In recent years, the circular economy has been mainly portrayed as an environmental policy. Reducing waste, increasing recycling, containing emissions, limiting resource consumption. All correct, of course. But today this interpretation is no longer enough.
The 2026 National Conference on the Circular Economy had at least the merit of stating it openly: circularity is now a matter of economic security, industrial resilience, and strategic autonomy.
And it is hard to disagree.
Italy continues to show good circularity indicators: high resource productivity, efficient use of materials, good recycling levels, European leadership in the rate of circular material use. Yet it remains the country most dependent on material imports among the major European economies: 46.6% of processed raw materials come from abroad.
This is a snapshot that well illustrates the Italian contradiction: we are relatively good at using resources, but still too fragile in sourcing them.
Meanwhile, the global context has changed radically. Restrictions on the export of critical raw materials are increasing, strategic supply chains are concentrated in a few countries, material costs are becoming increasingly volatile, and geopolitics is directly entering European production chains.
For this reason, circularity is no longer just an environmental virtue. It is becoming a form of industrial self-defense, of productive survival.
And here a much less discussed issue than it deserves emerges.
Environmental Law Continues to View Waste with a Linear Logic
For years we thought the main obstacle to the circular economy was the lack of plants, investments, or technologies. Certainly, these factors also matter. But those who work daily on industrial supply chains know there is an even deeper and less visible problem: European environmental law often continues to think as if the economy were still linear.
It is a cultural issue.
The circular economy presupposes that materials can pass multiple times through the production cycle: be recovered, transformed, reused, lose their waste status, return as material or product. The legal system – those who create and apply the rules – however, sometimes continues to look at these steps with a certain underlying suspicion. As if waste retained a sort of permanent legal stigma, difficult to truly erase.
It may seem a theoretical issue. In reality, it is one of the main friction points of the circular transition.
Not surprisingly, among the proposals put forward during the Conference for the future European Circular Economy Act are precisely the harmonization of End of Waste and by-product criteria, simplification of procedures, strengthening of secondary raw material markets, and development of industrial symbiosis.
Put less diplomatically: Europe is realizing that recovering material is not enough if the legal system then continues to make its industrial circulation and real use difficult.
Digestate, End of Waste and DM 5046: When Circularity Gets Stuck in Legal Qualifications
And this problem, for those who work daily with plants, agro-industrial supply chains, biomethane, and valorization of production residues, is very concrete.
Take the case of digestate.
For years, European and national legislators have insisted — correctly — on the need to develop biomethane, recover organic matter, reduce dependence on fertilizers, and valorize waste. In theory, one of the most advanced examples of applied circular economy.
But then, delving into regulatory details, paralyzing short circuits emerge.
DM 5046/2016 links the qualification of digestate as a by-product to a strict list of input matrices. And here the paradox arises: biomass that has ceased to be classified as waste through End of Waste can end up, precisely for this reason, outside the scope necessary to maintain the qualification of digestate as a by-product.
Put less bureaucratically: the system treats with substantial suspicion a material that has already been recovered according to procedures provided for and authorized by the legal system.
It is hard to imagine a more effective representation of how difficult it is for environmental law to truly accept – not to mention promote – the circular logic.
Because the implicit message that reaches operators is ambiguous: “feel free to recover material, but be careful, because that material might still carry its past with it.”
The same tension continuously emerges also in the field of normal industrial practice. In theory, the by-product regulation should encourage the reuse of production residues. In practice, however, interpretative uncertainty about what constitutes a “normal” transformation or instead a treatment incompatible with the by-product status continues to produce a very concrete effect: many companies give up circular paths not because they are technically impossible, but because they are legally too risky.
And here the problem stops being only environmental and becomes industrial.
Because when the regulatory framework makes valorizing a residue too risky – criminally risky – the economic result is almost inevitable: increased use of virgin raw materials, supply chains become rigid, and dependence on foreign countries grows.
In other words, part of Europe’s geopolitical vulnerability does not depend solely on resource scarcity. It also depends on the legal system’s difficulty in allowing materials to truly return as “secondary” raw materials; products.
The Real Game of the Circular Economy Act Will Be “Qualificatory”
Of course, all this does not mean calling for environmental deregulation, unsustainable “simplifications,” such as those currently on the agenda regarding excavated earth and rocks, for example. Quite the opposite! A circular supply chain works only if there are rigorous standards, traceability, controls, and verifiable quality. But precisely for this reason, it becomes essential to distinguish between control and permanent suspicion.
Because when legal categories become too uncertain, the system, companies, and entrepreneurs inevitably produce defensive, defeatist behaviors. And indeed many companies end up, more or less explicitly, reasoning like this: it is easier, more “healthy” to manage a material as definite waste than as a contestable by-product.
It is a phrase that may sound cynical. In reality, it rather well describes the point at which part of the European circular economy stands today; Italian in particular.
The risk otherwise is that circularity remains a highly evoked political goal but industrially hard to practice. A bit like those cities that enthusiastically inaugurate new bike lanes without asking, however, if there really is a viable road to reach them.
And it is probably here that the most important game of the next Circular Economy Act will be played.
The real issue will not only be increasing recycling or setting new environmental targets. It will be understanding whether Europe finally intends to consider material recovery as an ordinary component of the industrial economy, and not as a supervised deviation from the traditional linear model (the “normal” industrial practice).
Because in the new geopolitical context, the ability to valorize residues, by-products, and secondary raw materials no longer represents just a virtuous environmental choice. It is a form of industrial autonomy; national and union sovereignty.
And this is why the next frontier of competitiveness will increasingly be qualificatory.
Understanding when a residue is waste, by-product, End of Waste, or secondary raw material will no longer be just a matter for environmental law specialists. It will become a strategic competence for companies, investors, and probably for the very industrial resilience of Europe itself. Therefore, political.
(taken from the website of lawyer Stefano Palmisano)
