The Circular Economy Coalition has published its first policy brief. Launched at the beginning of 2026, the Coalition brings together companies, experts and stakeholders across the value chain to advance circular economy solutions and improve the operating environment for circular business models. This first policy brief outlines key priorities identified during the Coalition’s initial work and marks the starting point for its joint policy engagement at national and EU level.
Key policy priorities for advancing competitive, circular and net-zero plastics by 2050
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. The EU Plastics Industry and the Nordic Council of Ministershave set out roadmaps which show that all solutions are needed to achieve a circular and climate neutral plastics system. While there is no silver bullet, one major issue that must be tackled: almost 90% of plastics production remains based on virgin fossil raw materials. Changing this requires a significant scale-up of recycled and biobased feedstocks for plastics.
The urgency of this transition goes beyond tackling waste and climate challenges. The EU’s import dependency for oil (a major source of raw material for fossil plastic) is almost 95% and the competitiveness of the EU plastics industry is under severe pressure with the current status quo. It highlights the need to transition to strengthen the EU’s competitiveness and resource security.
The European Commission’s Clean Industrial Deal and Competitiveness Compass identify the potential of moving away from fossil raw materials for chemicals and plastics by scaling recycled feedstock.
Today, fragmented regulation, uneven market conditions, and insufficient demand are holding back investment and slowing progress. Without decisive and coordinated EU action, virgin fossil-based plastic will remain the default while Europe misses out on the growth opportunities afforded by the transition to plastics from recycled sources.
Our Recommendations:
- Enhancing demand is a prerequisite for market development - the EU should introduce new measures to strengthen demand for plastics from recycled feedstocks by 2030.
- Strengthen the Single Market with harmonising the EU rules especially for End-of-Waste criteria.
- Set a price on municipal waste destined for incineration to align economic incentives towards expanding recycling.
- Scale-up chemical recycling in complementarity with mechanical recycling by ensuring that mass balance rules promote resource efficiency and pathways that can target low quality waste.
- Ensure a level playing field with imports to ensure a thriving recycling and plastics sector in the EU.
These recommendations are particularly relevant for the upcoming preparation of Circular Economy Act (CIA), implementation of Packaging and Packaging Waste Regulation (PPWR) and review of EU ETS and Revision of Public Procurement Criteria.
1) Introduction
In this brief, we present our recommendations for accelerating theEU’s transition towards recycled raw materials in a circular economy for plastics towards net-zero in 2050.
Plastics are one of the fastest growing waste streams in Europe and a major untapped resource that must be kept in circulation to meet climate and growth goals while strengthening the competitiveness of the EU. Even if the EU were to achieve a fully circular plastics economy, the highest feasible rate of plastic‑to‑plastic recycling is estimated at just 61%.Of this total, mechanical recycling can deliver about 46 percentage points, making chemical recycling an essential complementary technology. To reach a climate‑neutral circular economy by 2050, the EU will therefore need to replace the remaining share of virgin fossil inputs with biobased, and potentially other non‑fossil, virgin raw materials.While bioplastics will be essential for this shift, this brief focuses on plastic recycling, which remains the main driver within the sector.
Making the transition away from fossil-based raw materials requires a dual approach that strengthens both demand and supply. Binding targets combined with measures to boost public‑sector demand are essential to establishing predictable market demand investments. At the same time, Europe must expand its recycling capacity and accelerate the deployment of advanced technologies to ensure a stable supply of high‑quality secondary materials.
The EU should prioritise a set of mutually reinforcing measures to accelerate the circularity of plastics and strengthen the functioning of the Single Market. A key shared priority is to improve the free movement of secondary materials from plastics waste by harmonising rules under End-of-Waste and EPR schemes. Clear and predictable rules at the EU’s internal and external borders are particularly important for smaller Member States that rely on cross-border flows to ensure efficient and economically viable recycling markets.
Safeguarding the EU market from unfairly competing plastic imports is equally important. Effective monitoring and control mechanisms are needed to maintain a level playing field and support the transition to a circular plastics economy.
2) Enhancing demand in the short-term is a prerequisite for investment and EU competitiveness
Binding EU‑wide targets for recycled feedstocks for plastics are essential because they create the large, predictable demand base needed to scale the market. Without clear demand signals, investment in new recycling capacity remains too risky and fragmented. This is recognized by the EU Clean Industrial Deal which says it clearly: “Businesses will only make the necessary investments if they are sure there is a market for their products.”
