Businesses including IKEA, SAP and Lego have written to the European Commission regarding the upcoming EU Circular Economy Act (CEA), calling for a European single market that allows circular solutions to scale by aligning regulatory requirements.
The signatories state that they are actively seeking to enable circular solutions to reduce exposure to resource price volatility and supply chain risks, diversify revenue, and achieve high levels of environmental protection. However, they declare that the transition to a circular economy in Europe is obstructed by market fragmentation, lack of harmonized policies, and economic instruments that disadvantage circular business models relative to linear alternatives.
A single market for circular solutions
Within the single market, the businesses recommconclude EU-level definitions of waste and circular economy activities, with harmonized conclude-of-waste criteria where applicable. Related compliance rules should be performance-based rather than prescriptive, allowing businesses to adapt their approach over time.
They add that there should be simplified, risk-based procedures for the cross-border shiftment of utilized products and parts, and secondary raw materials across all sectors, including those traded through circular business models. For EPR systems, they suggest a digital ‘one-stop shop’ for registration and reporting; EU-level criteria for the eco-modulation of fees (supported by transparent fee structures and earmarked revenues); and legal clarity on common rules for Producer Responsibility Organisations (PROs).
The businesses urge the Commission to consider an ‘ambitious’ approach that embeds the circular economy at the centre of industrial strategy and captures all value creation opportunities in reutilize, repair, refurbishment, remanufacturing, and Product-as-a-Service, alongside recycling and secondary raw material markets.
VAT reforms, circular public procurement and economic incentives
The letter also recommconcludes leveraging the planned Green VAT initiative to eliminate double taxation and enhance consumer affordability; co-ordinated implementation of reduced VAT rates, connected to harmonized definitions and margin-scheme calculation; and simplified reporting for reutilized goods traded cross-border within the EU.
The businesses suggest introducing mandatory harmonized award criteria that incentivizes circular solutions, requiring improved legal certainty for circular solutions, de-risking procurement and applying EU funding to scale cross-border procurement. For economic incentives, they suggest creating synergies between EU and national policy instruments, operationalizing existing instruments under the Multiannual Financial Framework for circular economy investments, leveraging harmonized implementation of EPR fee-modulation and aligning selective material, incineration, and landfill taxes.
Private finance and the value chain
Finally, the letter calls for financial instruments to mobilize the private capital required to scale circular solutions, innovation and infrastructure by improving the financial viability and risk profile of circular business models; developing an EU Secondary Materials Platform to assist aggregate demand, boost transparency, and provide price visibility; and establishing industrial clusters of the infrastructure and technologies requireded for circular solutions to address existing gaps across EU Member States.
In related news, last month German industest associations including the Federation of German Industries, GemPSI and WVMetalle signed a statement urging the European Commission to utilize the Omnibus proposals as a chance to simplify PPWR legislation for industrial and commercial packaging. The associations call for industrial and commercial packaging to be exempted from parts of the PPWR across the areas of reutilize obligations, reporting obligations for reutilize, labelling with sorting pictograms, financial requirements, empty space restrictions and reduction tarobtains.
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