Europe’s circular economy in facts and figures

Progressing towards a circular economy

Several institutions have recently provided insights into the current state and future outlook of the circular economy in Europe, examining progress, challenges and recommended actions to further integrate circular practices. There is a consensus on recognising some progress, alongside a clear need for stronger policy implementation, financial support and the scaling up of circular business models and consumption patterns. The European Environment Agency’s 2024 report, Accelerating the Circular Economy in Europe, underscores the same balance between acknowledging positive progress and the need for bolder action. This briefing provides additional analysis on the state of play in Europe’s transition towards greater circularity, spanning all aspects of this systemic transformation.

Traditionally, the economic model underpinning economic growth globally has been linear, based on the extraction of natural resources for products, and subsequent disposal, often after a relatively short period of use. This model is linked to the unsustainable use of resources, which is a significant driver of the current triple crisis of climate change, biodiversity loss and pollution.

Europe’s response to the misuse of natural resources is to take measures to enable the transition towards a circular economy, which means shifting from linear production models and consumption patterns to circular models. This transformation is detailed in the Circular economy action plan (CEAP) (EC, 2020).

Such a transformation will help improve sustainability in Europe and the world in several ways, including by reducing pollution, mitigating climate change and helping to prevent biodiversity loss. In particular, circularity calls for the following actions (EEA, 2024):

• reducing resource use and moving towards a less material-intensive European economy;
• maximising the utility of products by promoting the intensity of their use and much longer life spans;
• making use of generated waste through high-quality recycling systems and returning high-quality secondary materials back to product manufacturing.

Moving to a circular economy involves adopting a set of circular principles across Europe’s production and consumption systems (Figure 1).

Monitoring the circular economy transition

Many aspects of the EU economy need to be transformed to successfully implement circular economy principles and achieve a measurable impact on Europe’s resource use and waste generation. These include comprehensive policy frameworks, circular economy knowledge creation, new sets of jobs and skills, the development and scaling of circular business models, changing consumption habits, and rethinking our relationship with materials and waste. Structuring this reflection further, for the EU to fully transition to a truly circular economy, four pieces of the circularity puzzle need to fall into place in the EU economy and also for society at large:

1. An enabling framework to not only allow for circularity but to also promote the approach. This means strong policies need to be in place; adequate financing for the transition should be channeled through both public and private financial institutions, while research and innovation need to support the transition.
2. Businesses need to adopt more circular models for providing goods and services, helping to lower resource consumption.
3. Consumers (private or institutional) should be encouraged to make sustainable product purchases and use products for a long time to help keep their value high.
4. Material flows need to become narrower, aiming to reduce the use of virgin materials and recycle the decreasing amount of waste generated.

To promote progress across so many aspects of society and to help support policies for a circular economy, comprehensive monitoring frameworks are necessary. These help to assess progress towards existing policy objectives and also to encourage understanding about where intervention is needed.

There are a number of monitoring frameworks currently focussed on Europe’s circular economy, including the European Commission’s Circular Economy Monitoring Framework (CEMF). The existing frameworks provide effective understanding of the macrophenomena related to the flow of materials in and out of the EU economy.

These aspects are crucial for a circular economy where material flows have a low virgin resource content and waste is recirculated. However, other elements of circular economy are less well monitored, often because the data flows to understand them are fragmented or non-existent. By combining novel sources and a wide range of perspectives, the EEA’s Circularity Metrics Lab (CML) complements existing initiatives by compiling responsive data on the growth of the circular economy (EEA, 2022).

The CML is structured around a four-part framework as outlined above and attempts to monitor circularity progress by developing metrics to equally and fairly assess advancements in each of the four areas. The CML metrics are sometimes based on established indicators drawn from official statistics, but at other times they are experimental and based on innovative data sources. It is important to note that as the EU is an open economy, some of the CML metrics adopt a footprint perspective, meaning that they monitor progress not always strictly within the EU’s geographical borders.

Figure 2 offers an overview of the current CML metrics, coloured according to whether they report positive, negative or stable circularity developments. The aim of this briefing is to outline the insights gained from monitoring the circular economy through the CML in order to inform future policy making in Europe.

