On the 9th of December 2025, PubAffairs Bruxelles organised an afternoon of discussion on how the circular economy can drive decarbonisation and strengthen economic security. This event was also a timely opportunity to discuss how a fully-fledged EU circular economy model can enhance competitiveness and innovation across the European economy, with our distinguished speakers: Glenn Schmidt, Vice President of Global Sustainability, BMW Group; Sara Matthieu MEP (Greens/BE) and Vasileios Rizos, Head of the Energy, Resources and Climate Change Unit, CEPS.
The discussion was moderated by Alice Hancock, EU Energy and Climate Correspondent at the Financial Times.
Alice Hancock introduced the topic as highly pertinent, given the anticipated Circular Economy Act in the coming year and the EU’s need to address its natural resource deficit compared to other regions. After introducing the panellists, the moderator invited Glenn Schmidt to deliver a scene-setting presentation.
Glenn Schmidt began his speech by outlining the BMW Group’s perspective on decarbonisation and circularity amidst global volatility. He stated that, while uncertainties remain regarding the future definition of sustainability, the commitment to the Paris Climate Accord and the continuous reduction of carbon intensity are non-negotiable. He referred to BMW’s recent announcement on CO2 targets for 2035, noting that, in the baseline year of 2019, the Group’s scope 3 emissions totalled 150 million megatons. He announced that BMW aims to reduce its footprint by 40 million megatons between 2019 and 2030 and by a further 20 million megatons until 2035, achieving a total reduction of over 60 million megatons.
Mr Schmidt emphasised that these targets demonstrate the possibility of operating a global business in a technology-open way, combining growth with decarbonisation. He then challenged the traditional view that growth is linked to CO2 output, arguing that the path to net zero requires decoupling the two. He further explained BMW’s technology-open strategy, which utilises every available lever, including efficient internal combustion engines, plug-in hybrids, battery electric vehicles and, by 2028, a series of hydrogen fuel cell vehicles. He stressed that the climate is indifferent to the source of CO2, making it essential to reduce emissions across all drive trains. However, he also acknowledged that the battery-driven electric train offers the most significant growth potential.
Turning to circularity, Mr Schmidt introduced the “Neue Klasse“ as a new car architecture, exemplified by the forthcoming BMW iX3. He highlighted that this model achieves a 20% reduction in energy consumption (WLTP) compared with its predecessor. Furthermore, there is a 35% reduction in supply chain CO2 emissions compared to the industrial average, thanks to the use of renewable energy as well. He also noted that the vehicle features a secondary raw material quota of 33%, amounting to over 700 kilograms, demonstrating that the “secondary first“ principle is viable. He then illustrated the aesthetic and the business value of circularity with the example of the iX3’s aluminium rims, 70% of which contains secondary material without compromising on quality.
Concluding his opening remarks, Mr Schmidt gave some recommendations regarding the upcoming Circular Economy Act. He urged policymakers to focus on creating frameworks for profitable business models rather than using quotas. He called for a holistic ecosystem perspective, harmonisation of definitions and the use of incentives to stimulate the market. He concluded by stating that, since the EU aims at both enhancing the uptake of electric vehicles and foster geopolitical sovereignty – but lacks extensive mining capacity, promoting circular economy models as much as possible is an imperative for the old continent.
The moderator thanked the speaker for the scene-setting remarks and turned to Vasileios Rizos, inviting him to provide figures on the state of the circular economy in Europe.
Vasileios Rizos began by discussing the EU regulatory framework, noting that it has expanded significantly in recent years. He pointed out that the number of legislative and non-legislative actions taken during the period of the two Circular Economy Action Plans since 2015 reflects this growing focus. He expanded on the regulatory landscape, noting that in 2025 alone, there were 89 actions, creating a varied and strong regulatory framework within the EU, albeit with some issues of incoherence that require alignment. Despite the comprehensiveness of this framework, he pointed out that the expected signs of progress in the EU economic landscape are still missing. Referring to the circular economy monitoring framework, he highlighted that the circular material use rate in 2023 was only 11.3%. This means that a mere 11.3% of materials used in the economy came from recycled sources, a figure that has seen very limited progress in recent years, he stated.
