One area of European Union law which is developing rapidly relates to improving the circular economy. There are a number of legislative proposals in the pipeline, but with the prospect of the UK leaving the EU in the next few years, what are the implications for these circular economy initiatives, and could there be opportunities for the UK to move ahead in any respects?

What is meant by Circular Economy?

The circular economy is “an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life.”

The circular economy affects all stages of the supply chain, from design for recyclability and reuse, through more efficient production and pricing to reflect recyclability, to increased recycling and recovery, and more use of secondary raw materials. There are widely acknowledged benefits for consumers, businesses, the environment and the economy.

Boosting the circular nature of the economy entails adjustments to legislation in a variety of policy areas. In the EU, this is being led through the so-called Circular Economy Package.

What is the EU Circular Economy Package?

This refers to the EU Commission’s Action Plan Communication, called “Closing the Loop” which was launched in 2 December 2015. It sets out a wide range of planned measures and initiatives which together will make up the Circular Economy Package.

At its core are four proposals for new waste-related Directives. These will amend the existing suite of Directives on waste, end of life vehicles, packaging waste, landfilling of waste, waste batteries, and waste electrical and electronic equipment.  The new Directives are currently working their way through the EU legislative process, and are likely to be substantially progressed during 2017.

The proposals include significantly higher recycling rates and extended producer responsibility. Recent changes proposed by the European Parliament, which will be voted on in March, would see the recycling targets tightened even further.  The package also includes proposals which add clarity to the definition of waste and associated concepts, such as end of waste and by-product, which can sometimes act as blocks to the reuse of materials.

It is anticipated that the measures set out in the Circular Economy Package will be completed before the UK leaves the EU, so the UK will be obliged to give effect to them for as long as it remains in the EU. However, given that the UK is currently struggling with some of the existing recycling targets, it remains to be seen how the UK government will approach the implementation of these new measures in the run up to, and after, the UK leaving the EU.

Possible implications of Brexit on the circular economy in the UK

Once the UK leaves the EU — even if it had been required to implement or take steps towards implementing the Circular Economy Package — the UK will no longer be required to meet those standards and targets once it leaves the EU (on the assumption that the UK also leaves the EEA/single market and does not have to continue to apply any EU law).

There have been widely expressed concerns about the possible weakening/lowering of environmental standards after Brexit, and these apply equally to the environmental and resource efficiency requirements of the Circular Economy Package. For example, the UK could decrease recycling targets, particularly if these are proving to be very challenging for industry and waste authorities alike.  Another big part of the Circular Economy Package is the research and collaboration which takes places across the EU to develop new ideas and technologies to improve the circular nature of the economy.  Much of the funding for that work comes from the EU, and there is a risk that the UK will have less ability to be involved in this collaboration and benefit from the resulting innovations.

On the other hand, when the UK is no longer regulated by the EU rules on waste and associated matters, there are also opportunities for change which could benefit the circular economy, rather than detract from it. There could in fact be an enhanced focus on innovation and new technologies, and increased UK government support for businesses in this sector.  Without the overarching EU rules, the UK would, for example, have more flexibility in relation to determining its own concept of waste.  That could allow new products and technologies to be developed, particularly where industrial symbiosis is concerned.  This could cut costs and boost the economy.  However, we need to keep in mind that any deregulation or move away from EU standards in relation to products could impact our ability to sell those products into the EU, so it is not a simple process.

Unlike some other types of environmental regulation, the circular economy is generally considered to be a win-win policy area – good for the environment, business and the consumer. It will therefore be interesting to see how it fares through the Brexit process, and whether this is an area where the UK government will actually seek to go further than the EU has done to date.