Jan. 15, 2025 • Reading time: 16 Min
The circular economy is becoming increasingly important in today's business landscape. At the heart of this economic model is the maximization of resource efficiency by minimizing waste and promoting the reuse and recycling of materials. This is in stark contrast to the traditional linear economy, which relies on a 'take-make-dispose' model. For companies, the shift to a circular economy opens up new opportunities to not only achieve environmental sustainability, but also economic benefits through innovative business models. In this article, we give you a comprehensive overview of the principles of the circular economy, highlight the benefits and explain how companies can successfully transition to this model to operate in line with current economic and environmental challenges.
The circular economy is an advanced economic model that aims to use resources efficiently. In contrast to the conventional, linear economy, the circular economy focuses on optimal efficiency in the use of resources. It supports the reuse, refurbishment and recycling of materials in order to reduce waste and conserve natural resources. This brings both environmental and economic benefits for companies.
A central aspect of the circular economy is closing material cycles. Products are designed in such a way that they can be dismantled after use and their materials reused, thereby reducing dependence on finite resources. This postpones Earth Overshoot Day, the day on which humanity consumes more resources than the earth can regenerate in a year.
The implementation of concepts such as sharing, reuse and upcycling plays an important role in the circular economy. These approaches increase resource efficiency and open up new market opportunities. Companies that adopt these principles can minimize their environmental footprint and remain competitive.
The transition from a linear to a circular economic model is crucial for a sustainable future. While the 3R model (Reduce, Reuse, Recycle) reaches its limits in a linear economy, the circular economy expands this model to include other strategies such as repair and new production.
The introduction of the circular economy offers various advantages: it reduces dependence on raw materials, improves energy efficiency and offers economic opportunities through new business models. However, companies must overcome technological, economic and cultural challenges in order to make this transformation possible.
The National Circular Economy Strategy (NKWS) in Germany supports this model with a legal framework and targeted measures. The aims are to reduce the consumption of primary raw materials and close material cycles. Measures to promote the circular economy are also being taken at EU level, such as the action plan to achieve climate neutrality by 2050.
In summary, the circular economy offers a sustainable solution to future economic and environmental challenges. It promises economic benefits through cost savings and new business models as well as a reduction in environmental impact.
The linear economy, which is based on a "take, make, dispose" model, is increasingly being criticized. In view of the increasing consumption of resources and growing environmental problems, the concept of the circular economy is coming into focus. This alternative economy emphasizes the reuse, repair and recycling of products and materials in order to minimize resource consumption and reduce waste. In this article, we look at the importance and relevance of the circular economy, the impact of the current consumption of raw materials, Earth Overshoot Day and the issue of plastic waste.
The circular economy is an economic model that aims to keep raw materials in a closed loop. Products are designed in such a way that they can be easily dismantled at the end of their life and the materials reused. This model not only reduces the need for new raw materials, but also minimizes the amount of waste and pollution.
Global consumption of raw materials has multiplied in recent decades. The growing population and economic activities are leading to an ever-increasing demand for natural resources. This not only leads to the depletion of these resources, but also to negative environmental consequences such as the destruction of natural habitats and the loss of biodiversity. The circular economy offers a solution here by reducing the need for raw materials and reducing dependence on finite resources.
Earth Overshoot Day marks a crucial point in the calendar year when humanity has consumed more natural resources than the Earth can regenerate within a year. In recent decades, the date of this event has steadily advanced, showing that resource consumption is exceeding the regenerative capacity of our planet. In 2024, Earth Overshoot Day was already reached on August 1.
If the entire world population were to adopt the same consumption habits as the citizens of a particular country, the planet's annual biocapacity budget would be exhausted on a fixed date, known as Country Overshoot Day. For Germany, this day falls on May 3, 2025. This figure not only encourages people to reflect on their own resource consumption, but also highlights the urgent need to implement sustainable practices in order to respect planetary boundaries and leave a planet worth living on for future generations.
The implementation of circular economy practices is a promising strategy to significantly reduce resource consumption and postpone Earth Overshoot Day in the future. By promoting recycling, reuse and sustainable production methods, companies and consumers can actively contribute to minimizing the ecological footprint and achieving long-term environmental goals.
Plastic waste is one of the biggest environmental problems of our time. Millions of tons of plastic are produced every year, a significant proportion of which ends up in the environment. This pollution damages ecosystems, especially marine habitats. By implementing circular economy concepts, we can reduce plastic consumption by switching to reusable alternatives and promoting recycling. This significantly reduces the impact of plastic waste on the environment.
The circular economy is a promising approach to tackling the challenges of modern resource consumption and pollution. By shifting to a model that emphasizes reuse and recycling, companies and societies can reduce their environmental footprint and operate more sustainably. The importance and relevance of the circular economy is particularly evident in light of the global challenges highlighted by Earth Overshoot Day and the issue of plastic waste. Widespread implementation of these practices could not only help to conserve resources, but also contribute to a sustainable future for generations to come.
At a time when environmental crises have become a pressing global issue, the circular economy offers sustainable solutions to address both economic and environmental challenges. The main objectives of the circular economy and its significance for companies and society are as follows:
A central goal of the circular economy is to maximize the efficiency of resource use. By keeping products, materials and resources in the economic system for as long as possible, the need for new resources is minimized. Techniques such as recycling, upcycling and the reuse of materials are crucial to maintaining this cycle. This not only helps to reduce environmental impact, but can also reduce dependence on imported raw materials.
The circular economy strives to reduce waste to a minimum. Innovative design approaches are used to create products that can be reused, repaired and recycled. The concept of waste avoidance is not only ecologically beneficial, but also opens up economic opportunities through the development of new business models in the area of repair and recycling.
Another aim of the circular economy is to extend the lifespan of products. This includes strategies such as the development of more robust, repairable and modular products that can be used over longer periods of time. Companies benefit from customer loyalty and a reliable reputation for quality and sustainability.
The circular economy promotes innovations that are both economically and environmentally beneficial. It encourages companies to develop new technologies and processes that reduce environmental impact while enabling economic growth. This, in turn, promotes job creation and strengthens competitiveness in a global economy that is increasingly focused on sustainable practices.
Another important goal is the promotion of social and environmental responsibility. Businesses and consumers are encouraged to rethink their practices and decisions in terms of their impact on the environment and society. The integration of social justice and environmental responsibility leads to a more sustainable and fairer economic system.