He further illustrated the high consumption levels by citing electronic waste, noting that the EU produces 17.6 kilograms of electronic waste per capita, which, according to the UN, is the highest figure in the world. Mr Rizos also drew attention to innovation indicators regarding patents, explaining that current data disproportionately focuses on end-of-life stages and waste management, failing to provide the full picture. He concluded that, while significant work has been done, the results are not yet visible in numbers, and added that the second decade of action should focus on providing evidence that the EU is moving in the right direction.
The moderator, addressing Sara Matthieu MEP, contextualised the discussion by noting that Europe is currently in a difficult economic position with flagging growth and geopolitical challenges. She then asked how important the circular economy agenda is for Europe’s future survival.
Sara Matthieu MEP stated that the circular economy agenda is crucial, not only due to the EU’s dependence on third parties for resources in a geopolitically unstable environment, but also because of the potential for job creation and economic independence and resilience. She described the current geopolitical situation as critical, pointing to the strong competition coming from China, which already dominates the clean tech domain and has a strong hold on global supply chains. She also warned that European factories could be forced to close simply because Beijing decides to stop exporting certain materials, framing this as a critical security issue beyond defence.
In this connection, Sara Matthieu criticised the tendency of European leaders to use appeasement strategies with those actors which apply bullying strategies against the EU, such as the current US administration. She also engaged with the EU’s recent push towards deregulation, arguing that this approach could be dangerous and ineffective. She then warned that this process risks watering down the so-called “Brussels effect” and potentially turning the EU from a rule-maker into a rule-taker.
She emphasised that, despite the need for simplifying certain aspects of the EU economy and society, regulation remains necessary, particularly regarding harmonisation within the Circular Economy Act. Indeed, she argued that, without harmonised standards for waste and circularity within the single market, the EU would hamper itself. MEP Matthieu eventually called for a narrative shift to frame the circular economy as a matter of resource sovereignty, ensuring supply chain security for businesses, resource efficiency and demand mitigation.
The moderator noted the interesting shift in narrative from environmental arguments to industrial policy and asked if it has given more impetus to the circular economy argument.
Sara Matthieu MEP agreed entirely, stating that, while the environmental aspect remains important, the inclusion of resource availability, such as lithium and cobalt, is crucial for the success of greening the industry. She cited the Critical Raw Materials Act, which she negotiated, as an example of this narrative switch in action.
Alice Hancock then turned to Glenn Schmidt, noting that BMW’s “Neue Klasse” demonstrates long-term thinking. She asked him to explain the genesis of this thinking and what circularity truly means for the BMW Group.
Glenn Schmidt responded that circularity requires extensive planning and strategy and cannot be achieved overnight. He described the industry’s traditional linear model as harvesting, using and disposing of resources, while explaining the challenge of converting this linear process into a circular one. He noted that the end-of-life phase is changing from waste management to supplying resources, representing a complete shift in perspective.
He further explained that, while product development previously focused on aesthetics and efficiency, the focus is now on design for circularity, ensuring vehicles are easy to disassemble without compromising safety or design. He highlighted that the “Neue Klasse“ is the first vehicle entirely conceived under the principles of sustainability and circularity by design. He also argued that circularity is a simple concept that “checks several boxes”: it is a major lever to reduce CO2, and increases resilience by securing materials such as lithium, nickel and cobalt, thereby avoiding the emissions and logistical costs of repeated extraction. The speaker concluded that circularity also improves the cost performance of the business model.
The moderator then addressed Vasileios Rizos, referring to critical minerals as a driving factor for the circular economy agenda. She cited China’s recent export restrictions on rare earths as a major issue and asked him to explain how this competition for resources exposes Europe’s strategic vulnerabilities.
Vasileios Rizos replied by addressing the impact of supply restrictions, noting that the EU has learnt a hard lesson with gas dependency. He highlighted that, although the bloc is dependent on a very limited number of countries for certain materials, citing that the vast majority of rare earths come from China, while 79% of lithium comes from Chile, the picture is not entirely negative. He pointed out that materials such as copper or aluminium are suffering less from external dependency, and that prospects are better. However, he warned that the question of dependency is not limited to upstream sourcing, but extends downstream such as refining and manufacturing, citing rare earth magnets and solar photovoltaic systems (PVS) as examples where China controls a valuable part of the global supply.
