The transition towards a circular and net-zero plastics system by 2050 is a major opportunity to deliver on Europe’s climate, industrial competitiveness, and resource security objectives. Finland, together with the Nordics, holds one of the leading circular plastics value chains and has made significant investments in capacity. This is a good place to be as Europe is aiming to double its circularity rate by 2030. The EU Commissions upcoming Circular Economy Act should serve as one of the main tools to realize this vision and move towards circular economy. The Commission is expected to publish the act this autumn.
Circular plastics are increasingly viewed through lenses of industrial policy, resilience, and security of supply. The current geopolitical tensions only underline how important it is for Europe to decrease the use of virgin materials, especially those based on fossil fuels.
Now the focus must be on strengthening circular competitiveness, in which the Circular Economy Act can play a key role.
Demand needs to come before the 2030s
The most urgent question is demand. Europe has companies, technologies and capabilities that can produce and use recycled plastic feedstocks, but the market is still too weak and too uncertain. This creates a difficult timing gap for industry. Many regulatory requirements become meaningful only in the 2030s, while investment decisions, plant operations and business model development need viable demand already now.
Recycled content requirements are already in place or emerging in areas such as packaging. This is a good start, but the design of these requirements matters. If targets stay flat for several years and then jump suddenly, they create uncertainty and expose circular investments to political moods. A more gradual strengthening of demand would give companies a clearer path to invest.
Demand creation should also avoid creating a market that primarily benefits imports produced under different conditions. If Europe creates recycled content markets, it must also make sure that European recyclers can compete on fair terms.
A circular economy needs a real Single Market
The second major barrier is regulatory fragmentation. Today, secondary raw materials do not move across Europe as smoothly as they should. End of Waste criteria differ between Member States, and the time needed to receive End of Waste status can vary dramatically. This is a direct obstacle to circular competitiveness. A company that wants to scale circular solutions across Europe should not have to navigate 27 separate interpretations of when waste becomes a product.
The Circular Economy Act should therefore make harmonisation or mutual recognition of End of Waste criteria a central priority. This is politically easy to support in principle, but difficult in practice. Member States often demand national exceptions and warn against a race to the bottom. These concerns must be taken seriously, but they should not become an excuse for maintaining a fragmented market that holds back circular investment.
Including municipal waste incineration under ETS
Too much material that could be recycled still ends up being incinerated. Including municipal waste incineration in the EU Emissions Trading System (ETS) should be seriously considered as part of the upcoming ETS review.
However, this cannot be done in isolation. In many Member States, landfilling remains the cheapest waste treatment option. If incineration becomes more expensive without complementary measures, there is a risk that waste moves from incineration to landfill instead of moving up the waste hierarchy.
This is why pricing incineration must be combined with measures that prevent increased landfilling, strengthen recycling capacity and create demand for recycled materials. The purpose of the cost signal should be to change systems and policies, not simply to create a new cost that is passed on to households.
Chemical recycling has a role where mechanical recycling cannot do the job
Mechanical recycling should remain the priority where it works well. But not all plastic waste streams are suitable for mechanical recycling. Low quality contaminated or mixed plastic waste often requires other solutions. This is where chemical recycling can play an important complementary role.
The EU should make sure that regulation enables chemical recycling where it improves resource efficiency and helps target waste streams that would otherwise be incinerated or landfilled. There is also a broader industrial transition opportunity here. Existing European refinery capacity could be part of the circular plastics transition, but only if regulation allows viable pathways for chemical recycling.
Circular economy also needs level playing field
The circular economy cannot be built on unfair competition. European companies are investing under EU climate, environmental and product rules. At the same time, recycled plastic imports from outside Europe have increased, including from countries that do not have comparable recycled content markets of their own.
This raises a simple question of reciprocity. If companies want to benefit from the European recycled content market, they should also operate under conditions that support comparable circular market development. Europe should not create demand that encourages short-term imports while weakening its own recycling and plastics value chains.
This is why level playing field measures must be part of the Circular Economy Act discussion. The issue is not protectionism for its own sake. It is about making sure that Europe’s circular economy policies build circular industry in Europe, while also encouraging trading partners to strengthen their own circular markets.
The Circular Economy Act must be an industrial policy tool
The Circular Economy Act should be one of the key instruments for building Europe’s clean industrial base.
For circular plastics, this means five things.
First, Europe needs stronger and more predictable demand for recycled materials before 2030. Second, secondary raw materials need a real Single Market. Third, waste policy must send the right price signals and avoid pushing recyclable materials towards incineration or landfill. Fourth, chemical recycling must be enabled where it complements mechanical recycling and improves the use of difficult waste streams. Fifth, European circular industries must be protected from unfair competition.
The direction is clear. Europe has set ambitious climate and circularity goals. Companies have invested in solutions. Finland and the Nordics have strong value chains and practical experience to offer. Now the EU policy must close the gap between ambition and market reality.
