waste of materials yields losses at the manufacturing level.

Low levels of repair and reuse, ultimately resulting in short consumer product lifetimes, are further consequences of a linear system.

Vollset calls reuse and reduce strategies “two critical levers that will grow massively in the years to come in order to avoid waste in the first instance.” Reuse and reduce models represent a $600-1,100B opportunity through circular business models, he says.

The authors pause on recycling, pointing out that the carbon intensity of recycled materials is about 5 to 25 percent that of primary materials—and avoided materials can avert even more.

The EU is setting ambitious environmental targets, which are driving circularity strategies in packaging, textiles, food, and waste handling. Among emerging policies are mandates for use of 30 to 35 percent recycled content in plastic packaging, a 50 percent reduction in food waste by 2030, and a push to almost completely eliminate landfills before 2040.

Other evolving trends are a reach for net-zero supply chains, particularly in the automotive, consumer goods, and construction industries, contributing to impacts such as higher commodities values.  Polyethylene terephthalate (PET) traded at an average 40 percent premium compared to virgin PET in 2021 for example.

Alongside these changes, technologies are accelerating. There are promising options for various use cases across different fractions, some being ready for market and others more early stage but ready to scale, Vollset says.

“Within the report we identify a range of examples along the maturity curve. For example, at the earliest phase you see blockchain solutions for tracking physical materials, while later on the curve you see solutions such as waste-to-aviation fuels, chemical recycling, automatic sorting (near infrared) for textiles to more asset-light models enabling reduction or reuse, such as digital platforms for surplus foods. All of them enable the transition,” he says.

More sophisticated waste sorting and the ability to reprocess materials to virgin quality could double the value of the reprocessing industry from €55B today to more than €100B by 2030, and that value could reach as high as €210B by 2040, according to Summa.

There is “enormous” scope specifically for durable product categories (like transportation, high-end fashion, consumer electronics, IT equipment, and office furniture) to circulate with longer lifetimes, the authors say, particularly through new service-based models.

They touch on circularity models from packaging via new delivery systems, to rental and sharing models, which combined with approaches such as using more high-strength materials and incorporating more sophisticated design could avoid 150 Mt of food waste and material use, they project.

Three actors need to take charge to accelerate the transition, Vollset says. 1) Industry to think through new supply chains and to design and innovate for circularity.

2) Policymakers to help set the direction for the entire system while leveling the playing field for circular versus linear solutions and business and to establish enablers for new supply chains, support innovation, and mobilize action in the public and private sectors. Lastly:

3) Investors to guide the allocation of resources to the right ventures with the greatest short- and long-term returns.

A fully developed circular economy would require an investment of €230B, Vollset says.

“But the value creation opportunity would be approximately €1.5TN, a massive opportunity for society and our planet.”