The plan has a range of measures to encourage closed economic loops: in particular, increasing the recyclability and reuse of products, as well as reducing the use of raw materials. Its cardinal goals include designing sustainable products made with longer life spans, repairable, and easily recyclable or reusable. The European Commission proposed mandatory product design requirements to ensure a lower environmental footprint throughout a product’s lifecycle.
Key priorities in the action plan include the textile industry, construction, electronics, and packaging-all those which traditionally generate much waste and consume large volumes of resources. For example, the textile sector will have to implement a new sustainable textile strategy that reduces pollution and increases the use of recycled materials in products.
The reduction of plastic waste is one of the most salient features of the plan. This includes limiting single-use plastics, developing infrastructure to process complex plastic materials, and setting clear recycling targets for packaging. The document sets intermediate targets across various sectors to ensure a gradual transition to sustainable models.
Moreover, the plan provides financial support for CE initiatives through EU funding programs such as Horizon Europe and Invest EU [29]. These programs stimulate innovation and technological development in recycling and material reuse, reducing environmental pressures and enhancing the competitiveness of the European economy by decreasing its dependence on imported resources.
Thus, the 2020 CE Action Plan has become a critical tool for shaping the legal and economic framework that encourages EU countries and companies to adopt sustainable development principles. It plays a vital role in achieving the European Green Deal’s objectives, which aim for Europe to achieve climate neutrality by 2050.
As of 2023, the EU has shown significant progress in transitioning to a CE. According to Eurostat, the share of recycled materials in the EU economy was approximately 11,8%. In 2023, the circular material use rate was highest in the Netherlands (30,6%), followed by Italy (20,8%) and Malta (19,8%). The lowest rates were recorded in Romania (1,3%), Ireland (2,3%), and Finland (2,4%). Detailed data is presented in fig. 8.
When assessing material types, the circularity rate at the EU level was highest for metal ores at 24,7% (+2,2 percentage points compared to 2022), followed by non-metallic minerals at 13,6% (+0,3 percentage points), biomass at 10,1% (+0,7 percentage points), and fossil energy materials/carriers at 3,4% (+0,6 percentage points).
Figure 8. Circular material use rate in the EU, 2023, % [30]
The CE impacts a wide range of industries. In manufacturing, active development is taking place in the recycling programs of rare earth metals and other critical resources, which reduces dependence on imports. Another target has been the construction industry: construction waste is being recycled, and the use of secondary concrete and steel reduces the carbon footprint [31]. The textile industry has been implementing take-back and recycling programs for clothes, shifting to the use of recycled materials. Biofertilizers made from organic waste are also being introduced into agriculture, reducing the use of chemical fertilizers. The transport sector is actively developing battery recycling for electric vehicles, while energy produces recyclable components of solar panels and wind turbines. The packaging industry is focused on introducing reusable solutions, systems for collecting plastic, paper, and glass.
Accelerators that will help speed up the transition to a CE in the EU include different legislative initiatives, investments, and political programs. Among them, the well-known legal accelerator is the CE Action Plan presented by the European Commission in 2020.
Among the investments, Horizon Europe has to be highlighted; the program allocates considerable financial means to research and development of the CE, including recycling, batteries, building materials, and textiles. The estimated budget of this program for financing from 2021 to 2027 is €93,5 billion.
However, despite these accelerators, there are several barriers that slow down the transition to a CE [32]. Among the legal barriers, complex bureaucratic procedures related to waste recycling stand out. For example, differences in legislation between EU member states create obstacles for cross-border cooperation in waste management. Some countries face insufficient coordination between authorities, making it difficult to implement unified standards.
The infrastructure issues remain one of the big barriers: In numerous EU countries-especially Southern and Eastern Europe-the recycling infrastructure for such waste remains underdeveloped. Due to the limited amount of recycling plants and lack of modern landfills, an imbalance between different regions will hamper CE ambitions.
Transitioning to a CE generates major economic benefits in the EU. This transition impacts some of the main economic aspects: reducing the dependency on imported resources, creating new job opportunities, stimulating innovation, and reducing the waste and environmental pollution costs. All of these factors impact positively the economy of the region long-term and set up a sustainable basis for growth (table 1).
Table 1. Economic benefits and long-term impact of the transition to a CE in the EU
Technological bottlenecks are linked to the insufficient maturity of the recycling technologies of specific materials such as composite plastics, lithium-ion batteries, and textile fibers. The other challenge is related to a lack of awareness and low consumer engagement. Insufficient information on the importance of recycling and reusing materials among some EU citizens reduces the effectiveness of CE programs at the level of a household.
1.2.1. Estonia
Estonia is one of the most progressive countries in Northern Europe regarding sustainable development and environmental care. Due to its advanced digital infrastructure, high level of citizen engagement in environmental issues, and innovations that are being actively supported, Estonia has succeeded in building a green economy. In the last years, the country is also actively developing a CE, what is reflected in its legislative and economic initiatives. In 2024, Estonia received the highest rating in the EPI and confirmed its leadership in environmental governance (table 2).
Table 2. EPI Index [21]
Among the initial steps in transitioning to the CE was the adoption in 2014 of the Estonian Sustainable Development Strategy, which provided goals for switching from the linear to the circular economic model. In 2017, the CE Action Plan was approved, stipulating goals for the recycling and reuse of materials [33]. One of the biggest undertakings was the incorporation of necessary recycling levels for plastics and other materials within the law, adding tax credits for companies already seriously investing in sustainable production methods.
Laws and legislative developments form a very important part in promoting the CE. First of all, the so-called Waste Recycling Act has regulated the process of separation and further processing of garbage [34]. In 2019, Estonia also adopted the CE Act, which requires companies to use recycled materials and develop products with consideration for their future recyclability or reuse. These laws support the mandatory recycling of plastics, paper, glass, and other materials, while also encouraging the adoption of green technologies.
Over the years, the Estonian waste collection industry has recorded a gradual annual turnover increase that is proportional to the rise in concern for environmental sustainability and material recycling [35]. Due to infrastructure development for recycling purposes and waste processing technologies,