Blog 13 December 2022

Focus in the Face of Crisis

The EU Green Deal Remains a Priority With Circularity Back on the Agenda

The EU Green Deal, published at the outset of the European Commission’s (“Commission”) current mandate in December 2019, is the EU’s flagship sustainability package, setting ambitious targets to achieve climate neutrality by 2050 by revolutionizing the European economy towards a sustainable future.  

However, since its publication, the EU’s legislative agenda has been put to the test by several external factors, from the COVID-19 pandemic to the Russian invasion of Ukraine and the subsequent economic and energy crises. Nevertheless, as repeatedly underlined by Commission Executive Vice-President for the Green Deal Frans Timmermans, Europe’s current security and energy challenges do not mean that “the Green Deal and Fit-for-55 can go on the backburner”.

Underlining this prerogative, the Commission has reasserted its commitment to several climate-related proposals, such as the Renewable Energy Directive, which incentivizes the development of renewable energy across all sectors of the EU economy. With the focus so far on regulating resource-intensive sectors such as textiles, construction, electronics, and plastics, the Commission published its long-awaited review of the Packaging and Packaging Waste Directive (PPWD) on November 30th. But as Europe continues to wrestle with ongoing crises, what lays ahead for the Green Deal and the EU’s circularity agenda?

Circular Economy Back in the Spotlight

The Commission published its new Circular Economy Action Plan back in March 2020. As one of the building blocks of the Green Deal, it set out several legislative initiatives targeted along the entire product lifecycle. They aim to transition the EU toward a circular economy, i.e., moving from a “make-use-dispose” economy to one where products are reused, and the pressure on natural resources is reduced. These initiatives focus on sectors such as batteries, construction products, and textiles among others.

On November 30th of this year, the Commission continued to build on its circular economy commitments by adopting a second package of legislative reforms, which included among others proposals one for the revision of the PPWD. Despite delays in its publication, which was originally scheduled for July, the Commission continues to see this revision as a legislative priority to address the management of waste in the EU.

This proposal aims to ensure that “all packaging on the EU market is reusable or recyclable in an economically viable way by 2030,” and reaffirms the EU’s commitment to sustainability in the face of crises.

Packaging and Packaging Waste Regulation – Key Takeaways

To transition the sector to sustainable practices, the Commission’s proposal puts forward measures to optimize the design of packaging; sets reuse and refill targets for economic operators and final distributors; introduces waste reduction targets for Member States, and mandatory minimum recycled content targets for plastic packaging.

The Commission expects that the proposal will create new business opportunities, especially for smaller companies, by decreasing the need for virgin materials and increasing Europe's recycling capabilities and strategic raw material autonomy.  

However, the food and beverage industry, as well as other large sectors of the EU economy such as pharmaceutical and cosmetics companies, as well as transport, will be heavily impacted by these new rules.

The first major change is that the proposed revision sees the rules transformed into a Regulation. Supported by industry, who currently face fragmented national rules, and opposed by some Member States which are satisfied with national schemes, a Regulation would mean uniform application across the EU, with less room for national flexibility.

In addition, the Commission’s proposal introduces provisions for secondary legislation related to key aspects of the Regulation, establishing criteria for the design of recycling and the methodology to assess if packaging is recycled at scale, and the types of packaging covered.

Lastly, compared to an initial leak of the proposal, the Commission has reduced the ambitions of several provisions, attracting criticism from civil society and green NGOS, including easing proposed targets. We might expect to see increased targets the subject of debate in the European Parliament.

Countdown to Compromise? Time Pressure on Packaging

The proposal will now be debated by both the European Parliament and Member States as they seek to adopt their respective positions as co-legislators. The text could be adopted at the end of 2023, but its complexity and controversy make compromise by then ambitious.

In the European Parliament, several MEPs criticized what they see as the Commission’s preference for reuse over recyclability, lack of ambition, and the possibility that this Regulation hampers the investments of the industry.

In the Council, Sweden will hold the six-month rotating Presidency in H1 2023. Although an honest and neutral broker, the Presidency plays a key role in agenda setting and chairing negotiations. Sweden, with a strong forest and paper industry, may choose to focus on finding compromises between Member States on key priorities for these sectors.

Despite the Commission’s efforts to adopt legislation within the current legislative mandate, the timing of the next European elections, set for May 2024, may have consequences for the proposal. Faced with political and social pressure to finalize negotiations, policymakers may rush the file, potentially creating unclear items or obligations seen as unfeasible.

There are even concerns the proposal will roll over to the next political mandate if no agreement is found by the May 2024 elections, creating legal uncertainty for industry and likely sparking further ire from civil society.