Long‑term EU‑level targets give industry the confidence to commit capital to expanding sorting, mechanical recycling and chemical recycling and infrastructure systems that require high volumes and stable market conditions to operate efficiently.
To deliver this effect, targets must be material‑specific, aligned with technological maturity, and regularly updated to reflect progress. It must also be ensured that targets increase gradually to expand demand rather than staying flat for years before making big jumps in the target level (experience for other sectors like sustainable aviation fuels (SAF) show that this penalizes first-movers and holds back investments). These steps ensure that ambition remains realistic while still driving continuous improvement across plastic value chains.
The EU has established recycled content targets for plastics in the packaging in the packaging and packaging waste regulation (PPWR) and the end-of-life vehicles regulation (ELVR).
These are important steps, but progress must be accelerated. If demand-side policies are only in place by early 2030s, the EU will not get the short-term investments that are needed to boost growth and secure long-term competitiveness in clean tech.
A major tool that is under-leveraged by the Commission in this respect is the Ecodesign of Sustainable Products Regulation (ESPR). The first working plan takes a product-by-product approach and completely misses the opportunity to introduce more horizontal requirements for use of recycled materials. The Commission should amend the current working plan for the ESPR to introduce a circular plastics delegated act with material-specific targets across a range of plastic markets. An alternative to this would be to await the Circular Economy Act although this process will take significantly longer.
Public procurement can become one of the EU’s most powerful tools for boosting circularity when it includes mandatory minimum recycled‑content requirements for key product categories. Embedding such criteria into EU procurement rules would generate a strong, stable demand pull for recycled plastics, helping to overcome the current mismatch between supply potential and market uptake. Predictable demand from public buyers is crucial for scaling high‑quality recycling capacity, enabling investment in advanced technologies, and reducing Europe’s reliance on virgin fossil‑based plastics.
Relevant process:Eco-design for Sustainable Products Regulation (ESPR), Circular Economy Act, Revision of Public Procurement Criteria
3) Strengthen the Single Market for secondary raw materials from plastic waste with harmonized EU rules
A genuinely integrated single market for secondary raw materials from plastic waste is essential if the EU wants to scale up circularity and meet its climate and resource‑efficiency goals. Today, recycling value chains are slowed down by fragmented national rules that govern how secondary raw materials can move across borders. A practical example of such regulation is the concept of End-of-Waste, i.e. the point in the value chain where waste becomes a secondary raw material. This is currently determined on a Member State level, which can lead to a secondary raw material losing its status and returning back to waste, as the material crosses a border to a Member State with stricter EoW criteria. Such inconsistencies create delays, increase administrative burdens (e.g. additional permitting requirements), and may even fully prevent recyclable plastics from reaching the facilities best equipped to process them. As long as these barriers persist, the EU cannot achieve the volume and quality of secondary raw materials needed for a competitive circular plastics economy.
A coherent regulatory framework would allow recyclers to source feedstock from across Member States, build integrated cross‑border value chains, and operate at the scale required for modern, high‑efficiency recycling. This would ensure that recyclable secondary raw material can move smoothly to the right facilities at the right time. Removing unnecessary administrative costs and delays also creates a more predictable environment for investments. This stability encourages the deployment of advanced recycling technologies, supports innovation, and helps European industry lead the global transition toward circular plastics. To make this progress tangible, the EU should draw on proven approaches from other material streams and implement practical, harmonized solutions without delay.
Relevant process: Circular Economy Act
4) Introduce a carbon price for incineration of fossil-based plastic waste to incentivize recycling
At the moment, incinerating waste remains a relatively inexpensive option for operators because the climate impacts of fossil‑based plastic incineration are not fully priced in. As a result, recycling is forced to compete with a treatment method that externalises a significant share of its environmental costs. Integrating municipal waste incineration into the EU ETS would correct this imbalance by strengthening incentives to divert plastics away from incineration and toward recycling.
Introducing a carbon price on incineration would also send a strong and predictable market signal that guides investment into recycling, sorting, and emerging waste‑management technologies. As incineration becomes more expensive, a wider range of waste streams would shift toward recycling, improving utilisation rates and profitability for recycling facilities. This dynamic would accelerate the construction and expansion of both mechanical and chemical recycling plants, supporting the development of a more circular plastics economy.
To avoid unintended consequences, such as increased landfilling, the integration of incineration into the EU ETS must be accompanied by complementary measures that ensure waste does not revert to lower‑value or more environmentally harmful disposal routes. Together, these policies would create a more coherent framework that rewards climate‑efficient waste management and drives long‑term investment in circular solutions.