The circular economy, also known as the circular economy, is an increasingly important concept in the modern sustainability and business landscape. Unlike the traditional linear economic model, which is based on "take - make - dispose", the circular economy aims to extend the life cycle of products and thus reduce their environmental impact. This not only minimizes resource consumption, but also creates new business opportunities and social benefits.
The circular economy is an economic model that focuses on the longevity of products. The aim is to share, lease, reuse, repair, refurbish and recycle existing materials and products for as long as possible. In this way, the life cycle of products is extended and waste is reduced to a minimum. As long as the resources and materials remain within the economy, they can continue to generate added value. This is in stark contrast to the throwaway economy, where large quantities of resources are used for disposable products.
Minimizing waste is an important element of the circular economy. Products that have reached the end of their life should not simply be disposed of, but their components and raw materials should continue to be used. This concept is supported by various international standards such as ISO 59004:2024, which provide guidelines for the implementation of circular economy principles in companies.
According to the World Wildlife Fund WWF, the circular economy is a regenerative system that focuses on renewable energies and minimizes the negative effects of industrialization. It promotes a rethinking of the way we understand growth and consumption, which can have positive effects for the environment and society.
In the context of the EU Commission's requirements, the circular economy also plays a decisive role for companies subject to CSRD. The ESRS E5 standard (resource use and circular economy) supports companies in integrating and implementing their sustainability goals in their reporting.
The circular economy is far more than just a sustainable approach to conserving resources. It represents a comprehensive economic model that combines ecological, economic and social benefits. For companies, it offers numerous opportunities not only to operate in a more environmentally friendly way, but also to remain competitive. At the same time, it is a key element in achieving global sustainabilitygoals (SDGs) and a more sustainable future for all stakeholders. By implementing its principles, companies can make a significant contribution to solving current and future challenges in the use of resources.
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The circular economy represents a sustainable economic model that aims to use resources efficiently and significantly minimize waste. In contrast to the traditional linear economic approach, often referred to as "take, make, dispose", the circular economy focuses on closing material loops within resource use. This model not only promotes environmental sustainability, but also offers economic benefits through the reuse of materials and the significant reduction of costs.
The relevant aspects such as reuse, sharing, repair, overhaul, recycling, upcycling and closed-loop systems are explained in detail below.
A central aspect of the circular economy is the reuse and sharing of resources. By reusing, products and materials can be kept in the economic cycle for longer, which reduces their ecological footprint. Sharing models, such as car sharing or shared office space, promote the efficient use of resources by emphasizing sharing rather than ownership. These models not only promote sustainability, but also help reduce overall costs for individuals.
Modern technology plays a crucial role in promoting reuse and sharing. Platforms and apps support the organization of these models by facilitating access and coordination. In addition, digitalization can better monitor the traceability and condition of products, ensuring their longer and more efficient use.
Repair and overhaul are essential to extend the service life of products. Instead of disposing of defective products, efforts are made to repair or refurbish them to restore their functionality. This approach not only minimizes waste, but also conserves resources and energy that would be used in the manufacture of new products.
Companies can benefit from a transition to improved repairability and refurbishment. By offering services that focus on maintaining and updating products, companies can develop new business models and promote customer loyalty. This can be done through extended warranties or maintenance packages that increase the value of a product over time.
Recycling plays a key role within the circular economy. It involves simply recovering material from a product in order to use it for the production of new goods. Recycling contributes directly to reducing the need for natural raw materials and the environmental footprint of production.
In contrast to recycling, upcycling goes one step further by not only reusing materials, but also transforming them into more valuable products. This leads to innovations and increases the economic value of the resources originally used. For example, textile waste can be turned into new designer garments. Upcycling promotes creative solutions and inspires business models that aim to create added value.
Closed-loop systems are a core element of the circular economy. They aim to maximize product lifecycles by eliminating waste and continuously recycling materials. These systems require close collaboration between different actors within the supply chain, such as manufacturers, suppliers and consumers, to ensure that materials are efficiently returned to the cycle after use.
A systemic approach is essential for the success of closed-loop systems. Companies need to collaborate not only within their own organization, but also with partners and customers to ensure that the material cycle is efficient and sustainable. Digitalization and data analysis help to implement transparent and traceable cycles that ensure the optimal flow of materials.
The circular economy offers a sustainable and economically beneficial model that aims to use resources efficiently and minimize waste. Through concepts such as reuse, repair, recycling and closed-loop systems, companies and societies can act in a more environmentally friendly and economical way. By embracing the principles of the circular economy, innovation can be encouraged and a positive environmental impact can be achieved at the same time. This change gives companies the opportunity not only to act more sustainably, but also to open up new markets and business areas.
The transition from a linear economy to a circular economic model is crucial for the sustainability of our society. These different models of economic value creation and resource use differ significantly in their approaches and impact on the environment. In this text, we explain the key differences between the linear economy, recycling and the circular economy.
In the traditional linear economy model, resources are extracted, processed into products and disposed of after use. This "take-make-waste" approach is inefficient and leads to considerable waste problems and environmental pollution. The finite nature of resources is largely ignored in this model, which leads to resource depletion in the long term. The linear approach is therefore not sustainable and is often seen as a dead end.
To mitigate the effects of the linear economy, the 3R model was introduced: Reduce, Reuse and Recycle. These approaches promote a more efficient use of resources and aim to minimize waste.
Although the 3R model represents important steps towards a more environmentally friendly practice, it alone is not enough to solve the systematic problems of the linear economy.
The recycling economy goes one step further than the linear economy by viewing waste as a potential resource. However, the efficient collection, sorting and recycling of materials remains a fundamental challenge. In addition, it is often difficult to recycle materials without losing quality. The process can be energy-intensive and sometimes leads to so-called "downcycling", where the material can only be used for inferior applications. The recycling model therefore also encounters obstacles that limit its ability to represent a fully-fledged circular system.
The circular economy is a holistic approach that aims to eliminate waste and environmental pollution by closing loops in the materials and production economy. It goes beyond recycling and the 3R strategy with the so-called 10 Rs:
This comprehensive approach integrates resilience into the system, promotes innovation and creates opportunities for new business models that are more sustainable and resource-efficient. By creating closed loops, the circular economy minimizes waste and conserves natural resources while generating economic benefits.