To illustrate the complexity of the policy challenge, Mr Rizos shared that some recycling plants are currently unable to recycle permanent magnets due to the lack of a downstream value chain to process the components. He contrasted this reality with provisions of the RESourceEU Action Plan to assess export restrictions on permanent magnet scrap, identifying a potential incoherence where the EU might restrict exports of waste streams it cannot yet recycle itself. Despite these specific loopholes which require careful assessment, he concluded that the overall direction of the RESourceEU plan and recent EU actions is very positive, a progress he would not have imagined five or ten years ago.
The moderator turned to Glenn Schmidt to ask for the automotive industry’s perspective on Chinese export controls and the RESourceEU plan, noting the huge challenge this represents for EU carmakers.
Glenn Schmidt responded by emphasising that the automotive industry is highly global and integrated and, as a result, dependencies are inevitable. He noted that European companies such as BMW have been successful by tapping into the potential of markets in China, the US and Europe, and must therefore think in global terms. However, he cautioned that the world is becoming more regional and that the “ingredients of the car of the future”, namely battery cells, raw materials, semiconductors and data, are at the centre of this process.
Mr Schmidt then argued that China’s current advantages are the result of a long-term, strategic ecosystem approach that spans the entire value chain, from mining and refining to industrialising the cell. He urged Europe to adopt a similar strategic mindset to create competitive advantages. He advocated for an ambidextrous approach: Europe must cooperate with China on various technologies while simultaneously building its own resilience and independence. He questioned the utility of discussing strategic dependencies as threats, suggesting that stakeholders should instead focus on doing the work to alleviate them.
Alice Hancock then asked Sara Matthieu MEP for her view on the RESourceEU plan and whether its central feature, the Critical Minerals Centre, represents an adequate strategic step.
Sara Matthieu MEP expressed scepticism about whether the plan goes far enough, describing it as a sort of translation of elements already promised in the Critical Raw Materials Act. She added that the initiative is primarily focused on funding and framework strengthening rather than constituting a decisive shift. She agreed with the previous speakers that the situation is nuanced. While the EU focused on Chinese dependencies due to business concerns about supply chain vulnerability, she acknowledged that Europe lacks a unified industrial vision, as member states’ policy objectives are still often too far apart.
She then argued that it would be naïf to think that Europe could succeed in clean tech without partnering with China, given their progress in sectors such as automotive and battery production. Against this backdrop, she called for a balanced approach that would not simply accept trade restrictions without pushbacks. She also noted that Europe needs more instruments to make conditions such as technology transfers and joint ventures mandatory, ensuring that cooperation with China remains beneficial for the old continent.
The moderator then asked Vasileios Rizos what he thought about the debate regarding strategic autonomy, more specifically about the difference between “Made in Europe” versus “Made with Europe” approaches.
Vasileios Rizos stated that the European Union should foster diversification while developing partnerships. He argued that the EU cannot adopt the same narrative as the United States, as it must recognise that Chinese partners are highly advanced in crucial domains that are important to the EU economy. He described the recent mix of measures, including the RESourceEU plan, as a step in the right direction, while highlighting the proposal to accelerate mining permitting as a positive development as long as high environmental standards are secured that addresses a fundamental challenge for project development across the critical raw materials value chain.
Regarding the European Critical Raw Materials Centre, Mr Rizos noted the influence of the Draghi Report and compared this initiative to similar agencies in Japan. He eventually welcomed the idea of an agency dedicated to intelligence, monitoring strategic stocks and tracking trade flows to provide early warnings to the Commission. However, he also cautioned that the success of such an initiative depends on the details of its implementation to ensure it does not merely add administrative patterns.
The moderator asked Glenn Schmidt to what extent he saw a commercial advantage in circularity models and what specific incentives the EU should put in place in the Circular Economy Act to promote the use of secondary materials.
Glenn Schmidt expressed relief that the Green Claims Directive has not been fully launched yet, arguing that it would have added a bureaucratic burden to sustainability message conveying. Instead, he stated, with BMW focussing on horsepower, acceleration, and performance, the company aims to highlight its sustainability credentials, such as circularity and CO2 emissions reduction. He also expressed the hope that sustainability will become a primary purchasing preference alongside design and brand.
Mr Schmidt also noted a shift in trends. While a decade ago vehicles were designed to have some sustainable elements, the current goal is to create vehicles that look sleek and functional while being operationally sustainable, he stated. However, he also acknowledged the challenge of consumer perception, citing internal survey results whereby customers associated recycled parts with lower quality or used goods.