Relevant process: EU ETS Review
5) Ensure that Mass Balance rules support the EU’s competitiveness in scale-up of chemical recycling in complementarity with mechanical recycling
A strategic combination of mechanical and chemical recycling is necessary to maximize plastics circularity - deploying these in complementarity way enables a significant increase in the plastics recycling rate (plastic-to-plastic) of the Europe’s plastic system to as much as 80% (plastic-to-plastic + plastic-to-chemicals). The EU has taken the first steps in the recognition of the role of chemical recycling: the PPWR introduces targets for use of recycled content in contact-sensitive plastic packaging (non-PET). These targets are forecasted to require significant expansion of chemical recycling capacity.
Ensuring the EU’s competitiveness in the scale-up of chemical recycling requires significant investment in recycling units (like pyrolysis) while maximizing the use of the EU’s existing assets, such as refineries, as part of the recycled‑plastic value chain. It is vital to use the EU’s existing e infrastructure, processing capacity, and logistics, to make the scale-up economically viable, speed up transition and support EU competitiveness. Higher costs when building new production facilities is identified by the Draghi Report as a root cause of the EU’s lack of competitiveness in clean tech. If the EU fails to leverage existing refineries or other assets, it will unnecessarily increase investment needs and risk Europe’s competitiveness in the scale-up of chemical recycling.
A crucial enabling condition for investments is the adoption of EU mass balance rules for calculating recycled content in plastics which will allow integration in existing value-chains. Massbalance accounting is indispensable for calculating recycled content inproduction systems where recycled and virgin feedstocks are co‑processed, i.e. connecting inputs with outputs while deducting losses at each step. Mass balance accounting is an approach that is widely used in other sectors, ranging from fair trade to energy.
The first EU mass balance rules for recycled content in plastics have been adopted in an implementing act under the EU’s Single-use Plastics Directive (SUPD). This is a positive step and, importantly, the implementing act recognizes that these rules are only relevant to single-use PET bottles and that a revised approach is needed for other plastic uses (such as packaging) to support defossilization of the chemical sector.
It is therefore important to revise and update the mass balance rules to be fit for purpose for other plastic sectors and typesincluding the high quality requirements of certain applications
A major focus in this should be to update the rules to properly leverage the role of refineries in the scale-up of chemical recycling. Refineries bring several benefits to the chemical recycling value-chain as their advanced upgrading capabilities maximises resource efficiency and deals with contamination. This is vital for chemical recycling to truly target the hard to recycle waste which is today incinerated.
Refineries are effectively excluded by the method in the SUPD because the mass balance approach assumes that inputs from chemical recycling of plastic waste are blended in a fixed (proportional) ratio with virgin fossil inputs in all outputs. This leads to high accounting losses - even when the refinery increases the amount of recycled material that is suitable for new plastics production.
Another reason that the SUPD approach must be revisited in the PPWR for other plastics is that the cost of recycled content couldbecome preventative to fulfilling the EU targets. According to a recent research paper, by following a proportional fuel-use excluded approach, the resulting costs for companies could be 6 x that of a non-proportional credit-based mass balance fuel-use excluded approach.
The future PPWR rules must be adopted with a focus on technologies that preserve complementarity between mechanical and chemical recycling, while avoiding that the EU is put at a competitive disadvantage in scale-up of chemical recycling for its own recycling targets.
Relevant process: Packaging and Packaging Waste Regulation – Implementing Act
6) Introduce measures that ensure a level playing field with imports of plastics sourced from recycled raw materials
As the EU introduces new incentives and targets for greater use of recycled raw material in plastics, these need to be complemented by comprehensive and forward-looking measures to ensure a level playing field with imports.
Achieving this requires that imported raw materials and products meet standards equivalent to those applied in the EU internal market. Harmonised requirements would prevent competitive distortions, protect recycling markets from low‑quality imports, and create the stable investment conditions needed to scale high‑quality recycling and circular‑economy infrastructure.
It may also be relevant to explore additional options to ensure a level playing field such as introducing EPR modulation for recycled content based on environmental performance (see Art. 7(7) of the PPWR). This may help ensure that EU producers face a level playing field with non-EU products which may have worse environmental performance due to lower requirements outside of Europe.
Relevant process: Packaging and Packaging Waste Regulation – Implementing Act on equivalence, circular economy act
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