Regulation ‘the first obstacle’ hindering the transition to a circular economy

A study of more than 50 cities found regulation held back progress on circular economy goals, according to the OECD's Oriana Romano.

Regulations are the major barrier preventing further investment in a circular economy, according to panellists at Vauban Infrastructure Partners‘ circular economy event last week.

Oriana Romano, head of unit, water governance and circular economy at the OECD, said that, having conducted research across more than 50 cities in OECD and non-OECD countries “it emerged clearly that the major obstacle was not the lack of technical solution[s]” to help transition to a circular economy. Instead, “the first obstacle was regulation”, in part because there is “there is often a lack of coordination across levels of government”.

Sébastien Petithuguenin, CEO of waste management company Paprec, agreed. He said that “regulation can be very good tool to help deliver safe circular economy, but it can be also a real burden”. He pointed to the French regulatory regime relating to plastic, which aims to eradicate all non-reusable packaging by 2040, while also looking to incentivise investment in making such packaging more recyclable.

“Who is going to invest in a sector that is going to disappear?” he asked.

Petithuguenin did acknowledge that the EU regulations were “definitively better” than the French national regime. The European Commission announced its circular economy action plan in 2020 as part of the European Green Deal.

Fellow panellist Gabrielle Gauthey, senior VP for European public affairs at TotalEnergies, said the European market has never seen “such a tsunami of regulations” before, and that some market participants have decided “it’s too complex to produce in Europe” and are instead looking to produce sustainable fuels in the US due to the incentives provided by the Inflation Reduction Act.

Florian Flachenecker, policy officer at the EU Commission Directorate-General for Environment, represented the regulator on the panel. He stated that there was still work to be done in refining the regulatory regime, but also said that the industrial leaders and citizens both have a part to play. “All of those things have to have to come together”, he said.