A set of 17 circular economy actions have the potential to reduce the EU’s impact on climate change by 22%, or almost one billion tonnes of CO2-equivalents, reduce its impact on biodiversity loss by 19% and reduce air pollution (fine particulate matter) by 25% according to the EEA briefing ‘The environmental and climate benefits of circular economy'.

These estimated benefits, based on modelling of specific circularity measures carried out in selected sectors like housing, mining, food, and mobility also have positive aspects in terms of building resource supply security. They would reduce the EU’s reliance on strategic raw materials produced elsewhere around the world. For example, the EU reliance on aluminium, nickel, and platinum group metals ores extracted in other world regions would decline by around 20%, and by 12% for copper.

The environmental and climate benefits of a circular economy

Circularity measures generate environmental and climate benefits by reducing demand for natural resources – and their associated negative impacts on nature. This in turn leads to economic opportunities by shifting value creation from material extraction to other parts of the economy.

Reducing natural resource use in Europe has benefits both within and outside the EU as the EU imports large amounts of resources and products, the extraction of which burdens the local environment in other world regions.

Untapped business opportunities

The circular economy represents a strategic business opportunity to expand Europe’s market, unlock significant economic returns and decrease resource dependence at the same time as reducing pressure on the climate and the environment, according to the EEA report ‘Unlocking the circular economy: investment needs, barriers and enabling conditions’.

Building on the most recent estimates, the EEA report shows that accelerated investment is needed to meet the objectives of the circular economy policies already adopted, with an investment gap of around EUR 82 billion a year up to 2040.

Unlocking the circular economy: investment needs, barriers and enabling conditions

It points to product design and end of life-stages as areas that need the most attention with the greatest sectoral gaps in construction, textiles, and batteries and vehicles. It adds that while private finance currently dominates investment, public funding plays a catalytic role in de-risking projects and enabling blended and long-term financing.

The progress of the circular economy faces structural economic and financial barriers that need to be addressed adding that policy action is needed to improve access to finance and marketability of circular projects. Better monitoring is also crucial to follow financial flows and how they deliver the best socio-economic and environmental benefits.

Better circularity and use of longer lasting materials

Improving the circularity — reuse or recycling potential — of Europe’s long-lived products like buildings, cars, roads or machinery can provide the EU economy with more cost-competitive homegrown raw materials, according to the EEA briefing ‘Material stocks in a circular economy’.

Europe’s economy depends heavily on large amounts of materials: 14.4 tonnes are consumed by each person per year. Almost half of that, over 6 tonnes, ends up embedded in buildings, infrastructure or machinery, forming what is known as material stock. Stocks are essential for our quality of life, they are buildings and roads, hospitals and schools, cars and washing machines, but they increasingly shape Europe’s resource dependency.

Material stocks in a circular economy

Material stocks have a key part to play in a circular economy, Increasing the circularity of material stocks can transform them into a source of secondary raw materials, strengthening European competitiveness and economic security.