The transition from a linear economy to a circular economy is an essential step towards a sustainable future. By actively implementing the principles of the circular economy, companies and societies can not only achieve environmental benefits, but also take advantage of economic and social opportunities. The circular economy offers potential for innovation and efficiency that goes far beyond traditional economic models. The 10R strategy provides a comprehensive basis for using resources efficiently, minimizing waste and promoting a sustainable circular economy.
The circular economy offers numerous advantages that cover both ecological and economic aspects. Reducing dependence on raw materials: In view of the growing world population and the limited availability of important raw materials, demand is constantly increasing. In 2022, each European consumed an average of 14.9 tons of raw materials. To reduce supply risks such as price fluctuations and import dependency, recycling is becoming increasingly important, especially for critical raw materials such as batteries and electric motors, which are crucial to achieving climate targets.
The circular economy plays a crucial role in protecting the environment by reducing pollution and greenhouse gas emissions. By reusing and recycling materials, the consumption of natural resources is reduced, minimizing the ecological footprint while helping to preserve landscapes and habitats. This helps to limit the loss of biodiversity.
Another important aspect is the optimization of product design, as over 80 percent of the environmental impact is already determined in the design phase. This is where the concept of eco-design plays a decisive role. By integrating ecological criteria into the design process, companies can not only improve their environmental footprint, but also achieve sustainable competitive advantages.
More efficient and sustainable products significantly reduce energy and resource consumption. Packaging waste is also a growing problem: Every European generates around 190 kg of packaging waste every year. It is therefore essential to reduce excessive packaging and design it in a way that promotes reuse and recycling.
The introduction of circular economies offers numerous economic benefits. One of the most important aspects is the potential reduction in greenhouse gas emissions by up to 70%. This not only contributes to environmental protection, but can also reduce economic costs caused by climate-damaging emissions in the long term.
Another key benefit is the creation of new jobs. According to forecasts, up to 700,000 new jobs could be created in the European Union by 2030. These new job opportunities will mainly result from the demand for services to repair, reuse and recycle products, which will support and strengthen local labor markets.
The circular economy also promotes innovation and competitiveness. Companies that focus on such sustainable practices can set themselves apart from their competitors and win new customers through innovative solutions.
Ultimately, the circular economy helps to reduce the demand for raw materials and reduce dependence on imports. This allows countries to position themselves more resilient to global changes in the raw materials market and secure their economic stability.
The circular economy offers consumers not only the creation of new jobs, but also access to high-quality and durable products that significantly improve their quality of life. It also enables long-term cost savings. Products designed for longevity and reusability reduce the need for often expensive new purchases, which has a positive impact on the household budget. This sustainable approach benefits consumers both financially and environmentally by using fewer resources and minimizing waste.
Companies benefit economically from new business models, such as renting out products instead of selling them. Such models not only open up potential savings through recycling and reuse, but also promote innovation in product development. The integration of sustainable practices also improves a company's image and increases consumer confidence, as transparency with regard to environmental standards is increasingly demanded.
In addition, strategic green marketing enables companies to reach environmentally conscious consumers in a targeted manner. This not only appeals to a growing audience, but also generates competitive advantages in a changing market environment. At the same time, circular economy offers solutions to reduce dependence on limited raw materials and protects against price fluctuations.
The transition to a circular economy not only promotes sustainability, but also improves the corporate image and enhances brand perception. Customers increasingly value the origin of products and environmentally friendly standards. Transparent information about supply chains and production methods is crucial as it creates trust. However, greenwashing is quickly recognized and leads to a loss of trust.
In order to successfully pursue sustainable marketing, it is important to integrate the principle of the circular economy into the marketing strategy. Green marketing appeals to environmentally conscious consumers and addresses ecological aspects in production, product design, packaging, sales and advertising. Implementing these strategies not only brings benefits such as stronger customer loyalty and more efficient business processes, but can also give you a competitive advantage. For example, you can score points with transparent communication and recognized sustainability certificates and labels.
A key advantage of circular business models is also the significant minimization of risks associated with fluctuations in the price of raw materials. In a global economy where prices for traditional raw materials are often extremely volatile, companies can create a more stable cost base by using recycled materials or by designing products that are easily reusable. This not only protects against sudden price increases, but also reduces uncertainty in procurement and planning.
In addition, circular business models promote innovation within a company as they open up new ways of creating value. Companies that focus on circular approaches must regularly evaluate and optimize their processes and products in order to realize efficiency gains. This continuous improvement can not only lead to cost savings, but also make the company more responsive to changing market conditions.
Overall, the transition to a circular economy holds enormous potential for environmental and corporate benefits - a strategic necessity for forward-looking organizations.
The implementation of the circular economy brings with it a number of challenges that encompass technological as well as economic, regulatory and cultural dimensions. Despite these hurdles, there are significant opportunities for companies that are willing to embrace change and develop innovative solutions. It is crucial to develop solutions that address these difficulties in order to reap the full benefits of a sustainable economy. Conscious investment in technology, a clear focus on regulatory requirements and building a more sustainable business culture can make the transition to a circular economy more successful. By reducing waste and promoting sustainable business practices, companies can conserve resources in the long term and make a positive contribution to environmental protection.
One of the biggest challenges in implementing the circular economy are technological hurdles. Companies need to make significant investments in new technologies in order to adapt their current systems and processes to the principles of the circular economy. This starts with the development of durable and repair-friendly products and extends to the implementation of efficient recycling and reuse processes.
Another obstacle is the lack of interoperability between existing and new technologies. Many companies are still using outdated systems that are not designed to seamlessly integrate new technologies. This can lead to inefficiencies and a more difficult transition to a circular economy.
There is also a lack of technical expertise and capacity, which hinders the implementation of innovative solutions. Companies need to invest in training and education to develop the necessary skills for the application of new technologies.
Economic hurdles represent another major challenge. The transition to a circular economy can require significant financial investment, especially for small and medium-sized enterprises (SMEs). They may not be able to bear the initial costs of converting their production processes or acquire the necessary technologies.
Regulatory uncertainties and a lack of clear guidelines also make implementation more difficult. Companies have to find their way through a complex web of national and international regulations in order to meet the requirements of a sustainable economy. This can entail considerable legal and administrative costs and act as a deterrent.
There is also a risk of economic instability, as there is uncertainty about the profitability of circular business models. Companies have to strike a balance between short-term profits and long-term investments, which often requires difficult decisions.