A strong framework to enable the circular economy is in place

The CML metrics monitor the framework necessary for enabling a circular economy in Europe; these metrics conclude that political and economic momentum for circularity is building in Europe.

Perhaps the most important precondition for a circular economy in the EU is support for this transition by EU and national policies which promote circularity across various facets of the economy. Since the first edition of the EU Circular economy action plan in 2015, 20 of the 27 EU Member States have adopted national circular economy policies in the form of strategies, action plans or other policy documents (Figure 3). This means that countries were quick to put policy frameworks into place that include a variety of measures to promote circularity. The next step involves further development of national policies, for example by adopting suitable targets other than in the area of waste, or other innovative policy options to accelerate implementation of the circular economy.

Another vital factor for circularity is the importance of securing adequate financing. Recent estimates place the financing needs for a circular economy in the EU at EUR 55 billion annually (Trinomics, 2024). Encouraging signs for adequate circular economy financing come, for example, from the fact that the European Investment Bank’s lending to circularity projects has been steadily increasing and reached EUR 3.8 billion in the period 2019-2023.

Knowledge creation and innovation are essential pillars to support circularity. If this is approximated by academic publications, a circular economy helps to build an increasingly sound knowledge foundation. In 2023 alone, almost 4,000 scientific articles were published related to circular economy; this shows a growing level of research and innovation activity for circularity.

Figure 3. Number of national circular economy policies among the EU Member States

Loading chart...

EU businesses recognise the value of circularity

It is vital that businesses shift towards embracing circularity and continue to integrate it as a core element of their EU business models. European companies are displaying signs of adopting sustainability in general and circular approaches in their business models in particular. Looking at the Environmental, Social and Governance (ESG) performance of large European companies, their average score denotes them as leaders in sustainability matters (Figure 4). Certification to the European Ecolabel has skyrocketed, registering a four-fold increase since 2010, with 32% of EU SMEs offering green products or services with an increasing trend. Employment in the circular economy sector is increasing with a total of 4.3 million people employed, indicating a dynamic workforce.

However, a look at the absolute numbers instead of the trends reveals that circular economy-minded businesses are still somewhat niche, and further effort is needed to mainstream circularity practices in the business sector. Literature and case studies on circular business models — meaning models that aim to offer the same product or service with lower material use, such as product-service-systems (PSS) — indicate that such models have not yet been scaled up to influence the EU economy broadly.The dominant business models rely on mass production, often at the expense of quality, which leads to premature product breakdown. It is also important to note that data availability on circular economy monitoring is currently limited, but that new data streams will soon become available (e.g. through the Corporate Sustainability Reporting Directive (CSRD)).

Figure 4. Trend in ESG ratings of companies of the EU STOXX 50 from 2019 to 2024

Loading chart...

EU consumers are willing to contribute

The most challenging of the four parts of the circular economy monitoring framework outlined in this briefing is consumption. Data on how consumers (individually or collectively through public institutions, for example) make decisions about what to purchase, how we use and maintain products, and what we do when products need repair or upgrade, are very scarce. Essentially, only proxy metrics such as surveys can be used. The ones that are available conclude that there are signs that consumers are ready to embrace more circularity in the products and services they consume. In 2024, over three-quarters of Europeans (78%) acknowledge that environmental problems directly impact their daily lives. Around 60% of Europeans are concerned about the growing quantities of waste; this percentage has almost doubled in the past 15 years (Figure 5). Positive signs of behavioural changes include car sharing, which is increasing in most countries (for example by more than 450% in Germany since 2010). Increased interest in the sharing economy and other novel circular models is positive, as long as conventional consumption is replaced rather than added to.

On the other hand, our consumption patterns in Europe are not sustainable and no improvement is within sight: each of us generates 70 kg of food waste every year, while impacts from our consumption show no signs of reduction. In fact, in recent years such impacts have increased. The level of these environmental and climate impacts transgresses several of the planetary boundaries.

