Circular economy: New EU rules on packaging and packaging waste
On 30 November 2022, the European Commission, with a view to delivering on the commitments made in the European Green Deal and the New Circular Economy Action Plan, presented a draft Regulation of the European Parliament and of the Council on packaging and packaging waste, amending Regulation (EU) 2019/1020 (on market surveillance and product compliance) and Directive (EU) 2019/904 (on reducing the impact of certain plastic products on the environment) and repealing Directive 94/62/EC (on packaging and packaging waste).
Over the past few decades, there have been several legislative interventions by the European Union motivated by environmental concerns. Such rules, in what concerns packaging, cover all types of packaging and packaging waste placed on the European market, including what types of packaging may be placed on the European market, as well as measures for the management and prevention of packaging waste. Thus, all packaging placed on the EU market must comply with requirements relating to its manufacture, composition and reusable or recoverable nature.
In the Commission's view: "the regulatory failures of the current Directive on packaging and packaging waste (e.g. the poor formulation of the essential requirements for packaging and the difficulties encountered by Member States in implementing them) have made it clear that harmonisation is necessary and that harmonised rules should take the form of a regulation rather than a revision of the existing Directive". It was, therefore, with the aim of achieving the targets set by the European Green Deal and the new Circular Economy Action Plan, that the European Commission presented on 30 November 2022 a proposal for a Regulation of the European Parliament and of the Council on packaging and packaging waste.
What is circular economy?
Circular economy, as opposed to the so-called linear economy, is a concept based on the reduction, reuse, recovery and recycling of materials and energy, with a view to promoting sustainable economic growth, generating employment and boosting global competitiveness. Circular economy aims to keep materials and products in use for as long as possible, maximising value during their use and recycling them at the end of their life cycle, with a view to improving resource efficiency and helping to reduce the demand for virgin raw materials, as opposed to the linear economic model of resource extraction > production > consumption > waste.
The first Action Plan to implement the Circular Economy was adopted by the European Union in December 2015 and was densified in 2018 by new measures proposed by the Commission.
More recently, in March 2020, an Action Plan for the Circular Economy was approved, designed as the main foundation of the European Green Deal. The new circular rule covers the product design model and aims to ensure that waste is avoided and that the resources used are maintained in the EU economy for as long as possible. The new Plan focused most heavily on the sectors that use more resources and where the potential for circularity is higher, such as electronics and ICT, batteries and vehicles, packaging, plastics, textiles, construction and buildings, food, water and nutrients.
The Circular Economy II package (consisting of the proposed Regulation on packaging and packaging waste and the EU Strategic Framework on Bio-based Plastics, Biodegradable Plastics and Compostable Plastics) of November 2022 is part of the review of the requirements for packaging and packaging waste in the European Union, currently contained in Directive 94/62/CE. As mentioned, the Commission proposed the adoption of a Regulation, rather than revising the existing Directive or approving a new one. Thus, as opposed to what has happened so far, the new rules proposed by the Commission will be directly applicable to the Member States, dispensing with the transposition of the new rules into national law.
The Commission's proposal on packaging
The amount of packaging waste has been increasing, often at a faster rate than GDP. In the EU, packaging waste has increased by more than 20% in the last 10 years and, if no action is taken, it is expected to increase by a further 19% by 2030.
The review therefore aimed at ensuring that 'all packaging on the EU market is reusable or recyclable in an economically viable way by 2030', as well as to complement the commitment made by the 2018 Plastics Strategy to ensure that, by 2030, all plastic packaging placed on the market can be reused or recycled in a cost-effective manner. The objectives of the proposed revision are essentially three:
i. Avoid the generation of packaging waste: reduce them in terms of quantity, restrict unnecessary packaging /over-packaging and promote reusable and refillable packaging solutions;
ii. Promoting high-quality recycling ('closed loop'): making all packaging on the EU market recyclable, in an economically viable way, by 2030;
iii. To reduce the need for primary natural resources and create a properly functioning secondary raw materials market by increasing the use of recycled plastics in packaging manufacturing and making them a valuable raw material.
In order to achieve these objectives, the Commission has considered a number of measures capable of achieving them, including:
- Definition of design criteria for packaging;
- The creation of mandatory deposit return systems for plastic bottles and aluminium cans;
- Creation of mandatory percentages of recycled content that producers must include in new plastic packaging;
- Product labelling harmonised across the European Union to remove doubts about the containers to be used for recycling;
- Prohibition of certain types of packaging, e.g. single-use packaging for food and drink when consumed inside restaurants and cafes; single-use packaging for fruit and vegetables; the bottles of miniature shampoo and other miniature packaging in hotels;
- Establish producer responsibility schemes for all packaging.
What are the economic and financial impacts of the new measures planned by the Commission?
According to what has been said by the European Commission, the consequences of the new packaging measures will be generally positive. As a result of the ban on the production of single-use packaging, companies will have to make investments to be able to make this transition. However, the Commission considers that the new rules will, ultimately, foster new business opportunities, as they will reduce the need to obtain virgin materials, thereby boosting Europe's recycling capacity and making it less dependent on external suppliers.
The Commission estimates that around 600.000 new jobs will be created by 2030. Indeed, the promotion of the reuse of waste will also entail the need for more human resources, including in small and medium-sized enterprises.
From the point of view of consumers, economic advantages are also envisaged in terms of savings. The European Commission hopes that the implementation of the projected measures will mean the transition to a new paradigm of innovation with regard to packaging solutions, which will allow companies to save. Of course, consumers will only benefit from companies' savings if they reflect them on market prices.
Finally, at the environmental level, a reduction of 1.1 million m3 in water consumption is expected, as well as a reduction in greenhouse gas emissions from packaging by around 23 million tonnes, which will reduce the cost of environmental damage to the economy and society by EUR 6.4 billion, with reference to the year 2030.
The proposal on packaging and packaging waste will now be examined by the European Parliament and the Council under the ordinary legislative procedure.
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Partner responsible for the Energy and Infrastructure and Public Law team.