Closing the loop: Improving automotive steel recycling for a circular economy

The automotive industry is one of the European Union’s most resource-intensive sectors, responsible for over 7 million tonnes (Mt) of steel demand per year, 19% of the EU total. As the average mass of new passenger cars grew by 21% from 2001 to 2023, material demand also increased. Typical passenger cars in the European Union are estimated to contain about 800 kg of steel. Steel used in vehicle production in the region has a high greenhouse gas emissions intensity, with impacts extending beyond production to include iron ore and coal mining and refining.

A more circular economy, based on the reuse and recycling of products and materials, can reduce the European Union (EU)’s dependency on raw material imports, lower greenhouse gas (GHG) emissions, and mitigate the environmental and social impacts of mining.

In 2023, the European Commission proposed a regulation on circularity requirements for vehicle design and management of end-of-life vehicles that would replace and combine prior directives on end-of-life vehicles and type-approval of motor vehicles with regard to their reusability, recyclability, and recoverability. A key concept in incentivizing a more circular use of materials in vehicles is the introduction of recycled content quotas in newly type-approved vehicles. For steel, the proposal enables the Commission to set such a quota through a delegated act following a feasibility study.

This policy brief explores strategies to incentivize a more circular use of automotive steel in the EU. It discusses challenges and opportunities in increasing the quantity and quality of steel recovered from vehicle recycling, considering potential displacement effects and technical and economic feasibility. The brief also examines how steel use varies across vehicle models and manufacturers. It concludes with policy options, focusing on how recycled steel quotas should be designed to avoid displacement effects, prevent the current practice of downcycling of automotive steel, and instead create an additional availability of high-quality recycled steel from end-of-life vehicles.