Designing Germany’s Circular Textile EPR System
What are the system-wide recommendations for Germany’s Textile EPR scheme to influence companies’ design and portfolio decisions?
Carina Hofmann-Wellenhof talks about CIRCULAR REPUBLIC’s System Design Report for Germany’s textile EPR, developed with 20 organisations and more than 50 stakeholders across the textile value chain.
She explains the main recommendations for designing the system, from the structure of PROs to eco-modulation and recycling incentives.
What you’ll hear in this episode:
-Why Germany should combine competing PROs with centralised functions
-Recycling quotas and content targets for textile-to-textile recycling
-How eco-modulation, collection and R&D funding could influence the development of a more circular textile system
This conversation also looks at the role of EU-level harmonisation, the economics of virgin materials and the next steps in Germany’s legislative process.
This is the final episode of the Textile EPR series.
Video Impression
People
Carina Hofmann-Wellenhof, Circular Systems Architect at CIRCULAR REPUBLIC
https://www.linkedin.com/in/carinahofmannwellenhof/
Patrick Hypscher, Circular Business Strategist, PaaS Expert
https://www.linkedin.com/in/hypscher/
Chapters
0:00 Intro
4:04 Why CIRCULAR REPUBLIC built the EPR report
5:50 Retailer trade-offs under EPR fees
10:37 A multi-PRO system with centralized functions
12:01 Funding, ESPR, and eco-modulation basics
15:03 Collection and the cherry-picking problem
17:08 The textile-to-textile recycling quota
21:26 Regionality, terminology, and lessons learned
27:50 Eco-modulation, pricing, and next milestones
35:11 CIRCULAR REPUBLIC’s next two pilots
38:41 Outro
About
CIRCULAR REPUBLIC is Europe’s leading implementation platform for the circular economy. As part of UnternehmerTUM – Europe’s largest center for innovation and business creation – the initiative empowers established companies and start-ups to design circular innovations and scalable business models. By connecting key stakeholders across the entire value chain, CIRCULAR REPUBLIC drives the systemic transformation required for a resilient, sustainable, and prosperous global economy.
Further Links
Report: https://www.circular-republic.org/epr-textiles/
Get to know more about CIRCULAR REPUBLIC: https://www.circular-republic.org/
Transcript
[00:00:00] Intro
Carina Hofmann-Wellenhof: All the regulations that we have now where we say “Dear producers, we know that all does not make economic sense, but we drag you to do it, and we put a punishment on it, which we don’t know how high we should make it.” We could instead increase prices of resources, and then it will all make economic sense.
Jingle: My name is Patrick Hypscher, and this is circularity.fm, the podcast about understanding, building, and managing circular business models.
Patrick Hypscher: Greetings and a warm welcome back to our deep dive into textile EPR. Following last week’s legal perspective with Alexander Sustal, we are concluding this series by discussing possible improvements of the German approach and examining the upcoming legislative milestones. For a concise one-page briefing of today’s discussion, subscribe to the newsletter at www.circularity.fm.
Patrick Hypscher: Two days ago the system design report for Germany’s textile EPR was released, and I’m super happy to have the responsible author with me. Welcome, Carina.
Carina Hofmann-Wellenhof: Hello. Nice to see you.
Patrick Hypscher: Carina, who are you?
Carina Hofmann-Wellenhof: So my name is Carina Hofmann-Wellenhof. I dedicated my whole career to sustainability. I started up with environmental and process engineering and biotech, worked for four years in biotech. But then I realized probably the good and sustainable technologies are already out there, and there’s something wrong with the economic system, and that’s why I changed my career to strategy consulting. Went to BCG, did a mini MBA, and then went into the circular economy. So now for already two years, I’m working for CIRCULAR REPUBLIC. CIRCULAR REPUBLIC is Europe’s largest implementation platform for the circular economy. It is a part of UnternehmerTUM, and here I help companies start into the circular economy. I already worked for packaging with L’Oréal, for electronics with Bosch, Siemens Hausgeräte, and now for already half a year, I had the honor to work with a consortium of 20 organizations, which makes more than 50 individual stakeholders, on the creation of recommendations for the new textile EPR.
Patrick Hypscher: Wonderful. I can’t wait to dive into the details.
Carina Hofmann-Wellenhof: Yes.
