Europe’s path to industrial decarbonization could run through circularity rather than new technologies, according to a new report by the European Commission’s Joint Research Centre (JRC).
The study finds that integrating circular economy practices in heavy industry could reduce up to 231 million tones of CO₂-equivalent emissions per year by 2050—a figure roughly equal to the combined annual emissions of Spain and the Netherlands.
The report, which evaluates steel, aluminum, cement, concrete, and plastics, highlights the disproportionate role these sectors play in Europe’s carbon footprint. Together, they account for nearly 15% of the EU’s total greenhouse gas emissions, underscoring why circularity—recycling, reuse, and material efficiency—has become a central pillar of Europe’s climate strategy.
The most significant decarbonization potential lies in steel and plastics, where circular practices could yield combined reductions of up to 165 million tonnes of CO₂ annually. For steel, emissions could fall by 64 to 81 million tonnes, while plastics could contribute 75 to 84 million tonnes in annual cuts. These reductions hinge on minimizing virgin material use, redesigning products for longevity, and improving recycling efficiency.
In steel production, scrap-based electric arc furnaces and improved collection systems could dramatically lower emissions without requiring novel technologies. For plastics, scaling mechanical and chemical recycling, coupled with substituting fossil-based feedstocks, presents the most immediate route to decarbonization. Yet, experts caution that recycling alone won’t be sufficient unless design-for-recycling principles are standardized across the EU market.
Beyond direct emissions reductions, circular economy measures could reshape Europe’s energy balance. By using fewer raw materials and optimizing industrial energy use, the EU could lower its fossil fuel demand by nearly 4.7% relative to 2023 levels, the JRC finds. Electricity consumption would fall by a comparable share.
This decline in resource and energy intensity translates into enhanced energy independence—an increasingly strategic objective as Europe seeks to reduce reliance on imported fossil fuels and critical raw materials. Crucially, the report notes, these improvements do not depend on unproven technologies; they are achievable with existing industrial tools and policy frameworks.
The JRC also emphasizes the financial dimension of circularity. By cutting imports of iron ore by 22%, bauxite by 11%, and fossil fuels by several percentage points, the EU could improve its trade balance by about 4%, or €35 billion, by 2050. These savings come not from subsidies or export growth, but from systemic efficiency—using less to produce more.
Plastics emerge again as a key variable, given the sector’s dependence on imported hydrocarbons. Enhanced recycling and material substitution could sharply reduce both Europe’s cost exposure and its geopolitical vulnerability in raw material markets.
To accelerate this transition, the report recommends targeted policy measures: investment in advanced recycling infrastructure, incentives for circular product design, and mandatory Green Public Procurement (GPP) to stimulate demand for circular materials. These recommendations echo priorities laid out in the EU Clean Industrial Deal and the Competitiveness Compass, both of which stress that industrial sustainability and competitiveness must advance in tandem.
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