Judging by the internal documents which have become public in the last few weeks, there is a big debate going on inside the European Commission about some of the key features of “more ambitious” Circular Economy package due to be unveiled on 2 December.
Some in the Commission clearly favour a light touch, deregulatory and voluntary approach to future EU action. Others believe that regulation has been essential in getting the sector to where it is today and will remain essential if we are to make progress towards a more Circular Economy.
Commission Vice-President Timmermans recently argued that better regulation and environmental progress are fully compatible, but not everyone agrees.
There is a continuing debate amongst officials about what the revised 2030 recycling targets should be, whether there should also be landfill reduction targets, and what to do about the vastly different starting points of the 28 Member States. These questions will only be resolved at the most senior political level within the Commission.
But it looks as if one of the most crucial debates of all has already been lost. The latest internal Commission document suggests there will be no concrete action by the Commission to develop sustainable markets for secondary raw materials.
For example, it looks as if there will be no mandatory recycled content requirements. Action on green public procurement will be left to the Member States. And proposing preferential VAT rates for second hand or recycled products has been ruled out as too sensitive and controversial.
Unless demand side measures are put in place, markets for secondary raw materials will remain weak
The Commission has already made up its mind on “pull measures” (and I quote): “This is an area where prescriptive EU action would not be effective or proportionate.”
ESA thinks this is wrong. The new higher recycling targets will significantly increase the quantity of secondary materials to be collected and sorted. But this increased supply, though it may lower prices, by itself will not create extra demand.
Markets are already depressed for a range of reasons and prices for secondary materials no longer cover the cost of collection and sorting to the same extent as in the past. Unless demand side measures are put in place, markets for secondary raw materials will remain weak going forward.
Some Commission officials say that if recyclates are of high enough quality there will always be an outlet for them. But achieving higher quality comes at a price, further widening the gap between sorting costs and the output value of the material on what will be an increasingly saturated market.
If the Commission shies away from proposing effective “pull measures” in the Circular Economy package, the industry will have to take its case to the Member States and the European Parliament once the proposals are out for negotiation.
Roy Hathaway, Europe policy adviser, Environmental Services Association