Over the past five years, the EU has developed policies to foster a more circular economy. However, concrete progress remains insufficient with the EU’s Circular Material Use Rate essentially stagnating below 12%, while overall material consumption continues to rise (with a 6% increase over the past decade).
Europe’s systemic overconsumption and its overdependence on primary material extraction carries severe social and environmental consequences, while also exposing the EU to new geopolitical vulnerabilities and threatening the long-term competitiveness of European industry. This demonstrates the substantial untapped potential of circularity, the opportunities for a more decisive shift towards a circular economy reconciling resource consumption with planetary boundaries, as well as the urgent need to address remaining regulatory gaps while strengthening implementation.
As underlined by the European Environment Agency, circular economy policies now need to become more binding and target-oriented to accelerate the shift towards a regenerative economy in Europe. This requires moving beyond the current strong focus on waste management to address resource use more directly.
The IED 2.0 sets requirements on the operators of industrial activities to improve resource efficiency aligned to the circular economy ambition. In IED Recital 2, it is noted that ‘(…) it is necessary to establish a general framework for the control of the main industrial activities, giving priority to intervention at source, ensuring prudent management of natural resources (…)’. The revised policy objective set in Art 1; explicitly highlight the need to ‘improve resource efficiency [..] and the circular economy”.
The official BAT Conclusions definition also lists environmental performance levels associated with the BAT (BAT-AEPLs). Environmental performance means “the performance with regard to consumption levels, resource efficiency concerning materials, water and energy resources, the reuse of materials and water and to waste generation” Art 3 (13aa). The general principles for all measures to be set in permits also require efficient use of material resources and water, including through re-use.
IED Article 12(1)(b), demands ‘the description of the raw and auxiliary materials, other substances and the energy and water used in or generated by the installation’ as part of the permit application. However, the reference targets are to be specified in the BAT-AE(P)Ls. Environmental performance includes resource consumption levels and efficiency (incl. use of materials, water, and energy as well as the reuse of materials and waste generation, as precited). Those elements should be thus addressed in the EU BREFs. This is already clear due to the current wording of Article 13.2(a) (unchanged), which explicitly requires the information exchange to address performance of installations and techniques in terms of emissions […] and consumption and nature of raw materials, water consumption, use of energy and generation of waste.
- As per the Environmental Management Systems provisions, cross linked as a ‘general principles governing the basic obligations of the operator’ as per Art 11 (fc), the operator must continuously improve the environmental performance and safety of the installation, which shall include measures to optimise resource and energy use and water reuse.
- The IED 2.0 provides for a contradictory requirement that, ‘without prejudice to Article 9(2)’, the competent authority shall set binding ranges for environmental performance that may not be exceeded [as laid down in BAT conclusions], ‘in addition’ it refers to ‘indicative environmental performance levels concerning waste and resources other than water, which are not less strict than the binding ranges referred to [in BAT Conclusions]’. In conclusion there are quite contradictory provisions as what is the legal status of energy efficiency related requirements.
A new derogation option has also been introduced for the performance-based BAT levels (BAT- AEPL). Those derogations may be granted due to significant negative environmental impact or significant economic impact related to the local conditions or technical characteristics of the installation concerned. What this exactly means is not clear, in any case a safeguard clause is inserted that it should not cause any significant environmental impact, including depletion of water resources (Art 15(6)). One can hence argue that energy performance requirements (as other BAT-AEPL) are legally binding, but the competent authorities may grant a derogation based on the above-mentioned criteria.
Further, Article 27d of the IED 2.0, setting out installation level Transformation Plans, also requires the operator to provide information on how the operator will transform the installation during the 2030-2050 period to contribute to the emergence of a […] circular, resource-efficient [..] economy by 2050.
The main suggestions of the EEB in relation to promoting resource efficiency / circular economy are set out in two dedicated briefings. The main suggestions relate to the following:
- Obligation for the operator to provide a Circular Economy Plan as part of the IED permit, or within the installation level Transformation Plan;
- Systematic derivation of BAT associated performance levels (BAT-AEPLs) which address resource efficiency aspects. For this to be successful:
- the BAT-AEPL need to be explicitly binding;
- appropriate circularity metrics and indicators should be defined which could relate to the following:
a) Ratio input of raw materials / output (resource efficiency metric)
b) environmental footprint of the process inputs (resources incl. raw materials, energy) per output, at least the carbon and material footprint of input material
c) Minimum use of recycled / secondary raw material per output and
d) Waste generation per output and fate of generated waste.
Further information:
- EEB input to call for evidence on IED Transformation Plan (February 2025).
- EEA circular economy outlook (2024)
