The European Commission has set out its plans to pursue a circular economy for plastics in 2026, such as proposing a Circular Economy Act, enforcing end-of-life criteria for mechanical recyclate, and introducing new customs codes for imports.
Of the approximately 58 million tonnes of plastic produced in the EU, the Commission says that only half is collected and sorted, and around 13% is recycled into new plastics.
Between 2010 and 2024, the share of recycled materials in the EU’s economy reportedly increased by only 1.5% – leaving Europe far behind its target to reach a 24% circularity rate by 2030.
The EU’s installed plastics recycling capacity apparently reached 13.2 million tonnes in 2023, but steadily declining growth rates had fallen by 4% from the previous year; and the Commission expressed fears that this would culminate in a net decrease of around one million tonnes of capacity by the end of 2025.
Even now, the recycling sector still struggles under high energy costs, low and unpredictable virgin plastic prices, and competition from cheap imports, which the Commission alleges are ‘often’ virgin plastics falsely advertised as recycled plastics.
Concerns are growing that the objectives of the Competitiveness Compass, the Clean Industrial Deal, and RESourceEU will not be realized.
“Each material stream faces specific barriers that must be addressed through tailored measures,” the Commission says in its communication. “We need coordinated action at local, national and EU levels to remove those barriers and unleash the full potential of the circular economy.”
If the appropriate circular solutions are introduced, the Commission anticipates that the plastics value chain could reduce its emissions by around 80 Mt of CO2 equivalent and improve its trade balance by €18 billion per year by 2050.
Therefore, it is taking short-term steps to overcome a series of key barriers across the continent.
“These measures represent a concrete step towards a more integrated market for plastics, aim to ensure that European recyclers can play their role in scaling up recycling under conditions of regulatory certainty and a level playing field, and seek to stimulate innovation and investment,” the communication reads.
Market fragmentation
Industry estimates suggest that, without end-of-waste criteria for plastics, the EU’s plastics recycling sector faces additional costs of approximately €120 million every year, equating to around €260,000 per recycler.
According to the Commission, the European plastic industry foresees planning investments of up to €8 billion in chemical recycling over the next few years, but has asked for a clearer regulatory framework to ensure its success.
In line with the Waste Framework Directive, the Commission is introducing an implementing act that sets out end-of-waste criteria for mechanically recycled plastics. Under the new rules, recycled plastics will no longer be classified as waste – a move expected to help recyclate pass freely between Member States and establish a single market for recycled plastics.
In turn, the harmonized criteria are anticipated to lift the administrative burden on recyclers, especially SMEs, and ensure a ‘stable supply’ of high-quality recyclates across the continent.
Furthermore, the Commission will introduce mass balance allocation rules: namely, the share of chemical recycling outputs that can contribute towards recycled content objectives, and harmonized requirements for the calculation, verification, and reporting of chemically recycled content under the Single-Use Plastics Directive (SUPD).
These rules are expected to help industry players comply with recycled content targets – for example, the SUPD’s minimum of 25% recyclate in PET bottles by 2025 and 30% in all beverage bottles by 2030 – and improve legal certainty for chemical recycling investments.
The Circular Plastics Alliance
First launched in December 2018 under the European Strategy for Plastics, the Circular Plastics Alliance will be relaunched in 2026. This initiative brings together stakeholders from across the plastics value chain, initially with the shared goal of implementing 10 million tonnes of recycled plastics into new products by 2025.
This time around, the Alliance will propose a joint workplan for the upcoming year: this will involve an industry-led analysis of the EU’s plastics industry at present, which will then become a roadmap for addressing key challenges. Other deliverables will underpin the prioritization of market surveillance activities, the stimulation of market demand, and the development of customs codes for recycled polymers.
Market fairness
The Commission observes that its initial efforts to establish a market for recycled plastics within the EU have led to a rise in imported feedstock and plastic products. Under current customs codes, virgin plastics and recycled products are not differentiated in sufficient detail for authorities and operators to thoroughly monitor or verify plastic imports.
