— By PIE correspondent — 

In a joint statement, a coalition of European plastics recycling companies and trade organisations has warned that the proposed framework from Brussels for state aid rules governing recycling and renewable energy initiatives has been weakened by failing to mention how the circular economy will be funded.

The European Commission’s Clean Industrial State Aid Framework (CISAF) will accompany the Clean Industrial Deal (CID) and is set to be adopted this summer, after a consultation period ended in April. The Commission said circularity would be a priority for the CID, being “key to maximising the EU’s limited resources, reducing dependencies, and enhancing resilience”.

The draft CISAF said provisions could include measures to accelerate the rollout of renewable energy, support investments in technologies leading to decarbonisation, and ensure sufficient manufacturing capacity in clean technologies.

But the coalition of businesses and trade groups questioned the effectiveness of these proposals – and the wider CID – if the authorities failed to consider options on how to finance circularity efforts.

Related: French government permitted to subsidise chemical recycling efforts

Bilyana Ignatova, vice-president of EU public affairs at Norwegian recycling technology firm Tomra (Asker; www.tomra.com), which says it leads the group, warned that the ambition of the Clean Industrial Deal – to make the EU the world leader in circular economies by 2030 – would only be achieved if the accompanying state aid framework backed all pillars of activity, including circularity, with what she called “equal policy attention and financial support”.

Ignatova said, “The coalition […] believes this ambition cannot be realised without appropriate financial mechanisms in place to scale up circular infrastructure. As such, it expresses deep concern that circularity projects are not explicitly mentioned in the draft CISAF.”

Without targeted support for waste prevention, reuse, and high-quality recycling, the EU “risked undermining its own recycling sector and forfeiting industrial competitiveness in a world increasingly shaped by material constraints”, Janek Vähk, zero pollution policy manager at coalition member Zero Waste Europe (Brussels; www.zerowasteeurope.eu) told PIE.

Related: Interview on recycling sector: “An industry that is still fighting has not lost”

While the CID identified circularity “as a strategic lever to reduce resource dependency, boost resilience, and secure access to secondary raw materials”, such measures were “strikingly absent” from the proposed state aid provisions, an omission which Vähk said represented “a major policy gap”.

According to Virginia Janssens, managing director of coalition member Plastics Europe (Brussels; www.plasticseurope.org), circularity had been “marginalised” within the draft. This risked undermining not only Europe’s circular economy, but also its strategic industrial resilience, she said in response to a PIE query.

“The transformation to a circular plastics system is in acute danger from falling EU competitiveness and, for the first time, an alarming drop in recycled plastics production in Europe mainly due to an oversupply of low-cost imports,” Janssens added.

She noted that for the transition to circularity to get back on track, “plastics manufacturers, and the plastics system more broadly, must be able to take advantage of the state aid measures outlined in the framework. Therefore, it is essential that CISAF explicitly supports circularity.”

A spokesperson for the European Waste Management Association (FEAD, Brussels; www.fead.be) said the new state aid framework should include aid to support investments in European recycling capacities for any materials, while also backing existing recycling capacities “by bridging the price gap between virgin/new and recycled materials”.

Related: Wider price gap to virgin plastics weighs heavy on recyclate market

FEAD additionally wanted to see that conditions linked to aid under the new framework meant “the most environmentally sustainable technologies and projects are prioritised”.

The European Recycling Industries’ Confederation (EuRIC, Brussels; www.euric-aisbl.eu) told PIE it was “regrettable” that the state aid framework overlooked the need to invest in circular technologies.

“With Europe’s plastics recycling capacity growth rate dropping to just 6% in 2023 […] recycling plants across Europe will be forced to halt investments, reduce waste processing capacity, or even shut down,” as has been the case in the Netherlands, Germany, and Poland.

“Given the current situation, it is crucial for European plastics recyclers to access state aid funds swiftly, until the market for recycled plastics recovers and planned recycled content targets enter into force,” EuRIC added.

Related: EuRIC publishes roadmap to counteract slowdown in reclaim capacity growth

Meanwhile the lack of any mention in the CISAF regarding resource efficiency or circularity activities could have several implications for circularity efforts across the EU, according to Olivier Laigre, director of external affairs at Danish packaging group Faerch (Holstebro; www.faerch.com).

Responding to a PIE enquiry, Laigre said, “The EU has introduced binding recycled content requirements under the Packaging and Packaging Waste Regulation, which will require substantial investment in collection, sorting, and recycling systems. Without explicit support from CISAF, these investments may be harder to secure, potentially hindering the development of necessary infrastructure to meet these requirements.”

Related: PPWR’s key questions remain unresolved

Laigre added that including circularity in CISAF was not simply an environmental priority, but should be seen as an economic and strategic imperative: “It is essential for reducing costs, securing critical materials, and boosting Europe’s competitiveness. Ignoring circularity in the framework could weaken the overall effectiveness of Europe’s industrial strategy.”

In a response to the comments from the coalition, a spokesperson for the European Commission spelled out its approach to PIE:

“We recognise the importance of circularity for achieving decarbonisation, reducing dependencies, and enhancing economic competitiveness.

“Member states are encouraged to ensure that projects and activities supported by state aid under the CISAF contribute to the circular economy to the largest extent possible. Under the General Block Exemption Regulation (GBER), and in particular the dedicated Article 47 for ‘Investment aid for resource efficiency and for supporting the transition towards a circular economy’, member states already have ample possibilities to implement support measures for the transition towards a circular economy without the need for prior notification to the Commission. This includes granting state aid to undertakings for investments related to recycling and re-use of their own or third parties’ waste. Measures going beyond the GBER are assessed under Section 4.4 of the Climate, Energy and Environmental Aid Guidelines (CEEAG) and regularly approved.

“If all relevant conditions are fulfilled, the CEEAG and GBER also cover investments in new technologies for waste recycling or re-use.”