3 Key Lessons from the EU’s Circular Economy Act

By Sarah Currie-Halpern

In the space of a decade, extended producer responsibility (EPR) laws have transformed from a niche environmental advocacy topic to a new and multinational legal reality. Companies around the world are juggling mandates to use sustainable packaging materials and cover some of the costs of waste management, including collection, sorting, and recycling. And as is often the case when a sustainability measure of this scale approaches widespread implementation, both the benefits and the unanticipated shortcomings of EPR processes have become clear.

Among those shortcomings are EPR’s linear bias, meaning it skews heavily towards waste management and doesn’t encompass circular, reduction-minded strategies like reuse and repair. Current EPR laws lack a balance between management and reduction.

We see this imbalance in laws like the EU’s Packaging and Packaging Waste Regulation (PPWR), passed in April 2024 with the aim of reducing EU-wide packaging waste by 10% in ten years. Included in the regulation were comprehensive rules about reporting duties and standardized disposal labeling, as well as a clear target that all packaging must be reusable or recyclable by 2030. Despite these efforts, the EU’s circularity rate has stalled at roughly 12%, meaning that 12% of all materials used by member states are recycled or reused instead of thrown away. 

That’s not enough, and Europe knows it. To kickstart circular-minded efforts, the EU returned to the drawing board and drafted the Circular Economy Act (CEA), which will be debated as part of its 2026 agenda.

The CEA is a promising piece of legislation, and one the U.S. should consider as a model. It aims to double Europe’s circularity rate to 24% by 2030. It aims to not only reduce overall environmental pressures but also to increase economic resilience, and that’s why it might succeed.

Here are three lessons from the CEA that American legislators and circular economy advocates should consider:

One system, not many

27 separate national regimes for waste, recycling, and secondary materials often amount to 27 European headaches. The U.S. has a similar problem—or rather, 50 similar problems. The CEA plans to harmonize the criteria, reducing barriers that hinder cross-border recycling markets and material flows. Without similar and standardized criteria for recycling flows that applies to every state, the U.S. will continue to struggle to lift its nationwide circularity rate.

Stronger secondary material markets = strategic autonomy

The EU imports an enormous amount of its strategic resources from third countries, including nearly all of its heavy rare-earth elements from China. Current European recycling rates for materials such as lithium and rare earths sit at less than 1%. This is both an environmental problem and a potential geopolitical one. Included in the CEA are new market conditions that boost the economic viability of recovering these materials. With tariffs upending its own supply, the U.S. can’t afford not to rethink its own rare earths recycling in a business-minded way.

Make recycled materials great again

The circular economy needs to actually work economically. In addition to costing more than virgin materials, recycled materials are often perceived as lower quality, which drives down demand. To close the gap, the CEA will make it economically attractive for companies to use recycled materials and recyclers to produce high-quality materials. Resources are already the largest input cost for industry, so there’s a clear economic case for European and American businesses to be more prudent about recycling and reuse.

Whether in Europe or the U.S., the circular economy won’t be achieved through environmental altruism alone. It overlaps with hard legal, geopolitical, and financial realities, and any legislation that seeks to achieve it needs to take those realities into consideration. The EU’s CEA isn’t a perfect regulation or one that can be copy-and-pasted onto the U.S. It is, however, one step closer to a functional zero waste and circular economy framework, and one American legislators should consider as a partial model.