Capturing the climate change mitigation benefits of circular economy and waste sector policies and measures

Introduction

Achieving the EU’s 2050 net-zero climate target demands actions across economic sectors. These include those actions related to materials and how we produce, use, re-circulate and dispose of them. In this briefing, we explore this dimension further by analysing how European countries include circular economy and in their reporting on climate change mitigation policies and and how the introduction of additional measures can help accelerate future reductions of GHG emissions.

Waste management and the circular economy hold considerable potential for mitigating climate change. Therefore, countries would benefit from including PaMs in these areas as part of their climate policy mix.

The inclusion of such measures in national climate change mitigation reporting can also provide a more comprehensive and transparent account of countries’ climate PaMs. This integration can help reveal key areas where countries could increase mitigation efforts while also increasing circularity and improving waste management. Guidelines for improving interlinkages between these two policy areas and for modelling the national decarbonisation potential of a circular economy are at the end of this briefing.

The briefing is based on the European Topic Centre (ETC) ‘Circular economy and resource use’ and ‘Climate change mitigation’ technical reports Circular economy and climate change mitigation — analysis and guidance on including circular economy (CE) actions into climate change mitigation reporting and policy making and Climate change mitigation through policies on waste — intersectoral analysis.

Circular economy’s potential key role in climate change mitigation

The International Resource Panel (IRP, 2019) highlights that the extraction and processing of materials (fossil fuels, biomass, metals and non-metallic minerals) account for around 50% of global GHG emissions. A key aim of the circular economy is to retain the value of products and materials in use for as long as possible.

This key aim would reduce the demand for virgin materials and the GHGs emitted during their extraction and processing. In addition, the energy-intensive parts of the circular economy should be powered by renewable energy.

This can happen through a series of actions along the whole value chain, including via safe and sustainable design, efficient production, sustainable consumption, longer and better use of products and  using waste as a resource (Figure 1). By 2022, about 22 Member States had adopted a dedicated circular economy strategy.

The 2020 circular economy action plan (COM/2020/98 final) of the European Commission recognises this interlinkage between the circular economy and climate policies, presenting circularity as a prerequisite for climate neutrality.

This approach is further acknowledged from the climate perspective, where guidelines for updating national energy and climate plans (NECPs) emphasise the importance for Member States to start ‘integrating and modelling the contribution of the circular economy to the climate transition’.

Figure 1. The circular economy concept

The climate benefits of the circular economy are not well captured in climate policies and reporting

The potential emission reductions due to circular economy measures are usually hidden or are not well captured in the reporting of PaMs for reducing GHG emissions. This is partially linked to the disconnect between a strict sectoral reporting structure according to Intergovernmental Panel on Climate Change (IPCC) guidelines and the cross-cutting nature of the circular economy.

For example, if glass waste is collected and processed into recyclables and used as a secondary raw material in producing new glass, then the glass industry needs less energy than that used for producing the same glass from virgin materials. However, such processes are seldom reported as circular economy measures in the relevant manufacturing sector and their potential might be underestimated. Moreover, realising such potential usually requires collaboration along the whole value chain (EEA, 2022a).

Moreover, while returning waste to the economy as recycled materials is a crucial part of the circular economy, measures in the before use and during use stages of a product’s lifecycle are even harder to quantify (Figure 2).

Modelling results show that measures in the before use and during use stages can have even larger GHG emission mitigation potential than measures in the after use or waste phases (Ramboll, Ecologic Institute and Fraunhofer ISI, 2020). Yet, an overview of circular economy policies and measures reported to the EEA (ETC CE, 2022) found that 50% were related to waste (ETC CE, 2024).

A lack of quantifiable data, a focus on the after use stage and the cross-sectoral character of the circular economy might therefore lead to a lack of awareness and underestimation of its potential benefits for reducing GHG emissions.

Figure 2. Strategies for increased circularity within the product chain

Circular economy actions are not explicitly required to be reported under the current policies and measures reporting mechanism. However, they should be more greatly considered as they can offer a substantial potential for emission reductions.

About 148 circular economy related actions were reported — or about 6% of . These circular economy PaMs do not include those focused on waste-to-energy actions, such as those promoting waste incineration with energy recovery, those converting biowaste to biogas for energy production or technical measures to reduce emissions at landfills.

As indicated in Table 1, a majority of these actions were waste-related entries (60%). The vast majority of PaMs (93%) were reported without quantitative information. By 2030, only 3,070 ktCO₂e emission reductions were associated with all circular economy PaMs. This illustrates the large potential for the further inclusion of circular economy into PaMs reporting and the need to be able to quantify the emissions reduction potential of these actions.