Cultural and behavioral barriers are another significant challenge. Many organizations are deeply rooted in traditional, linear business model structures based on a "take-make-dispose" philosophy. The cultural shift towards a circular economy requires a fundamental change in corporate strategy and culture.
Another aspect is consumer habits. Many consumers are used to buying products, using them and then disposing of them. In order to successfully (implement) the circular economy, companies must take measures to promote awareness and acceptance of circular products and services.
Education and training are crucial to achieving cultural change in organizations. Leaders must act as role models and demonstrate commitment to the principles of the circular economy to facilitate change throughout the organization.
In September 1994, the Closed Substance Cycle and Waste Management Act (KrW-/AbfG, later the Closed Substance Cycle and Waste Management Act (KrWG) of 2012) was passed in Germany. It formulates the principles of the circular economy, which aims to primarily avoid waste, reduce its quantity and harmfulness and recycle it or recover energy from it. The aim is to conserve natural resources and protect people and the environment in accordance with Section 1 KrWG.
The National Circular Economy Strategy (NKWS) is a key component of Germany's efforts to promote a circular economy and integrate sustainable practices. On December 4, the Federal Cabinet adopted a comprehensive strategy consisting of three key objectives:
The Circular Economy Act thus forms the foundation for systematic and effective waste management in Germany. Building on these legal foundations, the Federal Government is continuously developing strategies to anchor the principles of the circular economy even more firmly in practice. The National Circular Economy Strategy (NKWS) plays a key role in this context.
Goal 1: Drastically reduce the consumption of primary raw materials and close material cycles. Per capita consumption is to be reduced to 6 to 8 tons by 2045, while the proportion of secondary raw materials is to be doubled by 2030.
Goal 2: Another goal of the NKWS is to increase independence from raw material imports. In accordance with the objectives of the Critical Raw Material Act (CRMA), the EU should be able to cover 10 percent of its demand for strategic raw materials and 40 percent of its demand for processed raw material products from its own production by 2030. In addition, it is envisaged that the EU's recycling capacity will make it possible to recycle 25% of strategic raw materials by 2030. In addition, no more than 65% of raw materials may be sourced from a single third country. Germany supports these ambitious targets through targeted measures in the NKWS.
Goal 3: Another focus is the avoidance of waste. Per capita waste generation is to be reduced by 10 percent by 2030 and by 20 percent by 2045.
In economic terms, the circular economy is seen as a significant driver of sustainable growth. According to forecasts, gross value added could increase by up to 12 billion euros annually and create around 120,000 new jobs. It is crucial to emphasize that an economy that relies heavily on primary raw materials cannot be sustainable in the long term. In contrast, a circular economy opens up new business models and significantly increases the competitiveness of companies.
The NKWS focuses on ten fields of action such as circular production and public procurement and includes measures such as standards for durable products and digital product passports to implement a sustainable product life cycle.
Although the NKWS has already made significant progress, challenges remain, including the adaptation of existing infrastructure, the financial resilience of smaller businesses and the need for internationally coordinated approaches to resource use. Nevertheless, the strategy offers a promising framework to guide Germany towards a more sustainable future. This strategy demonstrates Germany's commitment to sustainable development and signals the path towards a resource-efficient, economically viable and environmentally responsible future.
Digitalization has played a decisive role in the successful implementation of the circular economy. Digital technologies act as enablers and drivers for circular processes in Germany and beyond. The German government is working intensively with partner countries in the Global South to establish digital solutions and product passports. A fundamental prerequisite for this is transparency in the value chain, which requires the linking of physical material flows with digital data flows. This link not only enables the tracking of materials, but also their analysis and optimization.
A central element of this strategy is the digital product passport (DPP), which will be introduced from 2027 in accordance with European regulations. The DPP is intended to act as a comprehensive information flow that bundles data on ingredients, reparability and recyclability. This will create new business models and opportunities for sustainable consumption and the promotion of repair and reuse initiatives.
In addition, digitalization aims to steer throwaway behaviour and strengthen markets for secondary raw materials. To this end, the aim is to optimize logistics and improve waste management. The measurability of progress in the circular economy is supported by the use of anonymized data to ensure market transparency.
In Germany, around 19 kg of textiles are consumed per person every year, which corresponds to around 1.56 million tons. Expenditure on clothing and shoes amounted to around 77.7 billion euros in 2022 and has risen steadily over the last three decades, mainly due to the trend towards fast fashion. This leads to significant environmental problems such as increasing greenhouse gas emissions and water extraction as well as social challenges in the producing countries. The import of cheaply produced textiles makes it difficult to implement a circular economy, as there is a lack of social appreciation for durable products and insufficient incentives for innovation.
Several measures are required at national and European level to promote a sustainable circular economy. These include the EU Strategy for Sustainable Textiles (2022), new regulations under the EU Waste Framework Directive and the Circular Economy Act (KrWG) from 2025, which stipulates the separate collection of textile waste and reusable textiles.
A central aspect is the industry dialogue on circular business models in order to increase sales of durable clothing and promote the use of recycled fibers. Technologies for the efficient sorting of fiber materials will also be promoted.
The introduction of ambitious minimum requirements for the durability of textiles within the EU should be supported. A cultural and awareness change among consumers is crucial; information campaigns must promote the appreciation of durable clothing.
The aim is also to improve the collection of textile waste in order to promote high-quality recycling. This requires the creation of a specific collection rate for textile waste and the promotion of research and development in logistics and recycling technologies.
Renewable energy plants are crucial to achieving Germany's climate protection targets, which require at least 80% of gross electricity consumption to be covered by renewable energies by 2030. This includes an accelerated expansion of wind turbines and photovoltaics (PV), which will result in a significant increase in the demand for raw materials. Important materials include concrete, steel, glass and metals such as silicon, which are needed to manufacture technologies for energy generation. In addition, electricity grids and storage solutions need to be expanded.
Current challenges include supply risks for critical raw materials, which have been included in the Critical Raw Material Act (CRMA). Legal requirements include the Building Energy Act (GEG), which stipulates that a significant proportion of newly installed heating systems must be powered by renewable energy from mid-2028. Recycling the various components of renewable energy systems presents different challenges. While some materials such as copper are already easy to recycle, there are deficits in the recovery of other materials such as indium or fiber composites.
The increase in the volume of waste from PV modules and wind turbines will rise considerably in the coming years due to the technical lifespan of these systems, making it necessary to set up appropriate take-back systems. The disposal and recycling shelves vary depending on the technology: PV modules are subject to the ElektroG with shared product responsibility; operators of wind turbines must make provisions for dismantling.