Patrick Hypscher: There’s always a private question, at the beginning. And since we’re talking about textiles here, what is one of the most sustainable pieces of clothing in your closet?
Carina Hofmann-Wellenhof: So actually, since I work for CIRCULAR REPUBLIC, I chose to rent clothes. So, every month I get a parcel of four pieces of clothes, and when the month is over, I just put them back into the parcel and, I get four new ones. So they’re new for me, but they’re not actually new, so many people have worn them before. But, so I really like that concept as I have the feeling they are new, but actually they are shared with a lot of other people, and that’s probably the four most sustainable ones in my closet right now.
Patrick Hypscher: Awesome. I mean, these items will certainly have a high utilization rate or hopefully. That sounds good. I will come back to, renting, later on when we talk about the report. And yeah, why did you at CIRCULAR REPUBLIC create the system design report in the first place?
[00:04:04] Why CIRCULAR REPUBLIC built the EPR report
Carina Hofmann-Wellenhof: At CIRCULAR REPUBLIC, we want to help organizations be well-prepared for the upcoming textile EPR system. And one thing we usually don’t do is influence on policy. But this time we thought this is such a big deal, we should be doing both, helping organizations be well-prepared and help them influence policy. So that was our two goals, and that’s why we onboarded organizations all around the value chain to dive into that.
Patrick Hypscher: Can you give some examples? You already mentioned the 20 organizations. Who are they?
Carina Hofmann-Wellenhof: So they are all around the value chain. We had on board brands, producers, retailers, but also sorters, collectors, and recyclers, digital solution providers and also startups for cool new solutions. To name some of the big ones, we had on board Zalando, Tchibo, Decathlon, but also Lidl. Some probably don’t know, but they are actually the ones who bring the fourth largest fraction of textiles on the German market.
Patrick Hypscher: Wow.
Carina Hofmann-Wellenhof: And in fact, not only Lidl, but the whole Schwarz Group we had on board. That means we also had two PROs. The one from Schwarz Group is PreZero and another one that is Interzero. We thought it is difficult to have two competing PROs on board, but they realized that actually it was really cool because they could build a counterweight to the brands that we had on board. And then we also had a lot of recycling startups on board but also established companies like BASF and then solution providers like SAP.
[00:05:50] Retailer trade-offs under EPR fees
Patrick Hypscher: Okay. That’s quite a bunch of, different perspectives, and I can i- imagine pretty vivid discussions about certain issues and probably also to first of all, generate a common understanding of the different perspectives. Carina, our conversation is the last one in a series about textile EPR in Germany and, to a certain extent also in Europe. And you mentioned a couple of retailers, and I tried to get some on the show. It didn’t work out for various reasons, but, the retailers who often are also own brands, or manufacturers or licensed ones, so to say they have, of course, an important role to play, and I feel like for them it’s pretty hard given the different perspectives and different goals and sometimes even different, business models like rental, as you mentioned at the beginning. So can you share some of the trade-offs that especially retailers face with this upcoming regulation?
Carina Hofmann-Wellenhof: Yes. Maybe let’s have a look at the retailer’s perspective. So if they are retailers and not the producers, they are not the ones putting the the garment on the German market in the first place, so that would be the definition of producer, but they r- only retail it. That means that for the next two years, the producers can already have a look into what are the material composition of my textiles, the hazardous substances. Can I do something about eco-modulation? But the retailer has a lot less of that information. What will happen in two, two years? The producer has to pay EPR fees, so an EPR fee for the item and we will see if it’s per item or per kilogram of textiles you put on the market, and then an additional fee for the eco-modulation. And when you have a not sustainable T-shirt, you pay a lot of eco-modulation. If you have a sustainable one, you pay very few. So what can a retailer do? Because it does not pay the EPR fee itself, it just gets fee passed on by the producer. The very only thing a retailer can do is adaption of portfolio.
Patrick Hypscher: Mm-hmm.
Carina Hofmann-Wellenhof: So if that T-shirt all of a sudden gets expensive from that producer, then s- probably something’s wrong with it, and it’s probably not a sustainable one. The eco-modulation fee is high. That’s why I have to shift my portfolio to cheaper ones, which is then more sustainable ones.
Patrick Hypscher: A-and on that one, just to understand, in that case, the retailer won’t pay any fees at all. They just have to pass on, let’s say, the, the fees in a way to the customer, as part of the normal pricing structure. So, a retailer doesn’t necessarily see that a certain T-shirt that the price increase of a certain T-shirt is due to the EPR fees or some other factors. They just see the price increase from the producer, and, they pass it on to the customer. That’s basically– Be-because in the pure retailer position, the retailer neither has to pay fees nor does it get a part of the collected fees, if they are not a collector or sorter, which they are n-not in… Okay.
Carina Hofmann-Wellenhof: They just pass it on to the consumer. But there is actually another difficulty in that. So the producer and the retailer, they both have margins, and the producer can decide, “Do I wanna take it off my margin and keep the price for my retailer who I have long-term relationships with, or do I wanna pass it on to–“
Patrick Hypscher: Right.
Carina Hofmann-Wellenhof: And so the retailer, although he knows, “Oh, maybe that T-shirt is not that sustainable, probably uh, that’s gonna be more EPR fees than this other one,” the producer can decide not to pass it on or to pass it on in a, a declined way. And also the retailer can decide, “Do I wanna pass it on, these increased prices now to my customers?” So difficult decisions to make.
Patrick Hypscher: Okay, and then it gets more complicated when a retailer like you mentioned Zalando, for example or Decathlon, when they also have products where they are producer because then they have to pay the fee based on the eco-modulation and so on and so forth. So but a- as a pure retailer you’re more or less affected by possible price increases and how to manage those as you just explained. Um, let’s finally come to the study, Carina. We will for sure put the link to the study into the show notes so everyone can look it up. But since we are here, what are the key findings or suggestions of the report?
[00:10:37] A multi-PRO system with centralized functions
Carina Hofmann-Wellenhof: Yes. We structured our whole report in eight chapters. It’s probably too much to talk about all of them, but I’m gonna give you some of the most important recommendations. One chapter was model and institutions, and there are two possibilities on how to structure an EPR system. There’s a po- possibility of a single PRO system, but there is disadvantages with that high costs, inefficiencies, also no need for innovation. And there is the multiple possibility, but that brings other disadvantages with it which is in transparency, a race to the bottom and fragmentation. What we suggested was in the middle, so it still should be a multiple PRO system to get that innovation, but to avoid the race to the bottom, it should have some centralized functions. For example, a joint PRO body where activities that would cause a race to the bottom is organized in that central body.
Patrick Hypscher: And on the race to the bottom, the way I understood it basically is that I, as a producer, choose the PRO where I pay the lowest fees and I have, the lowest incentive to, become more circular or improve more for recy- recyclability and so on. That’s basically the race to the bottom, more or less.
[00:12:01] Funding, ESPR, and eco-modulation basics
Carina Hofmann-Wellenhof: Yes. So it would be a race to the bottom. So every PROs wants to set a lower price, and that’s why additional to some activities that we are sharing, we have to also set standards for quality and also quotas, but I come to that in a minute. So the second recommendation is on funding. It should, of course, be spent on the development of collection, sorting, and recycling, but it should also go into the development of digital solutions of repair and reuse concepts of design, of circular design, and many more so it should be a wide range of where these R&D funds should go. And then the third one is the eco-modulation. Here we want a, the best case, a Europe-wide yeah, standard for the eco-modulation, it should be based on the ESPR. Sounds similar to EPR, but it’s not. It’s the Eco Design for Sustainable Product Regulation, and they say it’s basically four criteria: repairability, durability, recyclability, and the use of recycled content.
Patrick Hypscher: On the eco-modulation, so we already discussed it in previous episodes that the Textile EPR started a couple of years ago from a legislative point of view, and now in the meantime, the urge to have a more standardized European framework became bigger and bigger while this Textile EPR technically will build uh, local different EPR systems. So I get that you’re bringing it up that especially the eco-modulation should be rather harmonized. Do you see potential for that, or technically is it, is this something to address to the German government, or is it is it something that every other member state should look into? Does the European Commission have a certain instrument in their toolbox that they can harmonize this eco-modulation?
Carina Hofmann-Wellenhof: So in the first place, everybody was annoyed that EPR for textiles is a regulation, which means that every country has to do it on their own.
Patrick Hypscher: Yeah.
Carina Hofmann-Wellenhof: But I think maybe it’s not a bug, it’s a feature. Maybe you can look at your neighbor and see what they are doing, and maybe they come up with a better solution. If we would take the most established one in Europe and just take that over for whole of Europe, we probably would have taken over the French one, which is a mono or single PRO system. I think the eco-modulation should be centralized Europe-wide and be based on the ESPR, so that’s already the biggest lever the European Commission have or has, that we just project that on the eco-modulation of the EPR.
Patrick Hypscher: Okay. And there’s actually also an instrument to do that later on for the European Commission by basically setting the standards in the ESPR. This will inherit in the national textile EPR systems.
Carina Hofmann-Wellenhof: Yes.
Patrick Hypscher: Okay.
[00:15:03] Collection and the cherry-picking problem
Carina Hofmann-Wellenhof: All right. The collection. The regulation wants nationwide coverage of collection. But when you have multiple PROs, they are gonna start cherry-picking. Where can you cherry-pick in collection? There are regions in Germany that are more populated and some that are less populated. That’s why in some areas, for example, Cologne center or Munich city center there is a lot of more textiles with a lot fewer logistics cost to collect than in a poorer populated regions. Also, the quality between these regions a lot and so it is important that the PROs do not compete in collection. So they should organize the collection through their joint PRO body that I mentioned before.
Patrick Hypscher: Okay. Makes sense. Yeah.
Carina Hofmann-Wellenhof: Yes, but as still competition is a cool thing to spark innovation, thought about another way how competition can take place, that is we distribute whole of Germany in certain areas, and there are private, or yeah let’s say private collection providers, and they can compete on on getting the tender for this area. And what we also said is or what the regulation also wants us to, is to have space for the social economy. And so some of these regions are gonna be cut out and their social economies can operate.
Patrick Hypscher: And who will decide, what these regions are? That’s probably super interesting.
Carina Hofmann-Wellenhof: Yes. So there are organizations already there today, and they can say, “Okay, I’m operating in this region.” And then the system, the EPR system, this new system will say, “Okay, so then we cut out your region.”
Patrick Hypscher: Okay. Cool.
[00:17:08] The textile-to-textile recycling quota
Carina Hofmann-Wellenhof: Ah, and one next one is about recycling. So the EPR actually wants us to do three things. It is, having a better circular economy for textiles, producing less waste and having a better sustainable design of textiles. And for having a better circular economy, we need more textile-to-textile recycling. And today, textile-to-textile recycling is happening less than 1% to all of the end-of-life textiles that we have in Germany. So we want to start into that EPR system and we have competing PROs, they are gonna search for the most profitable pathway they can send their end-of-life t-textiles down. And surprise, textile-to-textile recycling is not one of the profitable ones or the most profitable ones, and that’s why we need a quota. We need a quota that says, “That fraction of your end-of-life textiles, dear PRO, you have to send down that pathway.” And we wanted to call it textile-to-textile grade quota because the– it is for the PRO. PRO controls the collection, sorting, and recycling. And so what it can control is every step of the way until the quality of the granulate of the fibers that come out of that recycling process. But from then on, it does not have control on the market that is downstream. And that’s why we also say that the recycling quota, the textile-to-textile grade recycling quota, does not work on its own. It needs a counterpart. So the recycling quota creates an input stream and the– and there is this other quota that sounds similar but it’s not the same. It’s the recycled content target and that is that target that we talked about in eco-modulation that also appears in the ESPR and that is for the brands. They have to take some recycled content in their clothing and that’s where they create that output stream for the new recycling technologies. And with a steady and reliant input stream and a large and reliant output stream, there are a lot more investors willing to invest in the– to the scale-up of new technologies.
Patrick Hypscher: So super smart and definitely makes sense and is needed. Yeah, if you look into plastics, for example, this is one of the flaws in the current system that we lack quotas. Wouldn’t it be enough to have just a recycled content quota in the, eco-modulation, and by that you create automatically demand for fiber-to-fiber uh, recycling?
Carina Hofmann-Wellenhof: Yes, I thought the same at the beginning, then I realized that there– that would be a lot slower than when you have both,
Patrick Hypscher: Okay.
Carina Hofmann-Wellenhof: Of the quotas. And we already we also said in the in the report that we need that textile recycling or the recycling quota rather as a kickstarter to create that system. And at some point, that one will be less important and the output stream will create the whole market. But if we did not have the recycling quota, we had the PROs first putting the recycling or the end-of-life textiles in other streams, then we would have the brands saying, “Well, we have this quota, but there is no recycled content.
Patrick Hypscher: That sounds familiar somehow.
Carina Hofmann-Wellenhof: What are you doing?” And yeah. So with that kickstarter, the system comes into movement and then probably that is the most important one. You’re definitely right, but that’s the kickstart.
Patrick Hypscher: Okay. Yeah, makes sense. That’s actually a powerful instrument. Let’s see if it will be adopted. And if I did the math correctly, you have one final recommendation you wanted to share.
[00:21:26] Regionality, terminology, and lessons learned
Carina Hofmann-Wellenhof: Yeah. Yes. So we also talked about resilience and regionality of the textiles values value chain. The textile value chain is one of the most global we have here in Germany, and we thought about can we make it more regional? Can that maybe happen through EPR? And we realized that there is three levers could be used to make that happen, and that is the PRO expenses. That’s the first one. So that is when the producers give money to the PROs for collection, sorting, and recycling. They can spend it, of course, in Germany for the collection because that’s physically all they do. But then already the sorting and c- the recycling can take somewhere else on the planet, basically. We thought, should we restrict the PROs to spend these expenses in Europe, only regional, only in Germany? But we said, no, we want to accept that the production of textiles is today in Asia. There is already some infrastructure for recycling in Asia. Why not already u- use this infrastructure and get the system going? Yeah, so we said the PRO expenses can be spent worldwide. There is two more levers. One I already mentioned is the R&D spending or R&D funding, and that should only be spent on entities that are researching in Germany. And if there are– there’s research and development going on outside of Germany these inventors have to prove that their solutions are beneficial for the German system. And then there is another one, which is eco-modulation, and within eco-modulation, the cool um, uh, recycled content target, and there should be a eco-modulation benefit if a brand has some recycled content in their garment, of course. Cool. Perfect. But maybe there should be a-an additional one if the recycled content they use come from an European end-of-life textile stream, or even more if the recycler that recycled that textile stream sat in Europe, or even more if the whole supply chain was based regionally. So yeah, that’s the– was my last point and the third lever.
Patrick Hypscher: It’s super interesting to listen to you because, it feels like this is circular economy, spelled out for one specific industry. You have the design, you have the materials, you have the infrastructure, brands, retailers, and so on and so forth. And many of the topics you addressed pop up in automotive, in also to a certain degree in, in furniture, in construction, and so on and so forth, with different properties of the whole ecosystem and the organizations. So, when– I mean, you’re familiar with circular economy. You already looked into other industry, as, as you mentioned, for example, home appliances. What have been some of the personal learnings you made throughout the last six months?
Carina Hofmann-Wellenhof: Okay. When we had the, yeah, the discussions ongoing with all the stakeholders, it was one problem to challenge to get the right stakeholders to discuss with each other, because we had these two goals getting companies well-prepared. So there were people who wanted to learn, and there were experts who wanted to influence policy. And we wanted to create these discussions, but sometimes we had people in the room who just said nothing and wanted to learn and said, “Oh, that’s interesting.” And the other one saying, “We want this and exactly this.” And so it was important to see, okay, who could be a counterpart, who could have another opinion, and also bring that person or that company into the room. And maybe a second learning it was crazy that we talked about regulating recycling of the textile stream if the terminology for recycling is totally messed up. Everybody uses terms when it comes to recycling. Yeah, we realized when we wanted to talk about recycling, we needed to have a common terminology. We realized that people used upcycling, downcycling, fiber to X to textile, open loop, closed loop, we made a diagram. We came up with a framework for, what is upcycling, downcycling of textiles, what parameters are important, and we had four findings. The first one um, is that what we today call upcycling uh, so making out of any old textile bags, for example, that is actually component repurposing. You are not going down to material level. You’re actually staying on component level.
Patrick Hypscher: What’s the component in this example?
Carina Hofmann-Wellenhof: Yes. If you take a, a T-shirt and you cut a whole piece of it out, it is a component of that T-shirt, and you take that piece and stitch it to get a bag, for example, then you took components of old textiles and made a bag out of it. So before it was a T-shirt, now it is a bag, so it is a different purpose, that’s why it is component repurposing.
Patrick Hypscher: Okay. And in that example, what’s the material then the specific fiber, the single one, or?
Carina Hofmann-Wellenhof: There, there can be any.
Patrick Hypscher: Mm-hmm.
Carina Hofmann-Wellenhof: But the important thing is if you’re not going down to the fiber, if you’re knowing– not going down to the mono material then it’s not it’s not recycling, it’s actually repurposing.
[00:27:50] Eco-modulation, pricing, and next milestones
Patrick Hypscher: Yeah, super interesting. O-one final question on, learnings and the report. What puzzles me after many conversations in this, space is the expected impact of the eco-modulation. So when we look at T-shirts I see– I can buy T-shirts for three euros. I found one on Primark online, a three euro T-shirt, a hundred percent cotton, in that case, so mono material. And of course, I mean, there’s, there is no limit. Yeah. You have T-shirts for twenty, thirty, fifty euros, depending on the features, material, and then even above, depending on the brand. And if the eco-modulation should also have a steering effect you want to make linear economy design and material, more expensive. But the starting point for certain items that are super cheap, that are fast fashion, so they’re so cheap, as I said, like three euros what can the impact of a couple of cents for eco-modulation, what can that actually have of an impact to change the whole system towards more circularity?
Carina Hofmann-Wellenhof: Yes. So the first thing maybe on fast fashion, the term fast always kind of triggers me because when we talk about fast fashion, it’s mostly a business model where people order something and then it gets created, and then it gets shipped.
Patrick Hypscher: Mm-hmm.
Carina Hofmann-Wellenhof: So with that model, actually, we have a lot less overproduction, is in the first place good. So I’d would rather like to talk about maybe low-quality products that are that won’t have long life, that maybe have some hazardous substances that are not well recyclable. So it’s actually hard to set how high the eco-modulation should be. Just one thing to mention, we’re actually in the next half year doing a pilot for brands where we analyze their portfolio and we take some options, some more light options for eco-modulation and then the even more extreme ones, and we calculate what that eco-modulation would look like in cost and then ask them, “Would that change your decision in design
Patrick Hypscher: Mm-hmm.
Carina Hofmann-Wellenhof: Or in business model?” So we have that recommendations for politicians as well. But I think for every regulation we do in this spectrum, it stays hard on how high should a punishment be. And it’s not only the eco-modulation in the EPR, it’s also the ban of the destruction of unsold goods. If I make 1,000 euro more for if I destroy these goods and then the state comes around and says, “Well, then you have to pay 200 euros because you did that.” And when I say, “Well, okay.” It should be per item. Yes. So I think that, that is one difficulty of today’s regulations. But yeah, there is even another one that is micromanaging. So I had the feeling during steering this project on EPR, people came around with questions like, “What about mattresses? What about shoes? What about kids’ shoes that blink when you step on them?” And so it was going crazy into this micromanaging, and I thought, “Is that really what legislation should be about?” And I think there maybe we should take a step back and see if that kind of micromanaging regulation is even the, the best part. If we r- ask ourselves what do we reach with all these regulations, it is using less virgin raw material, and today, virgin materials are extremely cheap. We take them out of the environment for the cost of zero. Our economic system was developed in a time where we thought that natural resources were eternal, and our economic system is based on if something is scarce, it is expensive. If something is limited, it is cheap, and if it’s something is there eternal, free. And, today we know that that is not the case. Natural resources are not eternal, so they should have a price. And maybe let’s play that through with one example. Maybe taking a pullover and the cotton and the oil that I need for it are extremely expensive, so instead of selling it for 50, I would have to sell it for 500. And then as a producer, I would say, “Oh my God, I can’t sell that anymore. What am I gonna do? Maybe I have to sell it for 100 because that’s the most any customer would pay.” I would suggest or hope that I can buy it back so I can sell it again. And then I, of course, would slow down my fashion cycles because in five years it should still be cool. And then I would put a digital product passport on it just because I would want to know where it is and when it comes back. And I could go on and on. All the regulations that we have now where we say, “Dear producers, we know that all does not make economic sense, but we drag you to do it, and we put a punishment on it, which we don’t know how high we should make it.” We could instead increase prices of resources, and then it will all make economic sense.
Patrick Hypscher: Yeah, I fully agree. I ended up on the same conclusion after a couple of years in circular economy. And I totally share that approach. There should be a unleveled playing field in favor of secondary materials. And right now we d- not even have a level playing field. And if we had that, we could probably leave out many of the micro regulations you mentioned. Yeah, it’s kind to fix a problem to a small degree where the root cause is something much more bigger. Yeah. Yeah. All right. Step by step you already mentioned talking about the future, and it’s great that your recommendation are out there and you sparked this conversation. What are the next milestones in the German process now?
Carina Hofmann-Wellenhof: Yes. So in autumn, mid of September, we are going to see the um, Referentenentwurf. The Ministry of the Environment is now working on it. They hopefully take into account our report our recommendations. Then there is the Verbändeanhörung, people can react to that uh, Referentenentwurf. And then we have the the government approval of that draft, which is in the Bundeskabinett. That is about end of 2026 um, starting 2027. And then we have the parliamentary process in the Bundestag and Bundesrat in spring 2027. If we wanna be in time with the EU timeline, that would be it.
[00:35:11] CIRCULAR REPUBLIC’s next two pilots
Patrick Hypscher: And Carina, my final question is then again on CIRCULAR REPUBLIC and your activities. So there is this legislative process, as you just explained. What are you gonna do now after you gathered 20 companies, report has been published, but the story will continue. So what will CIRCULAR REPUBLIC do and how can companies be involved in that?
Carina Hofmann-Wellenhof: Yes. So one special thing about CIRCULAR REPUBLIC is that we don’t want to only discuss or talk about things. We want to bring things on the street. We want to test things in reality. And there is two things that we realized should, we should do some testing about. So we’re gonna do two pilots in the next half year. One I already mentioned, it’s about the eco-modulation and about the three different fee structures that we want to analyze, and we’re still looking for brands who want to join us here. Of course, the information of the portfolio it is sensitive so we treat it in a very secret way. But the metadata we’re gonna take to give recommendation to the government on how extreme the eco-modulation can or should be. Then we also have that second pilot on the recycling quota. We already talked about that one, the kickstart one, we see today that it is less than 1% textile-to-textile recycling. And should the recommendation to the government be, “Okay, set the quota on two percent,” or can we already go higher? So we want to take five tons of textiles divert it into a cream export or the reuse fraction, which is a cream, so used in Europe, and then export in other parts of the world, and then the non-reusable one, and we want to analyze the recycling potential for these streams. So if we look at the today’s export fraction, it is quite big. Germany is export world leader so we have our ask to, ask ourselves although it is to be reuse, if reuse in this country and then for sure disposal is the more sustainable option or if we maybe should drive back export and start using more of that stream in recycling. And that’s why we want to see what is the potential with today’s technologies for this stream and also for the today’s downcycling stream, even for the cream stream if we at some point realize that also secondhand in Europe is going back. And then we know that, and we want to see what of that potential can now not be fulfilled because technologies have to scale and maybe what is the lack to get to one hundred percent, what are the materials that we cannot recycle today and why?
Patrick Hypscher: Wonderful. Again, super exciting. Carina, thanks for, the work in the past six months. I’m super curious to see how the, draft proposal in September will look like, and, I’m pretty sure you will read it carefully and see if you can spot certain recommendations from your side. And yeah, we follow that topic. Let’s see if we pick it up again next year. Thanks again for creating the report and sharing the essentials here with us.
Carina Hofmann-Wellenhof: Yeah, for sure.
[00:38:41] Outro
Patrick Hypscher: We have reached the final installment of our series. You can find the main takeaways from Carina’s segment by joining the circularity.fm’s newsletter. As we wrap up, the focus shifts to the German government’s anticipated release of the textile EPR draft this autumn. Across Europe, every member state is required to implement these systems by mid-2027. This series aimed to clarify the critical points of contention. Please share your feedback or any outstanding inquiries you might have. If these episodes provided value, a podcast review would be greatly appreciated to help expand our reach. Regardless, I wish you much success in your efforts to build a profitable circular economy. And please don’t forget, the most abundant renewable resource is your imagination.
Jingle: My name is Patrick Hypscher, and this is circularity.fm, the podcast about understanding, building, and managing circular business models.
