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EU Green Deal: challenges and opportunities for industry


Federica Rizzo
published on 2021-02-15

On 11 March 2020, the European Commission presented the new Circular Economy Action Plan (“CEAP”) for a cleaner and more competitive Europe, as one of the main building blocks of the EU Green Deal.

Under the umbrella of the EU Green Deal, designed to get the EU to its target of carbon neutrality by 2050, the European Commission aims to achieve transformational change, while expanding the circular economy actions it started implementing in 2015.

The European Parliament supports the opportunities that derive from the combination of circular economy and digital solutions by optimising products and services. In this respect, the European Commission is also expected to develop policies to support new circular business models, such as “Product as a Service” (“PaaS”) approaches, within its “Sustainable Products Initiative” (“SPI”).

What products? 

The CEAP outlines a list of new measures and strategies to ensure the sustainability of certain EU products, reduce waste and promote circularity within the sectors that use the most resources, such as electronics and information and communication technologies (“ICT”), batteries and vehicles, packaging, plastics, textiles, construction and buildings, food, water and nutrients. 

The European Commission’s strategies under the EU Green Deal adopt a horizontal approach that will be combined with sector-specific initiatives. Presumably, the initiatives will go beyond substitution of materials and require longer lifetimes of products such as electronics, through a “Circular Electronics Initiative”, to promote reusability and reparability, as well as upgradeability of components and software, avoiding premature obsolescence. 

Moreover, the CEAP indicates measures aimed at reinforcing the existing mandatory requirements for packaging and at reducing its (over)use, as well as scaling up the amount of plastics that are recycled. To that end recycled content requirements have been introduced for certain construction products, as well as restrictions of intentionally added microplastics, and measures on their unintentional release, and incorporating measures to tackle the presence of hazardous chemicals in textiles.

What are the requirements? 

EU legislation already addresses sustainability aspects of products to a certain extent, either on a mandatory or a voluntary basis. Though there is not a comprehensive list of requirements that apply to all sectors and products placed in the EU market, the new plan addresses the issue of restricting the use of certain chemicals that persist in recycled materials and articles and in secondary raw materials

In this regard, as well as with regards to waste, new harmonised systems for tracking information of substances of concern will be developed, together with additional bans of hazardous substances via the Eco-design Directive, which may possibly be extended to a border range of products.

Among the planned initiatives, in November 2020, the European Commission adopted the first proposal for a Regulation to modernise EU legislation on batteries. The battery initiative includes new requirements concerning both the performance and safety of batteries all along the entire lifecycle, including their collection, repurpose and recycling, while restricting the use of certain substances in batteries (for more information see https://greeninnovationnetwork.com/blog/.)

What are the main challenges for industry?

One of the main challenges is represented by the Eco-design Directive. Currently establishing EU-wide rules for improving the environmental performance of products, such as household appliances, the Directive could go beyond energy-related products and become applicable to electronics, ICT, furniture and textiles, as well as high impact intermediary products such as steel, cement and chemicals. The revision to the Eco-design Directive is expected to be adopted in the last quarter of 2021.

The challenges linked to a possible extension of the scope of Eco-design Directive are cross-cutting for a wide range of sectors, and together with the sustainability requirements on non-toxic substances, may encompass a wide range of actions to address their presence in textiles, electronic products, packaging, batteries, and construction waste. 

Moreover, the possible introduction of “products’ passports”, including information about the chemical composition of products, as well as the environmental impacts, appears to be very burdensome for the companies facing the challenges of the lack of information on substances along the supply chain. 

Furthermore, the new legislative initiative suggests offering consumers by 2021 a “right to repair” electronic products, such as smartphones and computers, whereas companies will have to comply with new minimum requirements on sustainability labels and upgrading services. The outlined plan already raises some discontent, in particular due to the announcement of possible regulatory options for an EU-wide take back scheme to return or sell back old mobile phones, tablets and chargers, as an additional measure to tackle premature obsolescence.

Textiles are also a “hot topic” under the EU Green Deal. Following the European Parliament’s new recommendations, on 10 February 2021, for new actions to tackle hazardous substances in material cycles, the sector will be subject to costly regulatory requirements, and may encounter additional difficulties at sourcing raw materials when seeking allowed alternatives.

Similarly, the issues concerning plastic products as well as restrictions of intentionally-added microplastics, or primary microplastics, are very well known. While the restriction process at the European level is still on-going, the issues concerning data gaps on microplastic toxicity remain at the centre of various consultations at the national and international level (such as the World Health Organization (WHO)). 

In this context, companies are already facing challenges with respect to onerous R&D investments and the lack of harmonised measurement methods, as well as uncertainties concerning labelling, and certification issues. In particular, since a methodology for measuring microplastics and establishing a watch list of substances of concern has not been identified yet, companies are still left among many uncertainties. 

Looking ahead

In the context of CEAP, the European Commission together with national authorities will flesh out on checks of applicable sustainability requirements for products placed on the EU market, including through concerted inspections and market surveillance actions. 

The very practical question that remains open is how the EU will be able to tailor the wide range of upcoming measures in the context of the recovery from the pandemic, and how the new overarching legal framework will be able to encourage companies to change their practices and see the benefits of this costly and challenging transition and, ultimately, become an incentive for consumers to adapt in turn their behaviours.

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Are you a company willing to innovate? Are you a startup looking for real business opportunities? Are you an expert willing to contribute to the cause?
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