Policy Mechanisms That Enable a More Circular Economy
- savinacaporali
- Mar 19
- 5 min read
The transition to a circular economy—where resources are reused, recycled, and regenerated rather than discarded—requires systemic change. While businesses and consumers play a role, government policy mechanisms are crucial in driving large-scale adoption. These policies create incentives, remove barriers, and establish accountability to promote resource efficiency, waste reduction, and sustainable economic models. Below we explore some of the key policy mechanisms driving the shift toward a more circular economy.
1. Extended Producer Responsibility (EPR)
EPR policies shift the responsibility of waste management from consumers and municipalities to producers. By holding manufacturers accountable for the entire lifecycle of their products, these policies encourage eco-design, recyclability, and product take-back programs.
Key Benefits:
✔ Reduces landfill waste by promoting closed-loop systems
✔ Incentivizes companies to design longer-lasting, repairable products
✔ Encourages manufacturers to invest in recycling infrastructure
Example: The European Union’s Packaging and Packaging Waste Directive requires producers to meet recycling and recovery targets, pushing industries to redesign packaging for sustainability (1).
2. Right to Repair Legislation
A core pillar of the circular economy is extending product lifespans. Right to Repair laws require manufacturers to provide consumers and independent repair shops access to repair manuals, spare parts, and diagnostic tools to fix products rather than replace them.
Key Benefits:
✔ Reduces electronic and appliance waste
✔ Lowers costs for consumers
✔ Supports local repair businesses and job creation
Example: The European Union has introduced repairability scoring systems and mandates that certain appliances must be repairable for at least ten years (2).
3. Anti-Waste and Circular Economy Legislation
Implementing comprehensive laws that target waste reduction and promote circular practices can drive systemic change. Such legislation often includes measures like banning the destruction of unsold goods and/or the disposal of certain waste materials in landfills (e.g., landfill bans), and enforcing repairability and recycling requirements.
Key Benefits:
✔ Reduces unnecessary waste and promotes resource efficiency
✔ Encourages manufacturers to design products with longer lifespans
✔ Enhances consumer awareness and empowerment regarding product sustainability
Example: France's Anti-Waste and Circular Economy Law prohibits the destruction of unsold non-food items and requires products to display repairability indexes, encouraging both producers and consumers to engage in more sustainable practices (3).
4. Circular Public Procurement
Governments as major buyers have significant influence over markets. Circular public procurement integrates sustainability criteria into purchasing decisions, prioritizing products and services that align with circular economy principles.
Key Benefits:
✔ Drives demand for recycled and sustainable products
✔ Encourages innovation in sustainable manufacturing
✔ Reduces government-generated waste
Example: The Netherlands aims for 100% circular procurement by 2050, requiring public tenders to prioritize sustainable materials and reusable components (4).
5. Deposit-Return Schemes (DRS)
DRS programs place a small refundable deposit on products (e.g., beverage containers), which consumers can reclaim when they return the item for recycling or reuse. These schemes significantly boost recycling rates and reduce litter.
Key Benefits:
✔ Encourages high recovery rates for valuable materials
✔ Reduces plastic and glass pollution
✔ Creates a cleaner, more sustainable waste stream
Example: Germany’s Pfand system has achieved a 97% return rate for plastic bottles, significantly reducing waste (5).
6. Financial Mechanisms for Circularity
Governments use financial mechanisms to encourage circular practices and discourage wasteful behaviors. This includes tax breaks for businesses that adopt circular strategies and landfill/incineration taxes that penalize excessive waste disposal.
Key Benefits:
✔ Makes circular products and services more competitive
✔ Encourages businesses to invest in waste reduction and recycling
✔ Reduces reliance on landfills and incineration
Example: Sweden offers tax reductions on repair services, making it cheaper to fix appliances and clothing than to replace them (6).
7. Financial Incentives for R&D and Innovation
Governments can provide financial incentives, such as tax credits, grants, or subsidies, to accelerate research, infrastructure development, and multi-stakeholder partnerships that advance circular economy solutions. These incentives support innovation in sustainable materials, circular supply chains, and advanced recycling technologies.
Key Benefits:
✔ Stimulates innovation in circular business models and material efficiency
✔ Encourages cross-sector collaboration between businesses, research institutions, and policymakers
✔ Reduces reliance on virgin materials and promotes regenerative design
Example: Denmark’s Kalundborg Symbiosis is a pioneering example where industries exchange waste materials, reducing environmental impact while cutting costs (7).
Example: The European Union’s Horizon Europe program provides €1 billion+ in funding for circular economy R&D, supporting projects that develop circular business models and innovative material recovery technologies. (8)
8. Post-Consumer Materials Legislation
Post-consumer materials legislation mandates that products contain a certain percentage of recycled content, ensuring that materials re-enter the economy instead of becoming waste. These policies drive demand for secondary materials, supporting recycling markets and reducing reliance on virgin resources.