The vehicle population in Germany reached a total of 48.8 million cars and 3.6 million trucks in 2023. On average, a household has around 1.1 cars at its disposal. Two trends are currently discernible: an increasing proportion of large, heavy cars and SUVs in new registrations and the increasing integration of electronic devices in vehicles. The German Association of the Automotive Industry (VDA) reports that around 30 percent of the materials used in new cars come from secondary raw materials. Alternative mobility models such as car sharing have so far played a subordinate role, although there were over 5.5 million participants at the start of 2024.
Looking to future developments, it is expected that zero-emission vehicles will make up the majority of passenger cars and light commercial vehicles from 2035. This raises questions about the longevity and recycling of batteries, as there is no adequate repair network for many electric vehicle-specific parts and there are no ecologically sustainable repair instructions. Forecasts on the return volume of used batteries are highly uncertain and increase the risk of circular business models.
Important regulations are already being prepared at a political level. The new EU Battery Regulation (EU) 2023/1542 was published at the end of July 2023 and focuses for the first time on the entire life cycle of batteries with minimum recycling targets. The EU Commission has also presented a proposal to revise the End-of-Life Vehicles Directive in order to improve partial recycling and the circular design of vehicles.
The objectives include increasing the recyclability of cars and establishing a legitimate market for used spare parts. To meet these goals, manufacturers must be required to develop comprehensive circular strategies. Initiatives such as a circular battery design platform should be implemented to promote both second-life use and efficient recycling.
In addition, the aim is to increase transparency regarding the whereabouts of end-of-life vehicles and to avoid illegal recycling and exports. Overall, this strategy aims not only to secure recycling quotas in quantitative terms, but also to provide high-quality raw materials through suitable separators and further developments in waste management.
In 2020, 584.6 million tons of aggregates were produced in Germany for the construction industry, of which only 13 percent were covered by recycled building materials. Despite an annual construction waste volume of around 220 million tons, the potential for the recovery of secondary raw materials remains largely untapped. Excavated soil in particular contributes significantly to the volume of waste, with a considerable proportion being disposed of without prior processing. The main obstacles to resource-conserving and recyclable construction methods are insufficient information about the materials used, a lack of awareness of reusability and legal uncertainties regarding the quality of secondary raw materials.
The lifespan and use of electrical and electronic appliances has fallen sharply in recent years, while the volume of newly introduced appliances has risen continuously. In 2022, this amount reached an impressive 3.26 million tons, which represents a doubling in just ten years. Despite the legal requirements, only 38.6% of waste electrical and electronic equipment (WEEE) was collected in 2021 - far below the statutory target of 65%. These inadequate collection rates lead to significant losses in the recovery of valuable secondary raw materials.
Numerous factors hinder the implementation of a circular economy for electrical and electronic devices, including prevailing market conditions, high repair costs and design-related barriers to maintenance and repair. These challenges are further exacerbated by consumers' desire for new products, defective devices and software obsolescence. Current regulations such as the EU Ecodesign Regulation (ESPR) aim to promote material efficiency and reusability and require manufacturers to comply with certain design and recyclability standards.
Germany is heavily reliant on imports to meet its demand for metals, while at the same time many of these metals are needed for the transformation to a climate-neutral economy. A sustainable circular economy can play an important role here, as high-quality recycling can secure the availability of raw materials and be more environmentally friendly than primary production. For example, recycling copper from cables has a significantly lower carbon footprint compared to production from construction waste.
There is also a growing focus on ship recycling, particularly as a significant proportion of the German seagoing fleet is ageing. In the next five years, a total of 800 ships will be 25 or more years old. The use of steel and other materials in shipping offers potential for recycling, and the cradle-to-cradle principle is part of existing coalition agreements.
Challenges include the current insufficient consideration of "design for recycling" approaches and the lack of specific information on material compositions. The EoL (end-of-life) recycling rate, which describes the percentage of a product or material that is recycled at the end of its life, is often less than 1 percent for technology metals. These low values represent a significant challenge for the efficient recovery of valuable resources and highlight the urgent need for improved recycling methods in this area.
In addition, high sorting costs and a lack of economic profitability can hamper progress in metal recycling.
However, the regulatory framework is improving: various European and national initiatives, such as the EU Ship Recycling Regulation or new recycling regulations for batteries, aim to increase the proportion of recycled raw materials and better manage waste.
Plastics are present in almost all sectors of the economy and are used in numerous products, including vehicles, buildings, electronics and medical applications. The pressure to act to promote a circular economy in the plastics sector results from the low circularity and increasing consumption. In Germany, plastics production in 2021 was around 21.1 million tons, with only 1.65 million tons consisting of recyclates. Of the 5.7 million tons of plastic waste produced each year, 64% is incinerated and only 35% is recycled.
The majority of plastics are used in the construction, packaging, automotive and electronics industries. Without measures to reduce plastic production, CO2 emissions could amount to around 56 gigatons by 2050 - which corresponds to around 10-13 percent of the remaining CO2 budget for the 1.5°C target. The chemical industry faces the challenge of achieving a fossil-free raw material base; prospects include the increased use of plastic waste as recyclates and renewable raw materials.
Although public procurement can contribute to environmental relief through its great market power, there are considerable deficits in the operationalization of general sustainability criteria. The majority of current procurement processes are linear and strongly oriented towards the purchase price without taking long-term life cycle costs into account. The implementation of circular procurement requires a profound change in public sector processes and the development of strategic procurement management.
Product design is crucial for creating circular and low-resource life cycle processes. Current challenges include economic framework conditions, short-term costs and the need for sound methodologies to measure efficiency measures.
Companies are facing difficulties with the availability of secondary materials, which brings with it uncertainties regarding investments in recycling technologies. At national and European level, various regulations such as the EU Ecodesign Directive and the Circular Economy Act have been established to promote circularity.
Targets have been defined for the period up to 2030, including the promotion of digital technologies to improve resource efficiency in small and medium-sized enterprises and the development of practicable methodologies for measuring circular processes.
Measures required at federal or EU level include promoting investment in recycling initiatives, supporting the economy with digital solutions and market transparency for various production routes. By expanding existing support programs, companies should be encouraged to integrate innovative approaches to implementing circular production strategies.
