The EU adopted the Circular Economy Action Plan (CEAP) in 2020, building a regulatory framework that requires companies to design products in a circular fashion — from the design stage through to disposal and recycling. The EU Battery Regulation, Ecodesign Regulation (ESPR), and Right to Repair Directive, which are being phased in between 2024 and 2026, directly affect manufacturers of batteries, electronics, textiles, and construction materials in particular. While these regulations do not directly apply to Japanese companies, they effectively cascade as requirements on the design, material selection, and waste management of products exported to the EU.
What Is the Circular Economy — The Difference from the Linear Economy
The core of the circular economy is the shift from the traditional "extract → manufacture → dispose" linear economic model to a "design → use → recover → regenerate → reuse" cycle. The EU promotes the circular economy as a means to simultaneously achieve climate action and resource security, and the wave of regulatory tightening toward 2030 has reached Japan's manufacturing sector.
Circular design requirements span every stage of product design, manufacturing processes, and supply chains:
- Design stage: Design premised on repairability, disassembly ease, and use of recycled materials
- Manufacturing stage: Waste minimization, water use efficiency, elimination of hazardous substances
- Supply chain: Procurement of recycled materials, ensuring traceability of materials
- Use and disposal stage: Collection and recycling infrastructure based on extended producer responsibility (EPR)
EU Battery Regulation — Mandatory Circular Design Built Into Batteries
The EU Battery Regulation (in force since 2023) requires carbon footprint declarations, minimum recycled material content thresholds, and attachment of a digital battery passport for EV, industrial, and portable device batteries. Among requirements being phased in from 2025 onward, EV lithium-ion batteries face numerical targets including "minimum recycled cobalt content of 4%, rising to 12% by 2030" and "lithium at 2–4%, rising to 4–10% by 2030."
This regulation cascades not only to manufacturers of battery cells and packs, but also to manufacturers of products incorporating batteries — EVs, industrial machinery, power tools, and the like. Japanese manufacturers selling EVs and electric equipment in the EU will need to build a system for obtaining certificates of recycled material content from parts suppliers at the procurement stage. The digital battery passport, mandatory from 2027, requires materials provenance, manufacturing, and recycling information to be accessible via QR code format.
Minimum recycled material content thresholds
The minimum recycled content thresholds for cobalt, lithium, nickel, and lead are being progressively raised. EU EV battery manufacturers must move away from 100% mined material compositions and build procurement relationships with recycled material suppliers. For Japanese battery materials manufacturers, developing products compatible with recycled materials is an urgent priority.
Digital Battery Passport (from 2027)
An obligation to provide battery lifecycle information — materials origin, manufacturing facility, carbon footprint, state of health, and recycling method — in digital format. Data collection and management infrastructure across the entire supply chain is a prerequisite. Providing information at the component and materials level will become a precondition for procurement transactions.
Carbon Footprint Declaration (EV batteries from 2025)
Carbon footprint declarations for EV batteries are mandatory from 2025. Declared values are compared against EU benchmarks, and from 2028 onward, products exceeding the threshold will face sales restrictions. Since PCF primary data provision will also be required from battery manufacturers' own suppliers, carbon data preparation all the way down to materials suppliers is required.
Ecodesign Regulation (ESPR) — Mandatory Circular Design Requirements for Products
ESPR sets durability, repairability, recyclability, and recycled material content as product design requirements for a wide range of product categories, including electrical and electronic products, textiles, and construction materials. Delegated regulations for individual product categories are expected to be drafted and phased into force between 2025 and 2027.
The most direct impact on manufacturers will be the mandatory implementation of the "Digital Product Passport (DPP)." Manufacturers will be required to provide information about material composition, repair information, environmental performance, and recycling information via digital media attached to products. For Japanese suppliers providing components for Europe-bound products, there is a high likelihood that providing materials composition and hazardous substance content information at the component level for inclusion in the DPP will become a condition of trade.
Right to Repair Directive: The Right to Repair Directive, in force since 2024, requires manufacturers to ensure consumers have access to repair services for products sold in the EU, and mandates the provision of spare parts and software tools. This directional push toward extended equipment use will affect manufacturers' after-sales service structures.
Practical Circular Design Actions for Japanese Manufacturers
Responding to European regulations is a compliance obligation, but circular design simultaneously represents an opportunity for cost reduction and new business. In Japan as well, the economic benefits of resource cycling are attracting attention, with growing activities such as remanufacturing of automotive parts, recycling of wastewater and exhaust gases in semiconductor manufacturing processes, and high-purity recovery of metal cutting chips.
Circular product design (collaboration with design departments)
Transitioning to product structures that are easier to disassemble, repair, and regenerate. Design for repairability (favoring screws over adhesives), design for recyclability (unifying materials to single materials), and long-term spare parts supply guarantees become requirements baked into the design stage. Establishing circular design guidelines aligned with ESPR and the Right to Repair Directive in design departments is a prerequisite for EU-bound product development.
Recycled material procurement (collaboration with procurement departments)
Building procurement relationships with suppliers of recycled aluminum, recycled plastics, recycled copper, and other recycled materials. Quality, cost, and obtaining content certification become new axes in procurement evaluation. Securing supplier certification infrastructure (content rates and provenance traceability) is a prerequisite for meeting EU Battery Regulation requirements.
Valorizing waste and by-products (collaboration with production departments)
Exploring in-house recycling of manufacturing process waste — cutting chips, slag, waste liquids, spent catalysts — or selling it as raw material externally. This can simultaneously reduce waste processing costs and create new revenue streams by valorizing waste as recycled materials. As EPR is strengthened, it becomes harder to pass waste management costs through to product prices, meaning waste reduction itself becomes direct cost reduction.
Responding to the Digital Product Passport (DPP)
The DPP is a mechanism for making product information digitally accessible, linking information to products via QR codes, RFID tags, and similar methods. Major information items in DPPs include:
- Material composition (content ratios, proportion of recycled materials)
- Hazardous substance content (RoHS and REACH compliance status)
- Carbon footprint (product PCF)
- Repair and maintenance information (disassembly procedures, part numbers)
- Disposal and recycling methods
DPP compliance requires a data collection infrastructure for receiving information at the materials and component level from suppliers. This significantly overlaps with the data collection required for Scope 3 Category 1 calculations, making it efficient to build an integrated data platform that serves PCF calculation, Scope 3 disclosure, and DPP compliance simultaneously.
EU circular economy regulations will continue to expand in scope and requirement levels through 2030. The most important near-term action for Japanese companies is mapping which parts of their product portfolios may be touched by which European regulations, and ensuring that their design, procurement, and waste management departments share a common understanding of the challenges. Regulatory compliance is not only about meeting obligations — it carries long-term significance in terms of materials and design differentiation and maintaining competitiveness in European markets.