Europe has committed to a fully circular economy by 2050, with ambitious member states like the Netherlands among the drivers of the agenda. In this vision, products and raw materials are reused as much as possible and almost no waste is produced. Although the earlier halving targets for 2030 gave useful direction and motivation, new goals have been formulated for 2035. Nevertheless, the urgency remains high. A circular economy does not only serve the climate. It is also essential for the strategic autonomy of Europe. By becoming less dependent on other geopolitical power blocs for our raw materials, we strengthen our own position.
Yet this is precisely where the tension lies. In the current debate on sustainability, a crucial element is often overlooked: the inextricable link between the materials transition, the energy transition, and industrial reality. Dr. Roderigh Rohling argues that the circular economy cannot be viewed as a separate matter. It is the product of the energy and materials transitions together, a synergy between long-term climate policy and sorely needed industrial policy. Without a strong industrial base and affordable energy, a circular transition is exceptionally difficult to deliver.
The symbiosis between energy and materials
A circular process is inherently unsustainable if it runs exclusively on fossil fuels. That is why making production processes more sustainable is an essential part of the circular ambition. Here, however, an interesting discrepancy emerges between government objectives and practical reality.
Companies that want to become more sustainable are currently running up against hard limits. The call for electrification and the use of hydrogen is loud, but the electricity grid is not ready for this mass transition. Moreover, the business case for hydrogen is currently still extremely difficult to close. The result is a painful paradox: companies that want to become more sustainable cannot do so, while at the same time being confronted with sky-high prices for the fossil fuels they remain tied to by necessity.
The forgotten role of the chemical industry
In public opinion, the chemical industry is often dismissed as “dirty.” This is a misconception that stands in the way of the circular transition. Chemistry is everywhere and needed for everything. In fact, the (chemical) manufacturing industry is the only sector that can develop and adapt materials and molecular building blocks at a fundamental level. This makes chemistry not merely part of the problem, but the very instrument for the solution.
Without a healthy chemical sector in Europe, the capacity to recycle materials at a high quality and close new circular chains disappears. If the manufacturing industry leaves Europe due to high energy costs and strict regulation, we once again make ourselves dependent on power blocs where this industry does flourish, often with a larger ecological footprint.
Reality versus climate ambition
European industry is under enormous external pressure, particularly from cheap competition from other parts of the world. While the costs of producing, for example, recycle-grade plastics in Europe are high, a great deal of cheap virgin-grade plastic flows into Europe from other regions. The result? Numerous European recyclers have gone bankrupt in recent years. For the EU’s circular ambitions this is disastrous; we are losing the very capacity we need to process our own waste streams.
A concrete example of the complexity is the upcoming Packaging and Packaging Waste Regulation (PPWR). From August 2026, strict rules will apply to the design and reusability of packaging. Producers of packaging materials must use an increasing share of recycle-grade plastics in the run-up to 2040. However, some packaging, such as food packaging, must meet strict hygiene and purity requirements. Recycled plastics currently do not meet these, leading to a conflict between sustainability goals and food safety. As a result, packaging for baby food, for instance, is for now exempt from the requirement. The example illustrates how a sustainable ambition runs into limits as a consequence of regulatory demands and practical feasibility.
The gap between innovation and scale-up
Although there is plenty of innovation taking place across Europe, the transition often stalls in the phase between start-up and full industrial application. There is a significant funding gap. Where funding is often still available for fundamental research and early lab phases, raising capital for pilot plants and demonstration installations is difficult, precisely the companies that in popular opinion are seen as polluting and that many would sooner see disappear. And although scale-ups and corporates do find their way to each other, there is a field of tension there too: start-ups seek investors but like to preserve their autonomy, while large corporates want to support the sustainability push but remain cautious given uncertain legislation and volatile market conditions.
There is also a mismatch in cooperation. Emerging companies in the biobased economy, such as the Dutch firm Avantium, have outstanding technologies, but struggle with the enormous capital requirements involved in scaling up and subsequent large-scale roll-out. This is where the large, capital-rich corporates can play an important role.
Did you know? European and national grant programmes are already in place for many of these transition projects, from Horizon Europe to national innovation schemes. Professional grant consulting can make the decisive difference.
A plea for integrated industrial policy
The current focus is strongly on climate policy, with industrial policy at times appearing to be forgotten. A change of mindset is needed. We must stop reacting to crises ad hoc and move to a multi-year plan that recognises the interdependence of energy, materials, and geopolitics. The low-hanging fruit, such as solar panels on roofs and windturbines, has by now been picked. The truly major sustainability challenges for heavy industry are only arriving now, and this is where the system is currently getting stuck. Price-raising tax measures alone are not enough; strategic support is needed to preserve a viable business climate for the manufacturing industry. It is essential that we stop treating industry as a sector to be “regulated away” and start treating it as the engine of the circular transition. If we lose production capacity, we also lose control over our own sustainable future.
The way forward
To truly close the circle, a targeted approach is needed:
- Integrate policy domains: Climate, industrial, and security policy must be viewed in conjunction in order to prevent contradictory rules.
- Invest in infrastructure: The energy transition must keep pace with industrial ambitions.
- Stimulate cooperation: The gap between innovative start-ups and capital-rich corporates must be bridged through strategic partnerships that can build on long-term industrial policy.
- Safeguard strategic autonomy: Protect the European market from unfair competition from non-sustainable products originating outside the EU.
The circular economy is not a utopia we arrive at simply by consuming less; it is a technological and industrial tour de force that calls for realism, capital, and above all a strong chemical sector.
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