Work is also underway to strengthen product responsibility in order to set standards for secondary raw materials. Circularity is to be systematically anchored in corporate strategies in future.
The European Community Council Directive of July 15, 1975, also known as the Waste Framework Directive (WFD) (Directive 75/442/EEC), was in force until 2006 and represented a decisive step in waste policy. It emphasized the fundamental need to reduce the generation of waste and to make optimal use of waste through reuse and recycling. These principles are still central to the development of sustainable strategies for dealing with waste and form the basis for further legal measures to promote a resource-conserving economy.
The EU Waste Framework Directive (Directive 2008/98/EC amended by Directive 2018/851/EU, in consolidated version of 18.02.2024) now pursues the goal of a circular economy and requires Member States to promote sustainable production and consumption models. Measures include improving the durability and reparability of electrical appliances, combating food waste and information campaigns.
The adjustments made in 2018, which had to be implemented by July 5, 2020, reflect a growing political awareness of the environmental challenges we face in a market that continues to be heavily influenced by disposable products and a throwaway mentality. These developments provide a significant opportunity for companies to actively participate in the transformation and develop innovative solutions for a more sustainable future.
In March 2022, the European Commission presented an action plan for the circular economy to accelerate the transition to a green economy in line with the EU's goal of being climate neutral by 2050. The planned measures include extended regulations for eco-design, strengthening consumer rights and a strategy for sustainable textiles.
In November 2022, a new regulatory package for packaging and a proposal for the certification of CO₂ emissions were published at European level. This was followed by further measures in March 2023, which included, in particular, regulations on environmental claims by companies and the right to repair products. In July 2023, the Waste Framework Directive was revised with the aim of promoting the sustainable management of textile and food waste.
In October 2022, the Parliament also adopted new regulations for persistent organic pollutants (POPs). The European Parliament's latest amendments include lower permitted levels for several hazardous substances and new rules on the disposal of waste with high concentrations of pollutants. These regulations are intended to increase the protection of the environment and human health.
Persistent organic pollutants are long-lasting chemicals that accumulate in the environment and can cause damage to ecosystems as well as pose health risks to humans. They are spread via air, water and even animal migration. These chemicals are found in numerous everyday products and pesticides and can cause serious health problems, including cancer risks or reproductive disorders, if exposed to high levels.
The handling of waste containing such pollutants requires careful regulation of disposal to prevent their return to the environment. Possible disposal methods include incineration or permanent storage in special landfills. In certain cases, however, recycling is possible if the pollutant content is below a specified threshold.
Finally, significant progress was also made in April 2024 with the introduction of a Europe-wide certification system for CO₂ removals, which guarantees precise recording of carbon sequestration activities and ensures long-term storage.
CO₂ removal refers to measures to remove carbon dioxide from the atmosphere and store it permanently. This can be achieved through various approaches, such as permanent storage in stable forms, climate-efficient agriculture to improve CO₂ binding in soils and the storage of CO₂ in long-lasting products.
This certification guarantees precise measurement of extraction activities and at the same time promotes other environmental goals such as biodiversity and the circular economy. The law covers different CO₂ extraction methods, but requires that they can store carbon for centuries. In addition, products must sequester carbon for at least 35 years, while land management activities should be maintained for at least five years.
At the same time, positive side effects on biodiversity and ecosystems are required for soil management measures. A transparent EU register should also help to prevent fraud and double counting.
Nowadays, the importance of sustainability in product development and design is constantly increasing. To support companies in implementing environmentally friendly practices, the European Union (EU) has introduced a number of regulations specifically aimed at promoting sustainable products. This article provides a detailed analysis of the most important product-related EU regulations, their objectives and the associated requirements.
The European Union is increasingly facing challenges related to the security and sustainability of raw materials. Critical raw materials play a central economic role for Europe, but are also highly vulnerable to disruptions in supply. These commodities are facing increasing global demand driven by the decarbonization of the economy. For example, the EU's demand for rare earths is forecast to increase six-fold by 2030 and seven-fold by 2050. Demand for lithium in the EU is expected to increase twelve-fold by 2030 and twenty-one-fold by 2050. Currently, Europe is heavily dependent on imports, often from a single third country, and recent crises such as the COVID-19 pandemic have highlighted the EU's strategic dependencies. For this reason, the Critical Raw Materials Act (CRMA) was passed in December 2023.
The Critical Raw Materials Act focuses on reducing the EU's dependence on a small number of third countries and promoting the recycling and recovery of critical raw materials. The Critical Raw Material Act (CRMA) provides for the EU to develop its own production capacities in order to secure 10 percent of the demand for strategic raw materials and 40 percent for processed products. This is an important step towards a more sustainable industrial policy that not only protects the environment, but also creates strategic independence for the EU. The promotion of recycling processes and recycling technologies also supports a circular economy that makes a significant contribution to conserving resources.
Another milestone in the promotion of sustainable products was reached with the extension of the Ecodesign Directive. It now goes beyond energy-related products and includes the development of digital product passports. These passports should contain all relevant information about the life cycle of products in order to promote transparency and sustainable decisions along the entire value chain. The new rules, developed in cooperation with the Parliament and the Council, were adopted in April 2024 to expand the market for sustainable and resource-efficient products in Europe.
The "Right to Repair" Directive (Directive 2024/1799), which was published in the Official Journal of the European Union on July 10, 2024 and thus became legally binding, represents a significant step forward in the area of consumer rights. This groundbreaking regulation aims to facilitate access to repairs of existing products for consumers and make them more cost-efficient. This not only reduces the burden on consumers, who are no longer forced to continually purchase new products, but also contributes significantly to reducing the environmental impact of waste.
The promotion of repairs instead of new products contributes to a more sustainable use of resources and thus actively supports the principles of the circular economy. Ultimately, the directive strengthens both consumer rights and environmental protection, which is crucial for a sustainable society.
To increase consumer confidence in sustainable products and reduce misleading environmental claims, the EU introduced new consumer rules in January 2024. These rules aim to promote the green transition by counteracting unfair practices and providing improved information (also known as the "Empowering Consumer Directive", Directive 2024/825). These address the practice of greenwashing and aim to provide consumers with greater clarity on the durability and environmental performance of products. This is a critical step towards a more transparent market where consumers can make informed choices.
These EU legislative developments mark significant progress towards more sustainable products and processes. By promoting independence from raw materials, increasing transparency in the life cycle of products and offering stronger consumer rights protection, the EU is creating a framework that enables companies and consumers to actively shape a more sustainable future.