Fundamental shifts in our consumption patterns are needed, for example through using low impact products and services or by switching to sharing and product-as-a-service models. Our consumption culture, currently under the strong influence of marketing, needs to change and perhaps be nudged by legislative changes. However, although consumers’ choices matter, these are framed by current production systems. The recently adopted Ecodesign for Sustainable Products Regulation (EU, 2024) is geared to promote safe and sustainable products and was designed for circularity from the outset.

Figure 5. Trends among EU citizens in environmental issues for the time period 2007-2024

Loading chart...

EU material flows are not yet highly circular

Europe’s reliance on natural resource appropriation to create prosperity and its high levels of waste generation come with significant environmental degradation (EEA, 2024). Monitoring changes in material flows and waste generation and management is key to assessing the impact that the circular economy has on the environment.

Figure 5 reveals four key metrics outlining the impact of circular economy efforts in Europe: the EU’s material footprint, waste generation, recycling of total waste and the circular use of materials.

The EU’s material footprint, reflecting the resources needed to produce the goods and services Europeans consume, stood at 14.1 tonnes per capita in 2023 while waste generation was at 5 tonnes in 2022; these are both high numbers stemming from an unsustainable use of resources. The data indicate that if the whole world were to consume resources at the level of the EU, the capacity of the planet to provide these resources would be exceeded. On the other hand, resource productivity in the EU is increasing — in 2022, for every kilogram of material consumed in the EU economy, 2.1€/kg worth of production activity was generated. This is more than 2.5 times the global average.

The material footprint does not show dramatic changes over time; it is rather stable, meaning that circularity has not yet taken off. On the other hand, in the period from 2010 to 2023, the EU economy grew, meaning that we were able to produce more with a stable material input. In this way, we achieved a modest decoupling of economic growth from resource use, which has been a longstanding objective in EU policy making. A similar picture is drawn when we look at waste generation data. A modest decoupling has been achieved, meaning that as the economy grew, it did not generate more waste overall.

Many years of successful waste legislation have greatly improved waste management in Europe. If major mineral waste is excluded, the EU landfills only 306kg per person annually (2022) and it recycles almost half of the waste it generates, which is a level that no other world region can boast. However, recycling alone is not enough to establish circularity in Europe as we keep increasing (by 2.6% annually) the share of resource use that is accumulated in material stocks. This means that waste generation is seriously lagging behind resource use.

Looking at recycling as a source of secondary raw materials—and therefore as an alternative to virgin resource use — we can use the circular material use rate (CMUR) as a proxy (Figure 6). The CMUR is calculated as the fraction of the material use by the EU economy that originates as recycled material. Figure 6 shows that the CMUR has increased very slowly in the past 12 years in the EU and has practically stagnated since 2016 with a figure of around 11.5%. This is because recycled amounts and also material use have remained more or less stable since 2016. It is important to note that focusing on maximising recycling alone will not be enough to establish a circular economy; Europe must also focus on reducing the use of specific material groups.

Overall, despite the progress made achieving a modest decoupling and high recycling levels, the absolute levels of resource use and waste generation in the EU are high, higher in fact than most other world regions. Focusing on implementing the circular economy by promoting high-quality recycling would result in the production of good quality and competitive secondary raw materials, while at the same time contributing to Europe’s resource independence. Functional secondary markets are also required so that these secondary materials find their way back into manufacturing, thus offsetting primary resources.

The future of monitoring circularity in Europe

Existing gaps in monitoring, mainly in the business and consumer monitoring arenas, can be filled by new methods of data collection, such as web scraping or using artificial intelligence to collect data from policy documents, corporate reports or product passports. Such methods and data sources will soon offer opportunities to better assess the progress of the circular economy in Europe as well as better informing policy-makers.

Moreover, as policy priorities change, monitoring efforts need to follow. For example, the effects of increased circularity in securing strategic resources for the European economy and increasing its competitiveness have not yet been comprehensively monitored. In addition, value chains critical for the circular economy in Europe, such as plastics and textiles or specific circularity aspects such as the lifespans of the products we use, deserve special monitoring tools to inform sectoral policy. These tools include the EU strategy for sustainable and circular textiles (2022) and the Ecodesign for Sustainable Products Regulation (2024).