A sustainable economic system should give back more to the planet than it takes.

This is possible through a coherent approach taking into account the limits of the planet, by reducing the consumption footprint and increasing the resources circularity. This is a central objective of the EU Industrial Strategy and brings benefits to the economy by creating new jobs and also by limiting the EU's dependence on raw materials from external sources.

Taking into account that an important part of expenses in the case of companies is directed to the purchase of materials, their management in a closed circuit will lead both to ensuring a stability in supply, but also to protection against price fluctuations on the market, with an impact on profitability.

Many of the products on the market today break down too quickly or cannot be repaired, some are designed to be used only once and often cannot be recycled. It leads to the generation of waste for which the possibility of re-introducing the materials into the economic circuit is either blocked or limited.

Providing high-quality, longer-lasting products designed to be easily repaired, disassembled, reused and recycled will have an important impact on consumers. Thus, the consumer becomes part of the system by adopting active behavior that can lead to the development of new usage concepts (dematerialization) for several product categories, as well as business models, such as "Product as a Service".

Circular economy is not only about recycling or about waste management, it is about extend product longevity and maximise the reuse of products, components, and materials. Even if the recycling is important to bring back materials into economy the circular economy is taking into account the entire life cycle of a product, from raw material extraction to end-of-life disposal.

This will require profound changes to how we design, manufacture, sell, use and dispose of the products. It will call for innovations in product design and business models, taking into account the circularity principles by adopting new policies and regulations, shaping of new business models and it will transform the supply chains, considering the environmental impacts, behavioural and cultural change, to reduce consumption and increase habits of reuse and repair.

The new Circular Economy Act, planned to be developed and having the objective to create the market for secondary raw materials, is going to minimize the pressure on raw materials, ensuring the demand for critical raw materials and increasing the resources’ efficiency.

For Romania, the transition to a circular economy remains a challenge, as there is still a lot to be done both in assessing the impact of previous decisions and the implementation of the existing legal framework, but also in terms of the ability of the economic sectors to adapt to the challenges brought by the new legislative changes at European level.

Legislative changes at the European level

Two of the most important legislative changes expected in the field of waste were widely discussed during 2024 and will continue in 2025. We are talking again about modification foreseen on the Waste Framework Directive, what it brings from the perspective of obligations and the associated impact, especially for textile. Regulation on packaging and packaging waste, recently published, will be discussed, and also the additions through subsequent acts that will follow.

Keeping resources in the economy and reducing dependence on hard-to-reach raw material

States and the business environment must look at circularity beyond legal constraints, as new business opportunities in the context of limiting access to resources, especially critical raw materials.

Regulation (EU) 2024/1252 establishes the necessary measures to ensure the secure and sustainable supply of the internal market with critical raw materials. The geographical distribution of relevant reserves at the global level and of the appropriate processing capacities can make the access difficult for producing the relevant products. Similarly, the recovery operations at the end of the life cycle of the products that contain critical raw materials are often carried out in another country or even outside the EU space. In these conditions, a coordination of the supply of critical raw materials at the EU level is necessary, especially since they are essential for strategic sectors such as energy from renewable sources, the digital industry, the aerospace sector and the defense sector.

Three directions are important:

• identification of critical and strategic raw materials;
• monitoring of supply and supply risks mitigation;
• measures to increase the circularity and sustainability of critical raw materials used in EU.

Coordinated actions are necessary in order to increase capacities for each strategic raw material at every stage of the value chain starting with extraction, processing and recycling of these materials, so that the supply of critical raw materials is ensured at the EU level.

The capacity benchmarks level for extraction, processing and recycling of strategic raw materials:

• increasing the degree of utilization of its own geological resources and strengthening the extraction capacity to produce at least 10% of its consumption of strategic raw materials;
• increasing the processing capacity to be able to produce at least 40% of its annual consumption of strategic raw materials;
• covering an increasing share of secondary raw materials, at least 25% of the EU's annual consumption of strategic raw materials, by increasing recycling capacity, improving both the security and sustainability of the Union's raw material supply.