In response, the newly created Import Surveillance Task Force and its dedicated monitoring system were introduced in March 2025 to oversee certain industrial chemicals. Producers and associations operating in the EU are encouraged to review the results and offer additional market intelligence and data to inform the development of further protective measures.
The upcoming amendment of Commission Regulation (EU) 2022/1616 is expected to introduce stricter requirements for compliance documentation when companies work with recycled plastics imported into the EU, particularly in food contact applications like PET bottles. Recyclate produced within the EU or imported from abroad will be held to the same levels of compliance; the Commission plans to conduct audits on recycling installations outside the EU and help control laboratories deploy new analytical methods to verify that imports described as recycled PET are genuine.
These amendments to the Regulation are also set to form the basis of specific customs codes for recyclates – helping Member States control plastic imports and levelling the playing field for domestically produced and imported materials, all while offering more legal certainty for producers and recyclers. Separate customs codes will apparently be developed for recycled polymers relevant to other sectors.
At the same time, exports of plastic waste to non-OECD countries will be banned as of November 2026; this is hoped to relieve the environmental and health and safety burdens of excess plastic pollution in other nations.
The Commission plans to monitor the export of plastic waste to OECD countries and, by the second quarter of 2026, assess whether the waste is managed sustainably in line with the Waste Shipment Regulation. It will pay particular attention to countries importing ‘significant’ volumes of plastic waste from the EU.
Investment and innovation
The Commission plans to keep supporting research and development through its Horizon Europe funding programme. Reportedly, the initiative provided €115 million to bolster solutions like circularity-minded plastic food packaging, develop bio-based alternatives for various applications, and remove hazardous substances from post-consumer plastic waste between 2021 and 2024.
Its Innovation Fund is also set to bring ‘highly innovative’ solutions to market, claiming to have awarded around €300 million under relevant calls for plastic product proposals to date.
Meanwhile, the Commission adopted the proposal for a Regulation on Accelerating and Streamlining Environmental Assessments in December 2025. It is expected to harmonize, simplify, and accelerate permitting procedures for strategic sectors like waste prevention projects, separate collection, reuse and preparation for reuse, and recycling – all of which is hoped to drive investment in recycling and circularity infrastructure.
Looking ahead, a pilot will be introduced under the Competitiveness Coordination Tool. Focused on Trans-Regional Circularity Hubs, the pilot expects to align with the Clean Industrial Deal by establishing synergies and economies of scale in circular systems like recycling, thus securing the availability of secondary raw material supply in the EU.
In doing so, it is set to unite manufacturers, recyclers, and waste operations across strategic value chains to support strategic downstream industries, lessen dependence on third countries, and improve the EU’s strategic autonomy.
The Commission also plans to work with the Joint Initiative on Circular Economy and the European Investment Bank to pursue a circular economy; this will involve the European Investment Bank introducing a dedicated Circular Economy Orientation this year, as introduced in the EIB Group Climate Bank Roadmap Phase 2 (2026-2030).
In line with ongoing developments in environmental-economic accounting – for example, the integration of circular economy metrics within the System of Environmental-Economic Accounting (SEEA) – the Commission will study the macro-economic and macro-financial indicators of EU growth and competitiveness under the circular transition. Its findings are expected to identify investment gaps and opportunities, inform monitoring efforts, and unite all relevant data providers and partners from the EU and beyond.
Last but not least, Member States are encouraged to bridge the investment gap by making use of the Clean Industrial Deal State Aid Framework; the Guidelines on State aid for climate, environmental protection, and energy; the EU General Block Exemption Regulation, and more.
These efforts will be backed by the ongoing implementation of the EU Ecolabel Regulation, the Ecodesign for Sustainable Product Regulation, and Digital Product Passports. Altogether, these measures are hoped to improve transparency, reduce dependence on imported raw materials, and scale circular business models across a harmonized Single Market.
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