Executive summary
The circular economy keeps products and materials in use to minimise resource extraction and waste. It can be categorised into three life-cycle functions and one enabling condition (visualised in Figure 1):
- Upstream action covers design and production
- Use-phase keeps products in use for a longer time through re-furbishing, repairing, etc.
- Downstream action covers collection, treatment and recovery
- Enabling conditions include e.g. skills, data, governance. This supports all three functions.
As EU regulation increasingly shapes how products are designed, produced, used and recovered, the challenge is no longer simply to finance waste infrastructure, but to help territories build functioning circular systems and markets. This study therefore assesses how Cohesion Policy supports the circular economy and provides policy recommendations for the next 2028–2034 framework.
The study concludes that circular economy has become more visible in EU funding, but it is not yet supported as a fully connected territorial and economic system. The next programming framework of 2028-2034 offers an opportunity to address this gap.
Key study findings
- Circular economy is gaining ground, but support remains unbalanced
In 2021–2027, approximately EUR 12.7 billion is programmed for circular economy across the European Regional Development Fund (ERDF), Cohesion Fund (CF) and Just Transition Fund (JTF), equivalent to 3.3% of their combined EUR 380 billion portfolio. Within the comparable ERDF/CF envelope – excluding the JTF, which did not exist in 2014–2020 – allocations rose from EUR 6.98 billion (1.9%) to EUR 11.47 billion (3.2%).
However, support remains uneven across the circular value chain, as can be seen in Figure 2 with 48.4% of programmed circular economy resources supporting downstream recovery. This downstream orientation should not be interpreted as misplaced investment.
In many less developed, island and infrastructure-constrained regions, improvements in collection, sorting, treatment and recycling remain essential. The issue is whether these investments are connected to prevention, reuse and repair, productive transformation, higher-quality recovery and viable markets for secondary materials.
The “missing middle” (the use phase) remains weak:
- Product-life extension is identifiable in only 1.3% of programmes
- Reuse and repair infrastructure in 7.2%
- Circular business models in 3.9%
Repair, reuse, refurbishment and maintenance are therefore still rarely treated as explicit and monitorable priorities, despite their potential contribution to resource efficiency, local employment, small and medium-sized enterprises (SMEs) and the social economy (including cooperatives, mutuals, associations, foundations and social enterprises that prioritise social objectives over profit distribution).
- From recovering materials to creating circular markets
A second structural gap concerns secondary raw materials (materials recovered from waste). Cohesion Policy is better at financing their collection, sorting and production than their actual uptake in production (meaning their use as inputs in manufacturing) rather than merely their recovery or preparation for sale.
However, effective recirculation requires more than recovery capacity: it also depends on quality standards, certification, traceability, appropriate End-of-Waste conditions, industrial demand and public procurement.
- Implementation is part of the policy challenge
By March 2026, 50.8% of ERDF/CF/JTF resources programmed for circular economy had been committed and 8.6% spent, compared with 57% and 11.8% for the entire portfolio of those three funds. Implementation differs considerably across circular functions:
- Upstream measures had reached a 82.7% commitment rate;
- Compared with 30.1% for downstream measures; and
- 6% for the secondary raw materials component.
Programme evaluations point to three bottlenecks:
- insufficient operationalisation and immature project pipelines
- administrative and procedural constraints
- weak beneficiary, market or territorial-system readiness
Future policy should therefore consider delivery capacity as part of investment design, using technical assistance, appropriate financing instruments and implementation milestones adapted to different types of intervention.
- Different territories require different circular pathways
The five regional case studies confirm that there is no single model for the circular transition:
- West Sweden follows an innovation-led pathway focused on business transformation sustainable materials and R&I
- Sicily (Italy) and Açores (Portugal) focus on waste-system modernisation and territorial services
- Grand Est (France) and Łódzkie (Poland) link circular economy to industrial restructuring and just transition
These pathways reflect different infrastructure, economies, geography and institutional readiness, and is not a ranking of regional performance. Policy should adapt the investment mix to each territory while connecting infrastructure, value retention, enterprise transformation, skills and markets.
- Cohesion Policy and the Recovery and Resilience Facility have complementary roles
The review of Recovery and Resilience Plans (RRPs) identified at least one core circular economy measure in 21 of the 27 national RRPs. The RRF has been particularly effective in supporting regulatory reforms, governance measures, waste-system investment and selected forms of industrial transformation. It is much less present in repair, reuse, refurbishment, product-life extension and territorially embedded circular-service ecosystems.
The RRF should therefore be seen as a selective accelerator, while Cohesion Policy retains a distinctive role in regional capacity-building, local value chains and place-based delivery.
Policy recommendations for the 2028-2034 framework
The proposed post-2027 architecture creates both an opportunity and a risk. National and Regional Partnership Plans could connect investments currently divided between environmental infrastructure, competitiveness, innovation, skills and territorial development. This could reduce fragmentation.
At the same time, greater integration could make circular economy less visible if investments are absorbed into broad green or competitiveness envelopes. Greater national flexibility could also weaken territorial ownership if regional and local authorities do not retain an effective role in programming and implementation.
The decisive question for the European Parliament is therefore not simply whether circular economy remains eligible for support after 2027, but whether it remains traceable and becomes more systemic, territorially grounded and measurable.
The report identifies eight policy recommendations for the 2028–2034 framework:
- Preserve the visibility of circular economy within National and Regional Partnership Plans through a common classification of circular functions.
- Rebalance support across the full life cycle, while recognising different territorial starting points and continuing essential waste-system investment where needed.
- Create demand for circular products and secondary raw materials through procurement, standards, certification, traceability and stronger links between suppliers and industrial users.
- Give regional and local actors operational roles, with clear responsibilities for preparation, implementation and monitoring.
- Coordinate EU, national and regional instruments around territorial circular-economy pathways, identifying gaps, overlaps and complementarities.
- Match financing and delivery arrangements to different interventions, including technical assistance, grants, financial instruments and staged milestones.
- Connect circular investment to skills, employment, the social economy and territorial inclusion, particularly in repair, reuse and refurbishment ecosystems.
- Measure circular transformation, not only expenditure and infrastructure, distinguishing procedural progress, outputs and genuine outcomes such as waste prevention, product-life extension and actual secondary-material uptake.
Cohesion Policy can translate common EU rules and market objectives into functioning regional circular systems. The next period should connect essential waste infrastructure with higher-value circular activity, bring innovation to markets and territories, and strengthen competitiveness, resilience and cohesion.
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