Circular Economy

Innovations and new technologies are changing the demand for resources worldwide. In Germany, the energy transition, digitalization and growing sustainability awareness among consumers has led to the development of a series of niche markets offering ever more potential for innovative companies in the circular economy.

At the cutting edge of climate protection

Germany is a worldwide leader in environmental technologies relating to climate change, recycling and waste management, and water treatment.

With a global trade share of 14% in 2020, German greentech products are especially sought after. In 2016, the markets for environmentally friendly energy generation, energy efficiency, resource efficiency, sustainable mobility, sustainable water management, waste management and recycling accounted for 15% of German GDP. This is expected to increase to 19% by 2025.

In 2016, the German waste management and recycling markets totaled approximately EUR 20 billion -equivalent to 16% of global market volume. The German circular economy industry is expected to grow by 5.4% annually through 2025.
Germany's Environmental Technologies Markets (in EUR billion)

Pioneering environmental regulation drives innovation

The Waste Management Act (KrWG) enshrines the notion of product responsibility by defining responsibilities along the product life cycle and offering incentives to manufacture durable products. The act’s goal is to turn a waste management culture into a resource management culture, minimizing waste generation and maximizing reuse and recycling.


Demographic changes have led to a constant increase in packaging waste. Domestic packaging waste volume reached its peak in 2016 with 18 million tons – of which 70% was recycled. In January 2019, Germany’s new Packaging Act entered into force, stipulating higher recycling quotas for packaging. The task is especially challenging for plastics, with the recycling quota for plastic packaging to be increased to 63% by 2022.

Minimum Recovery for Packaging Waste in Germany

  as of 2019    as of 2022
Plastic packaging 58%   63%
Aluminium 80%   90%
Tinplate and ferrous metals 80%   90%
Paper and cardboard 85%   90%
Glass 80%   90%
Beverage carton 75%   80%


Source: Deutscher Bundestag, BMU 2019

Government support for collaboration

The Federal Ministry of Education and Research (BMBF) supports the “Research for Sustainability” or FONA programme of collaborative networks for sustainability-oriented R&D. The programme includes EUR 4 billion in funding for the years 2020 to 2025.

Through the FONA strategy, the BMBF alligns its research funding for climate protection and sustainability with the United Nations’ 2030 Agenda. In collaborative projects with industry partners, the BMBF specifically calls for and help small- and medium-sized enterprises to develop Germany's role as a world leader in this sector. The program especially welcomes “funding newcomers” under the umbrella of the “KMU-Innovativ” FONA initiative. The FONA Strategy formulates separate fields of action, which in turn are underpinned by specific actions to help achieve the goals. The circular economy is formulated as the sixth field of action and includes four main actions: (1) Increasing overall raw material productivity (2) Utilising bio-based raw materias and avoiding waste (3) closing the plastics cycle and (4) Reusing waste streams and recovering resources.



In Germany, research is green.

Environmental technology research in Germany

120,000 research projects

There are more than 120,000 research projects in environmental technologies in Germany in such areas as water, energy and biodiversity, among many others.

BMBF’s “KMU-innovativ”

This initiative supports SMEs’ research in the fields of resource efficiency and climate change, among others. Since its launch in 2007, more than EUR 1.2 billion has been granted to 1,700 projects involving a total of 2,900 SMEs.

100 EUR million

To date, the German Federal Ministry of Education and Research (BMBF) has invested approx. 100 EUR million in sustainability research.

10,000 institutions

These projects take place at more than 10,000 institutions across Germany.

A long tradition in environmental technologies, pioneering environmental policy and a supportive legal framework has helped establish Germany as a leading player in the green economy. However, new environmental challenges continually create the need for innovation and offer opportunities for international companies to thrive in one of the most advanced environmental technology markets worldwide. Get in touch to learn more.