He then stressed the need for information campaigns to clarify that, for materials such as lithium and nickel in batteries, there is no degradation in performance when used for a second time. For steel and aluminium, he clarified that, while they can be melted and reused, virgin metals are still required for certain safety and structural parts. Similarly, he noted that plastics undergo structural changes that limit their reuse. He concluded by explaining why a new technology flagship such as the BMW iX3 contains one-third secondary material which requires detailed communication to transform it into a selling point.
The moderator then turned to Sara Matthieu MEP, asking what regulatory gaps need to be filled and what incentives are required to drive further action.
Sara Matthieu MEP emphasised that the primary task is to address the business case for circularity. She noted that, while some substances such as critical raw materials have inherent value, others face obstacles when competing with cheap raw materials produced under weaker environmental and social rules. She argued that there is a “price tag” on society from the linear model that must be recognised. Lacking the competence for direct taxation measures, she suggested alternative tools such as public procurement, proposing that all tenders should include at least one circular criterion.
Sara Matthieu also highlighted the importance of circular mandates, referencing the forthcoming End-of-Life Vehicles Regulation, which is expected to propose recycled content targets for plastics and, potentially, steel. Regarding trade policy, she suggested extending the scope of the Carbon Border Adjustment Mechanism to ensure a level playing field between virgin and secondary materials. She further advocated for broadening waste legislation to focus more on reuse, repair and longevity, citing the success of eco-modulation in the Extended Producer Responsibility (EPR) schemes for textiles. Finally, she pointed to the Eco-design Regulation, supporting the introduction of horizontal requirements, such as reparability, alongside product-specific measures.
The moderator invited Vasileios Rizos to add his perspective on the same questions.
Vasileios Rizos began by referencing a past CEPS study, which calculated that there could be 800 million unused phones lying in drawers across the EU, a figure that excludes tablets. He then offered thoughts on the Circular Economy Act, noting that the terminology has shifted from an “Action Plan” to an “Act” which follows the trend of the Critical Raw Materials Act. He endorsed the need for harmonised definitions and classifications and, in order to illustrate the current lack of alignment, he cited a study on waste wood, which found that five member states had significantly different methods for classifying waste, particularly regarding hazardous substances. He argued that, without a unified definition, a single market for circular products cannot exist.
Mr Rizos also raised the issue of policy coherence, noting that the intersection of horizontal and sectoral policies has led to misalignment due to the high volume of recent legislative activity. He suggested that the impact assessment of the Circular Economy Act provides an opportunity to identify and address these trade-offs. He specifically mentioned the carbon footprint methodology as an area where climate and circular objectives need to be balanced to provide a consistent message to businesses.
Alice Hancock then asked Glenn Schmidt about the practical hurdles of producing a secondary material-based car such as the “Neue Klasse” and how policymakers could address them.
Glenn Schmidt admitted that, while the end product may look easy, implementing circularity involves significant internal challenges and resistance. He explained that adding the sustainability dimension currently comes with a price premium, meaning that the sustainability features in the BMW iX3 come with a cost. He stated that the investment is driven by long-term belief, and suggested that the role of regulation should be to create a long-term, stable framework to support this transition.
He continued by discussing the potential advantages Europe holds, noting that, while roadblocks are often highlighted, the region possesses significant strengths, including innovation processes, forward-thinking customers, renewable energy production and a strong industrial manufacturing base. However, he also questioned the consistency of strategies across the bloc, observing that, while 20 out of 27 member states have circular economy strategies, these are often disconnected, with each state wanting its own “lighthouse initiative” rather than thinking European.
Mr Schmidt then critiqued the current incentive mechanisms, specifically the Important Projects of Common European Interest initiative. He described the process as cumbersome, involving consortium formation, applications exceeding 1,000 pages, and long periods of silence followed by a scrubbing phase. He argued that this process can take up to three years, during which governments may change and funding becomes uncertain, a timeframe which is unsustainable compared to Europe’s competitors.
Furthermore, he characterised the European recycling business as extremely fragmented, with local recycling stations in every city preventing the industry from achieving the necessary scale. He diagnosed the core issue not as an innovation problem, stating that Europe has the talent and engineering prowess, but as an industrialisation problem, namely the inability to scale up quickly compared to the US and China, which are particularly ahead of the EU in the recycling market.
The moderator turned to Sara Matthieu MEP, asking about the political landscape in the European Parliament and inquiring whether there is cross-party consensus on the circular economy or if certain elements remain controversial.