Sustainable products – ecological design

The new regulations adopted in the year 2024 for the implementation of the Circular Economy Action Plan (2020) bring into attention requirements regarding ecological design for sustainable products through the provisions of Regulation (ESPR) 2024/1781 and the promotion of the repair of goods according to Directive 2024/1799.

Increasing the recyclability of products is taken into account from the design stage by measuring the ease and quality with which an end-of-life good can be recycled by: using easily recyclable materials, safe, easy and non-destructive access to recyclable components and materials or to components and materials containing hazardous substances, the composition and homogeneity of the materials, the possibility of sorting with a high degree of purity, the number of materials and components used, the use of standard components, the use of component coding standards and materials for identification of components and materials, number and complexity of processes and tools required, ease of disassembly and non-destructive reassembly.

Right to repair

Starting from July 31, 2026, all Member States will have national regulations that will ensure the right of users to repair for those categories of goods for which there are requirements regarding the potential for repair. Among them are household equipment such as washing machines, dishwashers, tumble dryers, vacuum cleaners, refrigerators, mobile phones and other categories of equipment. This list is expected to be extended.

Manufacturer has to repair a product for a reasonable price and within a reasonable timeframe after the legal guarantee period. The rules aim to strengthen the EU repair market and reduce repair costs for consumers, but also to reduce the generated waste. During the repair, depending on the particularities of the respective goods, in particular the consumer's need to permanently dispose of these, the consumer may receive a replacement good, including a refurbished one, with the title of loan, free of charge.

In order to achieve successfully the environmental objectives, it is not enough to have only mandatory requirements adopted by legal norms. The most effective instruments are the balanced mix of punishment and reward, “the stick and the carrot”.

Therefore, a number of economic instruments have been developed and used for several decades, like eco-taxes or incentives, but also some other new instruments. These economic instruments create signals for the market that can influence the behavior of producers and consumers. In practice these can support the achievement of environmental objectives and also contribute to the internalization of environmental costs. As consequence the pollution or the excessive consumption of natural resources is reduced, as well as processes are optimized for a better raw materials management.

Financing environmental projects is one of the priorities of many states that need to find solutions to the environmental problems they face. At the European level, several financing programs have been created to support the Member States to comply with the stricter environmental legal provisions.

Sustainable financing has become a priority for financial institutions, so more long-term investments in sustainable economic activities and projects that take environmental, social and governance aspects into account are foreseen.

Economic Instruments

Among the most well-known economic instruments applied in the field of the environment are eco-taxes, fiscal incentives, the application of the Polluter Pays principle, the Deposit Return System, but also the Extended Producer Responsibility, with an implementation experience of over 30 years.

Extended Producer Responsibility

Extended producer responsibility (EPR) is one of the important tools for implementing the waste hierarchy, starting with prevention, preparation for reuse, recycling, recovery and disposal. It is an effective tool, having as main objective to reduce the amount of waste generated and improve recycling targets, applicable to a wide range of goods that are regulated separately at European level. Starting with the packaging flow, for which there is over 30 years of experience, and continuing with electrical and electronic equipment, batteries and accumulators, positive results have been recorded both in terms of increasing the amounts of separately collected waste and recycling rates. There is still much to be done if we turn our attention to the first steps in the waste hierarchy, especially regarding prevention and reuse, but also to increase the recyclability of products. Experts are currently focusing on new product flows and appropriate applicable economic instruments, starting with textiles, but we are expecting that furniture and construction materials will follow.

Environment financing

In the context of EU policy, sustainable finance is understood as finance that supports economic growth, while the pressures on the environment are reduced, to support the achievement of environmental goals taking also social aspects into account. Thus, in addition to the development of green projects and the application of clean technologies, aspects that help companies become more sustainable, anticipate needs and innovate in the field of sustainable development are also taken into account.

Financing instruments play an important role for Romania and we aim talk about it, but also to put the light on the current financing opportunities. Funding calls in progress or in preparation to support environmental projects, funds allocated for research and innovation, funding schemes dedicated to public authorities or companies, all these will be the subject of debates dedicated to environmental funding.