Work has begun on legislation on a closed-loop economy

On August 1, 2025. The European Commission has launched a public consultation on proposals for a circular economy act. They are intended to enable the Commission to gather opinions from a wide range of stakeholders and the general public, and thus better understand the risks and opportunities in the development and implementation of a circular economy.

As the EC points out, the closed-loop economy, which the public sees as the most effective solution to environmental problems, is key to increasing the European Union’s economic security, resilience, competitiveness and decarbonization.

Comments and opinions can be sent until November 6, 2025 via a form posted on the European Commission’s website.

General context

As is well known, the European Union depends on imports of many raw materials, including critical ones, moreover, its resource efficiency is insufficient.

In order to prevent the EU’s dependence on external raw materials, improve its competitiveness and reduce pressure on the environment, it has become necessary to move toward implementing a closed-loop economy. With this action, the EC intends to strengthen the single market for waste and secondary raw materials, increasing the supply of and demand for high-quality secondary raw materials at competitive prices by ensuring that these markets are adequately profitable.

The 2024-2029 policy guidelines, the Competitiveness Compass and the Clean Industry Pact identified the need for a commitment by the EU to move faster towards the implementation of a circular economy. These documents announced that an act on the circular economy was to be adopted by the end of 2026. Hence, the next step became the preparation of a legislative act on the circular economy.

Closed-loop economy act

As envisioned, the Circular Economy Act will aim to accelerate the transition to such an economy, increase the European Union’s economic security, resilience, competitiveness and decarbonization. It is also intended to contribute to the ambitious goals set out in the Competitiveness Compass and the Clean Industry Pact to make the EU a world leader by 2030. The EU will become a world leader, doubling the indicator in the field of the circular economy.

Thus, the purpose of the Closed Economy Act is to help create a sufficient supply of and demand for recyclables (including critical raw materials) and a true single market for waste and recyclables.

Options for closed-loop economy solutions

The EC proposes in the baseline (status quo) scenario to adopt regulations already in place that favor a circular economy. These include, for example:

• Waste Framework Directive;
• Ecodesign regulation for sustainable products;
• Packaging and packaging waste regulation.

Nevertheless, it is pointed out that these initiatives may not develop their potential unless the barriers to closed circulation in the single market are removed. Thus, it seems essential to ensure sufficient and cost-effective supplies of high-quality, verifiable secondary raw materials.

Therefore, the EC proposes to examine legislative and non-legislative provisions on supply and demand.

It is assumed that the solutions that will be in the circular economy act can be based on two main pillars:

• solving the problem of e-waste (electronic and electrical equipment), of which less than 40 percent is recycled;
• Consider combining interventions that support a single market for waste, recyclables and their use in products.

The European Commission will conduct an impact assessment of the proposed solutions to estimate the likely impact of the policy options on the various components. The assessment will include economic, environmental and socioeconomic analysis.

Public consultation

The aim of the consultation, which runs until November 6, 2025, is to ensure that all stakeholders have an opportunity to offer their opinion or experience the closed loop in the single market. This is intended to help the EC prepare a piece of legislation on the closed-loop economy.

The EC is particularly keen on participation in consultations and feedback from:

• societies;
• national administration;
• subnational administrations in member states (including from market surveillance authorities);
• individual enterprises (including SMEs) and business associations from sectors representing various manufacturers;
• recyclers;
• waste management entities;
• European, international and national trade associations;
• social partners;
• producer responsibility organizations;
• standards organizations;
• certification bodies;
• NGOs and civil society organizations;
• research and scientific institutions;
• third-country trading partners.

Comments and opinions can be sent by the deadline indicated above via a form posted on the European Commission’s website. The Closed Economy Act is scheduled to be completed in the fourth quarter of 2026.