Sara Matthieu MEP replied that consensus depends on the level of specificity. She noted that there is significant agreement among her colleagues on high-level strategies regarding lessening resource dependencies, recognising economic potential as well as on the need for a coordination at EU level to valorise regional strengths. However, she admitted that the debate becomes contentious when discussions move into more specific, concrete measures.
Using the End-of-Life Vehicles (ELV) Regulation as an example, Sara Matthieu highlighted that, while the European Commission’s impact assessment shows the automotive industry is ready to meet targets for recycled plastic content, there is still significant political pushback. She expressed frustration as some of her colleagues resist these measures despite the fact that they would support European recyclers currently struggling against competition from cheaper virgin materials. She concluded that, while principles such as harmonising waste definitions find broad support, specific sectoral regulations, particularly regarding the automotive industry, remain a contentious question.
The moderator then opened the Q&A session, selecting a question from the online audience. The first question suggested that, since a real circular economy prioritises reduce and reuse, EU policies should incentivise public transportation and the reduction of material use rather than the purchase of private vehicles.
Vasileios Rizos responded first by arguing for a holistic understanding of the system, stating that, while resource efficiency and reduction are part of the solution, merely cutting sales of certain product groups is difficult in times of geopolitical competition. He acknowledged that, while the car ownership model may have reached its limits in congested cities, where public sustainable transports and reduced ownership are more effective, arguments simply in favour of reducing sales without a holistic understanding of the system can be simplistic. He emphasised, though, that resource reduction is part of the debate but requires a careful assessment of its consequences.
Glenn Schmidt responded by stating clearly that he would not advocate for reducing cars. Instead, he outlined BMW’s approach to limiting the use of resources within is business model, namely reducing energy, water and other resource inputs during production. He described the hierarchy of steps as reduce, reuse, “reman” (remanufacturing used parts for resale) and recycling. He defended the role of the industry, asserting that the automotive, chemical and steel sectors are the backbone of Europe’s economy, generating high-paying jobs and prosperity.
He also rejected the notion of resignation amidst the current geopolitical confrontation with China and other global industries. Instead, he advocated for a distinct approach where Europe leverages its ability to produce high-quality, sustainable goods while preserving nature. He emphasised that this strategy must simultaneously be technology-driven and innovative. He concluded by highlighting that circularity offers a way to reconcile these seemingly contradictory targets by balancing industrial success with environmental protection, rather than viewing them as mutually exclusive options.
Sara Matthieu MEP began her response by agreeing that the issue should not be viewed in a Manichaean way. She then noted that, in her discussions with industrial actors, she sees significant investment going into innovation to ensure material efficiency. She also acknowledged the significant progress made by several sectors, including the automotive industry, regarding the number of materials used compared to a decade ago, praising the EU industry’s innovation processes.
However, she also expressed concern that the former Circular Economy Action Plan did not sufficiently address resource management, and argued that, just as climate policy relies on clear targets, the EU needs a compass for mitigating resource use and waste production. She eventually pointed out that current recycling rates are stagnant and still not high enough.
Sara Matthieu highlighted that the European Commission is expected to publish a study on demand mitigation and material efficiency before the end of the year, a provision included in the Critical Raw Materials Act. Speaking from the Green Group’s perspective, she stated that simply replacing every combustion engine with an electric one is indeed too simplistic.
While acknowledging that public transport is not a viable option for everyone, she advocated for a holistic approach that supports car sharing and technologies such as bi-directional charging, through which cars serve as batteries for neighbourhoods. She finally argued that such strategies, which should also address the issue of space taken up by cars in city centres, are essential to ensure the EU does not simply hand its market over to its competitors and neglect resource efficiency.
The moderator selected another online question asking Vasileios Rizos how the Circular Economy Act could ensure a tangible contribution to the Green Deal and the net-zero goal by 2050, moving beyond the mere industrial business case.
Vasileios Rizos responded that the circular economy contributes to the European Green Deal in three key ways. First, he pointed to the benefits of decarbonised production, noting that the reuse and recycling of resources generally deliver significant carbon savings. Secondly, he highlighted the contribution of the circular economy to competitiveness and security of supply, arguing that Europe must make use of every available resource, including materials stored in households or abandoned in extraction waste facilities. In this context, he referred to provisions in the Critical Raw Materials Act concerning industrial stockpiles and materials remaining in recycling plants. Thirdly, Mr Rizos emphasised the contribution of the circular economy to technological development, cost reduction, and innovation.
