2025 End-of-Year Forecast: Circular Economy, Clean Industrial Deal, Producer Responsibility - Part 2

Consultation Opens on Circular Economy Act

The Circular Economy Action Plan is part of the European Union's (EU) approach to creating sustainable growth for Europe. Passed in March 2020, the plan will address the entire life cycle of European products, including their design and disposal.

The framework for the plan consists of a series of policies designed to support a sustainable, circular economy, including the Ecodesign for Sustainable Products Regulation (ESPR), a directive on the repair of goods, and a directive on providing consumers with more information about sustainability, durability, and repairability at the point of sale.

“Europe's circular agenda has moved from vision to verification,” said Cassidy Spencer, regulatory research analyst at 3E. “The next two years won't be about a single 'go-live' date but about building evidence chains that withstand market surveillance. That means product-level data models for materials and durability, supplier attestations linked to batches, and auditable chains of custody into recovery outlets.”

On August 1, 2025, the Europea Commission launched a call for evidence for the Circular Economy Act, which the commission claims will facilitate the free movement of products, secondary raw materials, and waste. The aim of the act is also to increase the supply of and demand for secondary raw materials and waste by doubling the circularity rate of materials and positioning the EU as a world leader in the circular economy by 2030.

The Have Your Say portal is open for public comment until November 6, 2025, with the act due for adoption in 2026. Meanwhile, companies should begin preparing for the competitive advantages a circular economy will support.

“Treat EPR (extended producer responsibility), design-for-circularity, and recycled-content claims as product requirements in your PLM/ERP (product life-cycle management/enterprise resource planning), not as after-the-fact reports,” said Spencer. “The organizations that operationalize common taxonomies, machine-readable labels, and recycler contracts will receive approvals faster and convert compliance into cost advantage.”

Clean Industrial Deal Gathers Steam

The Clean Industrial Deal (CID) meets three of the EU's biggest challenges: climate change, competitiveness, and building a resilient economy. It looks to turn decarbonization into an opportunity for growth by boosting production in energy-intensive industries, such as steel and chemicals, and in the clean-tech sector. It will focus on an affordable energy action plan to accelerate renewable energy, mobilize more than €100 billion for clean manufacturing in the EU, promote product circularity, and support a skilled workforce with quality jobs.

The European Commission unveiled the CID on February 26, 2025, the same day it released the first details of the Omnibus proposal to simplify the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy. As such, the CID focuses on simplification of rules and quicker approvals for permits, which will reduce paperwork for small business and provide easier access to funding. MEPs have also pushed for carbon storage - activities that remove and store carbon pollution from the atmosphere - for industries in which emissions reduction is difficult.

There are upcoming initiatives for the different areas of focus throughout the remainder of 2025 and into 2026, including the following:

Access to Affordable Energy and Infrastructure

• Industrial Decarbonisation Accelerator Act
• Revision of the Energy Taxation Directive

Lead Markets: Boosting Clean Supply and Demand

• Communication and legislative proposal on greening corporate fleets
• Revision of Public Procurement Directives to mainstream the use of non-price criteria

Public and Private Investment

• Industrial Decarbonisation Bank
• Flagship call under Horizon Europe

Powering Circular Economy: Secure Access to Materials and Resources

• Circular Economy Act
• Green VAT (Value Added Tax) Initiative

Global Markets and International Partnerships

• Comprehensive CBAM (Carbon Border Adjustment Mechanism) review
• Guidelines on Foreign Subsidies Regulation

Flagship Actions – Skills and Quality Jobs for Social Fairness

• Quality Jobs Roadmap
• Skills Portability Initiative

There are also upcoming sector-specific plans, including the following:

• Industrial Action Plan for Automotive Sector
• Chemicals Industry Package
• Sustainable Transport Investment Plan

EU Battery Regulation Comes Into Force

Over the past two years, the European Union has seen considerable activity in the area of EPR. In 2023, the EU Battery Regulation (Regulation (EU) 2023/1542) was adopted, and at the beginning of 2025, the new EU Packaging Regulation followed.

Both are framework regulations and are directly applicable across member states. However, their practical implementation will take place through a series of gradually published implementing acts. This results in different compliance deadlines, making it increasingly challenging for affected economic operators to maintain a clear overview.

Staying up to date with these developments is essential to ensure continued compliance and avoid regulatory risks.

Battery Regulation

Although the new Battery Regulation was published in 2023, the previous Battery Directive 2006/66/EC remained in force. This changed on August 18, 2025. From this date, the Battery Directive is repealed, and the Battery Regulation is the primary legislative instrument for batteries and waste batteries in the EU.

Here is an overview of all the new rules that came into force on August 18, 2025:

• Labeling Requirements

All batteries placed on the EU market must be marked with a symbol for separate collection. The “CE” marking will also be required to demonstrate conformity with the regulation. There will be additional provisions in future implementing acts to establish harmonized specifications for labeling formats, dimensions, and positioning.

• Waste Battery Management Obligations

Manufacturers, importers, and other relevant actors must comply with the waste battery management rules. These include obligations concerning the collection, treatment, and reporting of waste batteries.

• Collection and Treatment Methodologies

The commission is expected to adopt implementing acts, defining assessment methods and operational conditions for evaluating the collection, preparation for re-use, and recycling of waste batteries. These measures are intended to support harmonized implementation across member states.

• EPR Adjustments

Member states must ensure that existing EPR schemes, especially those established prior to July 4, 2018, comply with updated requirements under Article 8a(7) of the Waste Framework Directive (Directive 2008/98/EC). This includes clarifying financial responsibilities, establishing clear performance indicators, and ensuring appropriate oversight mechanisms.

• National Enforcement Measures

Member states must establish and communicate penalties applicable to infringements of the regulation. These penalties must be effective, proportionate, and dissuasive, in line with the requirements.

Postponement of Battery Due Diligence

The EU Battery Regulation introduces due diligence obligations for economic operators involved in the battery supply chain. These obligations were originally scheduled to apply from August 18, 2025. However, on July 18, 2025, the Council formally adopted a legal measure to postpone the application of the due diligence requirements. The decision effectively defers the implementation date by two years, moving the start of the obligations to August 18, 2027. This postponement is intended to provide additional time for the development of supporting guidance and implementation mechanisms, as well as to align the battery due diligence rules with the broader regulatory framework under the Corporate Sustainability Due Diligence Directive (CSDDD).

As the EU Battery Regulation continues its phased entry into force, further obligations will become applicable in the final quarter of 2025.

Notification of Competent Authorities

By November 18, 2025, member states must notify the European Commission of the names and contact details of the competent authorities responsible for enforcing the provisions on battery waste management. The notification must cover both national and regional authorities tasked with implementation and oversight under the regulation. This measure is intended to ensure clarity in responsibilities and enable cross-border cooperation, particularly in areas such as waste shipments, enforcement, and compliance monitoring.

Recycling Efficiency Targets

As of December 31, 2025, recycling facilities must comply with the first phase of minimum efficiency thresholds for the treatment of different battery chemistries. The required recycling efficiencies are:

• Lead-acid batteries: 75% by average weight
• Lithium-based batteries: 65% by average weight
• Nickel-cadmium batteries: 80% by average weight
• Other battery types: 50% by average weight

Operators will need to demonstrate compliance through documented calculation methods and reporting structures that are expected to be clarified through future implementation measures.