The principles of the circular economy aim to reduce the consumption of resources, minimize waste and reuse materials within a closed system. In order to create an economic structure based on circular principles, all stages of the value chain - from planning to production to the end consumer - must be taken into account. The European Commission's action plan highlights seven key areas that are of great importance for the realization of a circular economy: Plastics, textiles, electronics, food, water and nutrients, packaging, batteries and vehicles, and the construction and housing sectors. The transformation to a circular economy is complex and requires cross-sectoral efforts and cooperation. Companies, governments and consumers are equally challenged to effectively drive the implementation of these principles and achieve a positive impact on the environment and society.
Plastics play a central role in the modern economy, but are also a significant environmental problem, particularly in relation to microplastics. The European Strategy for Plastics in the Circular Economy supports the phasing out of microplastics. This strategy aims to design plastics in a way that makes them easier to recycle and minimizes their environmental impact.
The textile industry is one of the most resource-intensive sectors, particularly in terms of raw material and water consumption. Currently, less than 1% of the textiles produced are recycled. In March 2022, the EU presented a strategy for sustainable and circular textiles. This initiative aims to ensure that all textile products placed on the market are durable, recyclable and free from harmful substances by 2030.
Electrical and electronic waste is the fastest growing waste stream in the European Union. To counteract this problem, the EU is pursuing a strategy of supporting reusability and reparability in order to extend the service life of electronic devices. The principle of the circular economy should therefore also be firmly established in the field of electronics and information and communication technology (ICT).
An estimated ten percent of food produced in the EU is lost or wasted every year. The "From farm to fork" sustainability strategy aims to reduce food waste by half by 2030. The efficient use of water and nutrients also plays a key role in sustainable agriculture and food production.
Packaging waste is continuously increasing in Europe. In 2021, each person in the EU generated an average of 189 kg of packaging waste (in Germany even 236 kg of waste per person). To counteract this, the Parliament, in cooperation with the Council, approved a revision of the regulations on packaging and packaging waste in April 2024.
The EU regulations on packaging and packaging waste regulate both the design of packaging and the disposal of packaging waste. Their aim is to harmonize national measures and promote waste prevention, reuse, recycling and recovery. The regulations, which were originally introduced in 1994 and amended in 2018, are now being revised as part of the EU initiative to create a circular economy by 2050. In November 2022, the Commission proposed new amendments, which were approved by the Parliament and Council in April 2024.
Sustainability in battery production is essential for the energy transition, as batteries play a key role in this. New regulations aim to produce environmentally friendly batteries and at the same time comply with social and ecological standards in the extraction of raw materials. Since 2006, the EU Batteries Directive (Directive 2006/66/EC) has regulated the handling of batteries and waste batteries, but the changing market requires a modernization of the legal framework. The demand for batteries is expected to increase 14-fold by 2030, particularly due to the boom in electromobility. This increase will lead to an increased demand for raw materials, the environmental impact of which must be minimized accordingly.
The construction sector contributes significantly to environmental pollution and is responsible for more than 35 percent of the total waste generated in the European Union. Greenhouse gas emissions resulting from the extraction of raw materials, the manufacture of construction products and the construction and renovation of buildings are estimated to account for 5 to 12 percent of total national emissions. By increasing material efficiency in a targeted manner, it is possible to save up to 80 percent of these emissions.
To promote sustainability in this area, the EU is focusing on extending the lifespan of buildings, setting reduction targets for the carbon footprint of building materials and introducing minimum requirements for resource and energy efficiency. An update to the Energy Performance of Buildings Directive (Directive 2024/1275) was adopted by Parliament in March 2024 and came into force on May 28, 2024 in order to achieve a climate-neutral building sector by 2050.
With an annual volume of over 2.1 billion tons of waste, waste management is a crucial aspect of the circular economy within the EU. In 2022, more than 32 million tons of waste were exported from the EU to third countries, with the majority consisting of ferrous metals.
New, stricter regulations for waste transportation were adopted in February 2024. The regulation on waste shipments (Regulation 2024/1157) was published on April 30, 2024 and has been in force since May 20, 2024. The export of plastic waste to countries outside the OECD is prohibited. The transportation of waste for disposal in other EU countries will only be permitted in exceptional cases.
Circular economy is an innovative economic model that aims to use resources efficiently and minimize waste. In this context, best practices are essential to help companies implement sustainable practices. This article highlights the key principles and strategies of circular economy and their practical application.
The implementation of the above principles requires targeted measures:
Circular economy is not just a trend, but a necessity for a sustainable future. Implementing best practices enables companies to not only be economically successful, but also to have a positive impact on the environment. By actively participating in the transformation to a circular economy, companies are helping to create a more sustainable business environment.
Consumers play an essential role in this model. With a few simple but effective measures, you can implement the principles of the circular economy in your everyday life and thus actively contribute to a sustainable future.
One of the most effective ways to contribute to the circular economy is through conscious consumption. Before every purchase, consider whether the product is really necessary and whether there is a durable and sustainable alternative. Focus on quality rather than quantity to extend the lifespan of products. Consuming less reduces the pressure on resources and reduces waste.
Use products for as long as possible and try to repair defective items instead of replacing them immediately. Many cities offer repair cafés or workshops where you can find support in repairing your products. Reusing items, whether through upcycling or simple repairs, helps to conserve resources and reduce waste.
When buying products, pay attention to recyclability and the possibility of returning materials to the economic cycle. Separate your waste conscientiously and use municipal recycling initiatives. Find out about local collection points for special waste such as electronic waste, batteries or textiles.
The sharing economy promotes access to products through shared use instead of individual ownership. Use platforms or neighborhood initiatives to share or swap items such as tools, vehicles or household appliances. This reduces the consumption of resources and promotes social exchange.
Give preference to companies and products that support the principle of the circular economy. Look out for certificates such as the Blue Angel or the EU Ecolabel, which indicate sustainable manufacturing processes. Find out about manufacturers' efforts to conserve resources and avoid waste.
By rethinking their purchasing decisions and consuming more consciously, consumers can make a significant contribution to implementing the circular economy. Reducing, reusing, sharing and supporting sustainable products not only reduces the impact on the environment, but also makes individual lifestyles more sustainable. Every small step counts and together these measures can have a big impact.