He subsequently highlighted the need for increased investment in recycling technologies, particularly for hard-to-recycle materials such as plastics, in order to maintain Europe’s competitive advantage. He also stressed the importance of circular business models that combine digital technologies with circular principles, for example through the use of artificial intelligence to identify resource needs across supply chains, a topic currently addressed by several Horizon Europe projects, he specified.
Alice Hancock then turned to Glenn Schmidt, referring to his earlier presentation on BMW’s decarbonisation targets. She recalled his argument that the 2035 phase-out of internal combustion engines requires a lifecycle analysis (LCA) approach, rather than an exclusive focus on tailpipe emissions. She then asked how circular economy arguments align with this LCA perspective and whether there is growing momentum for such an approach in the broader decarbonisation debate.
Glenn Schmidt thanked the moderator for raising the issue and criticised the current CO2 fleet regulation for being entirely based on tailpipe emissions, hence not taking into account innovation processes within the supply chain. He argued that, even if battery electric vehicles were to account for 100% of sales by 2035, substantial CO2 emissions would persist in the production processes unless explicitly addressed. He also noted that the current debate is prompting consumers and policymakers to take a closer look at the overall environmental performance of vehicles, including questions such as whether battery suppliers rely on renewable energy or how raw materials are extracted. He expressed optimism that legislators are becoming increasingly receptive to a more holistic LCA-based approach.
Mr Schmidt further suggested that incentives should be created to reward innovation along the value chain. As an example, he proposed that the purchase of green steel produced in Europe could generate credits in favour a manufacturer. He described this approach as a means of “killing two birds with one stone”, as it would support the challenging transformation of the European steel industry while simultaneously facilitating the automotive sector’s transition. He contrasted what he characterised as the EU’s “ban approach” regarding internal combustion engines as China’s took a more holistic promotion of electric vehicles without explicit bans, arguing that the latter approach would create more competitive advantages.
Reaffirming BMW’s long-term objectives, Mr Schmidt reiterated the group’s target of reducing its CO2 footprint from 150 million megatonnes in 2019 to 15 million megatonnes by 2050. He emphasised that this transition entails decoupling economic growth from emissions, noting that by 2035 the CO2 intensity per euro of revenue is expected to fall significantly compared with 2019 levels. He concluded that the overarching goal is to preserve a strong industrial base and the European way of life – including fiscal revenues and future economic prospects – while achieving the decarbonisation of the EU economy and society.
The moderator asked Sara Matthieu MEP for her take on the LCA approach versus the tailpipe emissions focus, with special regard to the context of the politically heated “2035 debate”.
Sara Matthieu MEP began her response by emphasising that the largest part of a product’s ecological footprint lies in its material use. She elaborated on the evolution of eco-design, noting that, while significant progress has been made in the use phase regarding energy demand, the next step must focus on material use. She questioned the sustainability of the current model, whereby consumers buy new appliances, such as washing machines, every five years and suggested exploring new business models such as product-as-a-service.
Regarding the life cycle analysis (LCA), Sara Matthieu expressed caution despite not being opposed to the concept. She illustrated the risks of flawed criteria with an example from the textile industry, noting that current LCA methodologies often portray nylon as more sustainable than wool because of water usage, but ignore microplastics or end-of-life outcomes, such as the fact that nylon must be burned while wool dissolves in the ground. On the topic of CO2 standards for cars, she argued that targets alone are insufficient and must be accompanied by an entire ecosystem of conditions, such as charging infrastructure, the battery passport and the greening of corporate fleets. She firmly stated that the automotive industry would not be helped by backing out of long-term EU commitments.
The moderator raised a question regarding the economics of recycling, specifically how to incentivise recycling when virgin material prices (such as lithium) are extremely low while recycling costs remain high, without relying on public subsidies.
Vasileios Rizos responded that for certain materials, recycling is simply not yet cost-effective. He highlighted the role of funding mechanisms, such as Horizon Europe projects, in financing pilots that can lead to successful future business models. However, he warned that the lack of a full value chain in Europe undermines investment, as actors in one segment will not invest in recycling processes if there are no downstream partners to take the material. He concluded that there is no golden formula, and the solution differs according to the material. He cited the example of textiles, referring to the PESCO-UP project, which revealed that the huge variety of mixed textiles entering the EU market makes realistic recycling extremely difficult despite high collection rates.