Table 1. Classification of circular economy-related climate change mitigation PaMs in European countries as reported in 2023

Greenhouse gas emissions from waste management

While the circular economy spans the whole economy, the waste sector is one of the defined economic sectors reported in GHG inventories and the reporting of PaMs. The waste sector, as defined by the IPCC’s 2006 guidelines (Box 1), was responsible for 3% of European countries’ GHG emissions in 2022.

GHG emissions in the waste sector are generated from the treatment and disposal of solid and liquid waste. Solid waste can be recycled, landfilled, incinerated and can undergo biological treatment.

Methane from landfills accounts for about 70% of the waste sector’s emissions. However, methane emissions decreased by 45% between 1990 and 2021. The waste sector’s emissions in European countries have decreased by 42% since 1990 and are projected to continue declining, with an expected reduction of 58% by 2035 compared to 1990 levels. The EU-27 countries have already achieved a 41% reduction in 2022. If additional policies are implemented, emissions are estimated to fall by 68% compared to 1990 levels (Figure 3).

European countries are committed to adopting, implementing, and planning policies and taking the corresponding measures to reduce GHG emissions in all sectors.

The number of reported PaMs in the waste sector varies considerably across reporting countries. For example, Denmark, France, Hungary and Luxembourg stand out as countries with a high number of such PaMs. However, the number of PaMs alone is not a reliable indicator of effort and/or completeness of national reporting.

In 2023, there were 218 single PaMs and 15 group PaMs linked to the reported waste sector PaMs. However, only 15% of waste sector PaMs have been quantified and nearly all quantified PaMs refer to the reduction of emissions from landfills.

For the waste sector, regulatory PaMs are common, reflecting the substantial regulatory requirements in EU waste policy to be met by countries. Most of the reported PaMs affecting the waste sector are linked to EU policy, especially the Waste Framework and the Landfill Directives.

Much of the GHG emissions reduction in this sector has been achieved so far by measures diverting biodegradable waste from landfills to recycling or energy recovery, and technical measures capturing methane from landfills. Related EU policies have driven such measures forward.

Waste sector PaMs tend to focus on municipal waste and organic waste types, as these are the wastes generating emissions from landfills and biological treatment.

Countries that introduced bans on landfilling biodegradable wastes seem to have achieved the largest emission reductions.

The emission reduction potential is bigger than current projections show. Waste sector emissions could decrease further once all current EU waste policies are fully implemented. Moreover, waste sector GHG emissions would decrease by 53% from the 2021 level if all EU-27 Member States, Iceland, Norway and Switzerland reduced their emissions to the average per-capita solid waste sector emissions of the five best performing countries.

While such a scenario might not be feasible in the short term, it clearly shows that the potential for further emission reductions is substantial. Such actions will also contribute to meeting the objectives of the EU’s strategy to reduce methane emissions (COM (2020) 663 final).

However, the effect of PaMs in the waste sector can be much wider as they can help reduce emissions in other sectors. For example, policies that ensure the collection and processing of waste into recyclable materials can help in the substituting of virgin materials, which usually require more energy to produce than the recycling processes. Cross-sectoral cooperation is crucial to make this happen. For some materials, the markets to feed the recycled materials back into production processes need improvement (EEA, 2022a).

Still, cross-sectoral effects are rarely reflected in the reported PaMs in other sectors than the waste sector as illustrated by Table 2. Table 3 presents an overview of the cross-sectoral impacts and the interconnectedness of waste treatment pathways with waste hierarchy stages and emissions reporting sectors.

Table 2. Summary of reported PaMs in the waste sector and gaps in reported measures, 2023

Table 3. Potential cross-sectoral links for waste treatment pathways

Challenges for linking circular economy and climate change mitigation

There are certain challenges for including circular economy actions, including those on waste management, into current IPCC-based reporting schemes. See Figure 4 for an outline of these challenges and their solutions.

Figure 4. Challenges and solutions for integrating circular economy policies and climate policiesse

Ways forward — a guideline for modelling the decarbonisation potential of the circular economy

Given the potential key role that the circular economy and waste management can have in achieving a country’s climate change mitigation targets, there is clear motivation for better understanding this potential.

Understanding such a potential provides countries with a more comprehensive reporting and may capture some activities countries are already doing to lower their emissions, for example, implementing circular economy policies, but are currently not reported. The six steps below offer guidelines for countries to start or better integrate the decarbonisation potential of the circular economy into climate change mitigation reporting.

Figure 5. Six steps to include the circular economy into climate change mitigation reporting and policymaking