Key Benefits:
✔ Strengthens recycling industries by increasing demand for recycled materials
✔ Lowers carbon emissions by reducing reliance on virgin materials
✔ Encourages manufacturers to design for recyclability
Example: California’s Recycled Content Mandate requires plastic beverage containers to include at least 50% post-consumer recycled content by 2030, setting a precedent for sustainable material use (9).
9. Standards and Common Definitions
Standards play a crucial role in supporting the circular economy by establishing clear guidelines for product design, material use, waste management, and resource recovery. They help harmonize practices across industries, ensuring consistency, safety, and efficiency in circular business models. In addition, establishing common definitions for circular economy concepts is essential to ensuring alignment across regulations, industries, and international trade. Standardized definitions for terms such as 'recyclable,' 'biodegradable,' 'compostable,' and 'post-consumer recycled content' help prevent greenwashing and ensure regulatory clarity. Many national and international organizations, such as the International Organization for Standardization (ISO), the European Committee for Standardization (CEN), and the Canadian Standards Association (CSA), develop standards that help drive circular economy goals.
Key Benefits:
✔ Ensures product durability, repairability, and recyclability through design standards
✔ Supports regulatory compliance and alignment with sustainability goals
✔ Encourages businesses to adopt circular economy principles by providing clear benchmarks
✔ Establishes shared definitions that improve regulatory consistency and prevent greenwashing
Example: ISO 59010:2023 provides guidance on implementing circular economy strategies in businesses and organizations, helping companies integrate sustainable practices across their operations (10).
Example: The CSA Group, in collaboration with the Standards Council of Canada (SCC), has introduced the National Standard of Canada, CSA R117:24, titled "Plastics recycling: Definitions, measuring, and reporting." (11)
Final Thoughts
Policy mechanisms play a critical role in scaling up circular economy practices by aligning financial incentives, setting regulatory standards, and encouraging innovation. As more governments implement these policies, businesses and consumers will benefit from reduced waste, lower costs, and a more resilient economy. To ensure effectiveness, it’s important to consider a phased approach with clear timelines for compliance to allow businesses time to transition to new requirements.
Policymakers can accelerate this transition by working collaboratively with industries, researchers, and consumers to create a system where waste is minimized, resources are valued, and sustainability drives economic growth.
References
1. European Commission. Packaging and Packaging Waste Directive. Available at: https://environment.ec.europa.eu/topics/waste-and-recycling/packaging-waste_en
2. European Parliament. Right to repair: Making repair easier and more appealing to consumers. Available at: https://www.europarl.europa.eu/news/en/press-room/20240419IPR20590/right-to-repair-making-repair-easier-and-more-appealing-to-consumers
3. Ellen MacArthur Foundation. France’s Anti-Waste and Circular Economy Law. Available at: https://www.ellenmacarthurfoundation.org/circular-examples/frances-anti-waste-and-circular-economy-law
4. Government of the Netherlands. Accelerating the transition to a circular economy. Available at: https://www.government.nl/topics/circular-economy/accelerating-the-transition-to-a-circular-economy#:~:text=Circular%20procurement&text=The%20principle%20is%20that%20the,used%20to%20make%20toilet%20paper.
5. TOMRA. Deposit return scheme in Germany: the world’s highest-performing drink container recycling system. Available at: https://www.tomra.com/reverse-vending/media-center/feature-articles/germany-deposit-return-scheme#:~:text=Germany%20has%20the%20world's%20largest,convenient%20network%20of%20return%20locations.
6. Knowledge Hub by Circle Economy. Swedish government tax break programme for repair. Available at: https://knowledge-hub.circle-economy.com/article/3624?n=Government-tax-break-program-for-repair
7. Kalundborg Symbiosis. Industrial Symbiosis. Available at: https://www.symbiosis.dk/en/
8. European Commission. Horizon Europe. Available at: https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-europe_en
9. California Department of Resources Recycling and Recovery. Plastic Minimum Content Standards and Reporting for Plastic Material Reclaimers. Available at: https://calrecycle.ca.gov/bevcontainer/bevdistman/plasticmaterialreclaimer/#:~:text=Assembly%20Bill%20793%20establishes%20recycled,on%20January%201%2C%202025%2C%20and
10. International Organization for Standardization (ISO). Circular Economy. Available at: https://www.iso.org/sectors/environment/circular-economy
11. CSA Group. Supporting Circularity Through Value Retention and Waste Reduction Strategies. Available at: https://www.csagroup.org/standards/areas-of-focus/environment-natural-resources/supporting-circularity-through-value-retention-and-waste-reduction-strategies/
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