The circular economy offers a promising approach to sustainable resource use and waste minimization. In contrast to the linear economy, the circular economy relies on the reuse, repair and recycling of materials to reduce resource waste and minimize environmental impact. Key elements are product design that enables full recycling from the outset, as well as innovative business models based on sharing and reprocessing.
The transition to a circular economy not only promotes resource conservation, but also contributes to economic growth. Companies benefit from cost savings and new market opportunities, while at the same time reducing dependence on natural raw materials. Consumers benefit from more durable and sustainably produced goods.
Looking ahead, the importance of the circular economy will continue to grow, as the political framework is increasingly moving towards sustainability and resource conservation. Technological innovations and digital solutions will play a key role in further improving the efficiency and creative power of the circular economy. In the future, we can expect to see a growing global trend towards the integration of the circular economy in a wide range of economic sectors, which promises both ecological and economic benefits.
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Everything you need to know about the circular economy
Circular economy, also known as the circular economy, is an economic model that aims to maximize the life cycle of resources. Rather than using the traditional linear method of "take - make - dispose", the circular economy promotes practices such as reuse, repair and recycling. The goal is to keep raw materials in a closed loop to minimize resource consumption and reduce waste.
The importance of the circular economy lies in its ability to reduce the use of resources and dependence on finite raw materials. It offers solutions to challenges such as the growing consumption of raw materials, environmental pollution and the depletion of natural resources. It also contributes to the achievement of global sustainability goals and ensures sustainable economic development.
The circular economy addresses several global challenges, including:
Earth Overshoot Day marks the day of the year on which humanity has used up all the natural resources that the earth can regenerate within a year. It highlights the fact that we consume more than the planet can sustainably provide. Implementing circular economy practices can help to push this day further into the future by reducing resource consumption.
By increasing the use of reusable materials and promoting recycling practices, the circular economy can reduce plastic consumption. This reduces the amount of plastic waste entering the environment and its negative impact on ecosystems, especially the marine environment.
The main objectives are:
Closed-loop systems are at the heart of the circular economy and aim to minimize material consumption by eliminating waste and continuously reusing materials. These systems require close collaboration between all actors in the supply chain to use resources efficiently and promote sustainable practices.
Yes, ISO 59004:2024, for example, provides international standards that support companies in implementing circular economy principles. These guidelines help companies to operate more sustainably and minimize their environmental impact.
By implementing the circular economy, companies can reduce their costs by using fewer raw materials and reducing waste. They can also develop new markets and business models, for example in the areas of repair, maintenance and recycling.
The challenges include the need to redesign existing business models, the need for technological expertise and investment in new technologies. Implementation also requires close cooperation along the entire value chain.
The circular economy offers a sustainable solution to many current and future environmental and economic problems and is therefore of increasing importance to businesses and societies worldwide. By promoting sustainable practices, it helps to protect our natural resources while enabling economic opportunities.
The linear economy, also known as the "take-make-waste" model, is a traditional economic system in which resources are extracted, converted into products and disposed of after use. This model is inefficient and resource-intensive, leading to significant waste problems and environmental pollution. It ignores the finite nature of natural resources and is therefore unsustainable.
Recycling is the process of collecting waste materials and transforming them into new materials. It goes beyond the simple waste disposal approach by considering waste as a potential resource that can be reintroduced into the production cycle. However, recycling is often associated with challenges such as efficiency losses and energy use, and is sometimes limited by 'downcycling', where materials are used for inferior applications.
The circular economy is a holistic approach that aims to eliminate waste and environmental pollution through closed loops in the production and use phase. It integrates the 3R model (Reduce, Reuse, Recycle) and expands it with additional principles such as Refuse, Rethink, Repair, Refurbish, Remanufacture, Repurpose and Recover. This strategy promotes the systematic reuse, repair and redesign of products and materials within the economic cycle, while recycling is mainly limited to the reuse of materials.
The circular economy reduces dependence on raw materials, minimizes environmental impact and creates economic and social benefits. It can reduce greenhouse gas emissions, create new jobs, promote innovation and strengthen competitiveness. In addition, the circular economy enables the sustainable use of resources and increases efficiency in the production process.
The 3R model (Reduce, Reuse, Recycle) is an important step towards a more environmentally friendly economy, but does not address the fundamental systemic problems of the linear economy. It mainly deals with waste reduction and reuse, but rarely merges the entire product and value chain into a closed loop. The circular economy, on the other hand, takes a comprehensive approach and considers the entire life cycle of products, including design, production, consumption and disposal.
The introduction of the circular economy faces several challenges, including technological barriers such as the need for significant investment in new technologies and the interoperability of existing systems. Economic barriers include high initial investments and regulatory uncertainties. Cultural barriers require a paradigmatic shift in business strategy and consumer habits.
The Closed Substance Cycle Waste Management Act (KrWG) is the legal basis in Germany for promoting a circular economy. It aims to prevent waste and reduce its quantity and harmfulness. In addition, waste should be recycled or used to generate energy in order to conserve natural resources and protect the environment.
The NKWS pursues three central goals:
Digitalization is crucial for the implementation of the circular economy as it creates transparency in the value chain. Technology solutions such as the digital product passport enable materials to be tracked and analyzed, promote sustainable consumption and support reuse initiatives.
The EU aims to minimize the consumption of resources, reduce environmental pollution and promote the sustainability of products. The circular economy is a central building block in the EU's strategy to become climate-neutral by 2050 and establish a sustainable economy.
The EU promotes the circular economy through a variety of strategies and directives, such as the Waste Framework Directive and the Circular Economy Action Plan. These include measures such as eco-design, the reduction of single-use products and the promotion of recycling.
The EU Waste Framework Directive (Directive 2008/98/EC, amended by Directive 2018/851/EU) aims to promote a circular economy. It obliges Member States to prevent waste, recycle and extend the life of products. Measures include promoting the reparability of products and combating food waste.
The 2018 revision, which had to be implemented by July 2020, included a stronger emphasis on recycling, the creation of information campaigns on waste prevention and measures to combat the throwaway mentality. These adjustments reflect a growing awareness of the urgency of environmental challenges.
The extension of the Ecodesign Directive goes beyond energy-related products and promotes the use of digital product passports, which provide information on the entire life cycle of a product. This supports transparent and sustainable decision-making along the value chain.
The European Union has introduced several important regulations to support the development and promotion of sustainable products:
The Critical Raw Materials Act (CRMA) has the following main objectives:
The new EU consumer regulations: