In Estonia, the legislative framework for the circular economy is grounded in the Waste Act. This has effectively applied a handbrake to the transition from a linear to a circular economy — one that cannot be released with a simple press of a button. The Waste Act’s purpose is to support the implementation of EU Waste Directive (EU) 2018/851. Accordingly, it focuses on organising waste management and preparing waste for reuse. The goal of the circular economy, however, is not to improve waste management but to reduce the use of primary resources. From a supply and value chain perspective, the aim of transitioning to a circular economy is to create a materials market where quality secondary materials are available that can substitute for new primary resources.
The greatest problem — why the Waste Act tends to impede rather than facilitate the transition to a circular economy — stems from ownership relations. Under the Waste Act, waste is any item that its owner has discarded, intends to discard, or is required by law to discard. A waste material can only regain the status of a material once it has undergone the required recycling or other recovery process. Recovery operations, however, may only be performed by companies holding an environmental permit and a waste handler registration. Only companies with a waste permit may receive waste from others. The result is that all waste management in Estonia is locked in the hands of waste permit holders. In simplified terms, the scheme operates as follows:
- the waste generator (the person whose activities generate waste) and the waste holder (the waste generator in whose possession the waste is held) hand over the waste to a waste holder;
- the waste holder collects waste by type in accordance with the requirements for the collection and transport of municipal solid waste and, where necessary, other waste, as organised by the local municipality (KOV);
- the waste holder transfers the waste to a person holding a waste permit.
Thus, circular economy activity in Estonia is only possible at locations licensed by waste-permit holders, or within the framework of research and development work as an exception provided for in the Waste Act. As a result, we do participate in technology development but not in the emergence of a materials market. This means that our universities have many circular economy experts, yet Estonian businesses still lack access to even the most basic circular economy tools, such as circular economy standards and digital product passports.
It is also significant that the Waste Act does not count energy recovery as part of the circular economy, on the grounds that burning materials or converting them into fuel does not constitute material recovery of waste. Indeed, it is not material recovery. But the goal of the circular economy is not to achieve material recovery of waste. The goal of the circular economy is to reduce the use of primary resources. Energy recovery from waste is therefore an activity that very much supports the circular economy. It must be understood that under circular economy standards, both energy and water recovery are considered part of the circular economy, because these activities save the deployment of new resources.
In summary, the purpose of the Waste Act is to help reduce waste generation, as required by the EU Waste Directive. However, the transition to a circular economy requires considerably more. For a circular economy to function, it must be possible at the level of a product, company, or value chain to use the metrics needed for management — for instance, to measure what share of inputs and outputs consists of recycled or reused materials, and how much recovered energy is used, and so on. Estonia’s current legislation, however, focuses on the separate collection, transport, and recovery of waste. These are important preconditions, but they are insufficient where the circular economy has already taken hold — for example, in the construction and real estate sector.
References are available here: Anu Kull TalTech thesis: quantification of circularity
When citing this text, please include the reference: A. Kull, Circular Village: a circular economy business model in real estate development. Tallinn University of Technology, 2025.