The moderator then opened the floor to the audience. An attendee offered two comments and a question. First, she underscored the importance of harmonising LCA methodologies, noting that differing national requirements for environmental product declarations currently undermine scale and public procurement incentives. Secondly, she pointed to the European Product Act (referencing the regulatory landscape) as a missed opportunity in the discussion to further streamline circularity definitions. She then asked Glenn Schmidt to share his thoughts on BMW’s approach to Digital Product Passports, specifically regarding the battery and vehicle passports.
Glenn Schmidt responded that the question ties into the need for harmonisation, stressing that a single, consistent methodology is essential for product passports to avoid confusion. He highlighted the digital element as a prerequisite, mentioning that BMW is a founding member of the Catena-X consortium (together with SAP). He explained that this initiative aims to digitalise the automotive supply chain to secure the data needed for CO2 accounting and transparency, which ultimately feeds into the digital product passport.
He added that BMW views product footprint information as a valuable sales argument and already provides this for its newest vehicles. He continued his explanation regarding transparency, noting that, when the group introduced sustainability indicators for electric vehicles, the original assumption was that electric vehicles would automatically display better values, thus potentially creating a hierarchy within the portfolio. However, he also observed that this hierarchy did not materialise as expected.
He then highlighted that, while individual retail customers are interested, the strongest demand for transparency comes from fleet customers, and pointed out that over 50% of BMW’s European customers are corporate clients and professional fleet managers who have their own CO2 reduction targets and are therefore highly attuned to sustainability. Consequently, the product footprint information serves as a helpful sales argument for this key demographic.
A further member of the audience asked Glenn Schmidt to elaborate on the concept of carbon credits he mentioned earlier in relation to green steel and how this would work in practice. He also invited reactions from the other panellists, noting that such concept can appear partly familiar yet partly foreign depending on the given legislation.
Glenn Schmidt responded by outlining the theoretical and practical application of the concept. He explained that the goal is to support the costly transition to green steel in Europe, noting that in the United States green steel is already cheaper than grey steel, whereas in China it is available to provide a competitive advantage. He proposed a mechanism where, if an original equipment manufacturing (OEM) makes a conscious decision to purchase green steel made in Europe – thereby saving CO2 in the lifecycle footprint, this saving should be credited towards the manufacturer’s compliance with CO2 fleet regulations.
Mr Schmidt described this proposal as a step towards a more life cycle assessment-centred approach. He also argued that such an incentive would simultaneously support the European steel industry, a backbone of the economy facing a difficult transformation, and assist the automotive industry with its transition. The speaker added that this model could potentially be applied to the aluminium industry as well.
Sara Matthieu MEP reacted to this part of the discussion by emphasising the necessity for clear definitions when it comes to green steel or green aluminium. She mentioned that this issue might be addressed in the forthcoming Industrial Accelerator Act, but noted that it remains unclear whether any resulting labelling would be voluntary or mandatory. She warned that, without strict definitions, such schemes could lead to unfair competition and a lack of a level playing field, urging advocates of the credit system to ensure these definitions are robustly included in the upcoming legislation.
Vasileios Rizos stressed that the core message emerging from the discussion is the need for a consistent direction coming from the Circular Economy Act. He called for better alignment between environmental, trade, industrial, and competitiveness objectives, noting that this requires careful assessment of trade-offs and interlinkages across policies. He concluded that sending a clear and coherent message to businesses depends fundamentally on harmonised definitions, whether for green steel, green aluminium, or recycled content in plastics, and expressed hope that the forthcoming proposal will deliver this consistency.
Do you wish to know more about the issues discussed in this debate? Then check out the selected sources provided below!
Carbon Border Adjustment Mechanism, European Commission
Circular Economy Act, European Commission
Critical Raw Materials Act, European Commission
Digital Product Passports European data
European Product Act European Commission
Extended Producer Responsibility European Commission
Important Projects of Common European Interest European Commission
Improving waste wood circularity in the EU: classification frameworks and policy options, CEPS
Industrial Accelerator Act, European Commission
Greening corporate fleets, Legislative Train Schedule, European Parliament
Green Claims Directive European Commission
RESourceEU Action Plan, European Commission
The Draghi report on EU competitiveness, European Commission
