THE STATE OF THE EUROPEAN UNION Towards a new legislative term

THE STATE OF THE EUROPEAN UNION 102 The future is circular The restructuring of European economies is not only about reducing CO2 emissions; the more careful use of natural resources is important as well. The Europe- an economy has so far been characterised by a linear rather than a circular structure, as is usual in capitalism. In 2020, the share of circular materials used in the EU (the so-called circularity rate) reached only 12.8%. Only about 13% of the material resources used in the EU thus come from recycled waste materials. The circular economy, on the other hand, is based on a changed production and consumption pattern. Exist- ing materials and products are shared, leased, reused, repaired, refurbished and recycled for as long as possi- ble. In this way, the life cycle of products can be extend- ed and waste reduced to a minimum. The resources and materials continue to generate value even if the product itself can no longer be used. Only by switching to a circular economy can security of supply and climate as well as environmental protec- tion be combined. Material cycles also reduce depend- encies on critical and imported raw materials, the distri- bution of which is becoming increasingly controversial. Overall, the circular economy opens up markets for high- quality recycled materials, efficient recycling processes, and new business models. However, the transition to a circular economy re- quires a fundamental rethinking of the entire organisa- tion of the economy. Importantly, the European circular economy is still in its infancy as the concept is not yet widely established. The transition needs to be thorough- ly and fundamentally integrated into industrial policy at the European, national and regional levels. A central challenge in Europe in the coming years will be to make it clear that the circular economy involves much more than improved waste separation and technically opti- mised waste management. Critical raw materials are the new oil For decades, oil and gas were at the centre of the global energy trade. In the future, critical raw materials will take their place. On the one hand, the transformation of the European economy to a circular economy is enor- mously important here. The share of recycled raw mate- rials must be steadily and rapidly increased, as this will protect the environment and make Europe more inde- pendent. But Europe will remain dependent on raw ma- terial imports for some time to come. Thus, the energy transition can only be secured through massive imports of raw materials. In view of the current structures in the extraction and processing of raw materials, Europe is threatened with new dependencies here, especially on the main supplier China. Europe has learned some les- sons from Russia’s attack on Ukraine, in particular the need to avoid excessive dependence on individual sup- pliers of strategic goods in the future. There is widespread agreement that a raw materials strategy should provide a remedy. Critical raw materials are central. The EU aims to cover a significant share of its own needs by 2030. To achieve this, the EU Com- mission has presented the Critical Raw Materials Act. In the future, no more than 70% of a raw material is to be sourced from a single country: the focus here is particularly on China. Accordingly, new suppliers must be acquired. In the future, the European Global Gateway Strategy is to be used more specifically for this purpose. Through this global infrastructure programme, €300 bil- lion are to be invested, especially in digitalization, en- ergy and transport. By doing so, the EU wants to offer an alternative to China’s New Silk Road. Under these plans, 10% of the demand for critical raw materials is to be covered by local mining, and 15% from recycling. And between mining and recycling, the entire local value chain is also to be strengthened. Simi- lar to wind and solar, permits for mining, processing and recycling are to be granted much faster than before. This is important, but nevertheless challenging, because Eu- rope should continue to guarantee high environmental and social standards in mining. The steps mentioned are not only central to Europe’s sovereignty and the energy transition. They also significantly advance the circular economy and conserve resources. Japan is considered a possible role model in raw ma- terials policy. The Japanese government relies on a new division of labour between the state and companies to secure raw materials. The needs of the companies as well as the current availability are precisely determined.