Digitalisation and Circular Economy

The digital product passport (DPP) was initiated by the European Commission. It is mandated in the EU Batteries Regulation for introduction from 2027, defined in the Ecodesign for Sustainable Products Regulation (ESPR), and included in draft regulations for toys, detergents and construction products. Over the coming years, nearly every industry will equip products and materials with interoperable DPPs based on EU rules for specific product groups. 

The DPP is intended as a central information carrier in a digitally supported circular economy. It integrates datasets on materials and products, including on composition, repairability and recyclability, which can be shared and processed digitally across value chain stakeholders. Throughout a product’s life cycle, these datasets will be supplemented with further information on product use, such as records of completed repairs. The conceptual development of the DPP and enabling technologies is currently underway. In addition to regulatory requirements on the core elements – data carriers, unique identifiers and a central registry – publicly funded projects at federal and EU levels are developing concrete aspects of the DPP. An EU standardisation request, led by the German Institute for Standardization (DIN), will define the necessary standards by the end of 2025 (see Section ‎3.4 of the strategy text).

Increasingly, data is being exchanged within industrial supply relationships between suppliers and buyers, forming circular economy data spaces. This applies to DPPs as well as specific segments of industrial supply chains and aggregated sector and industry analyses. The goal is therefore to create a decentralised, interconnected knowledge repository for circular economy through these data spaces, enabling data-driven collaboration and scaling effective systemic solutions. 

The introduction of the DPP and development of data ecosystems offer new opportunities for the system-wide analysis of material and goods flows. The prerequisite is that data from different sources can be linked together and evaluated, for example with regard to specific materials, critical raw materials and the proportion of product groups or circular services. Business confidentiality and data protection must be ensured. It is important to note that in global value chains, international standardisation must be achieved through norm-setting efforts and the comparability of analysis and measurement data.

The German economy, building on Industry 4.0 technologies, has laid important groundwork for implementing the DPP. However, many businesses and sectors will require further support to adopt it. 

The objective is to establish information and data systems for a fully developed digital and circular economy in Germany by 2030, making it easier for businesses to exchange relevant information.

Measures

To achieve these goals, the following measures, among others, are required at national or EU level.

A Digital Product Passport Initiative to link the introduction of DPPs with suitable data space concepts, such as those being developed in Manufacturing-X based on Industry 4.0. This initiative will prepare and implement funded pilot projects (DPP lighthouse projects) in key sectors (including plastics, textiles, electronics, packaging, batteries and vehicles, construction and buildings) to gather practical experience and build competencies. To enable diffusion and scaling of data space solutions, DPP-specific use cases will be designed and tested in the DPP lighthouse projects, with the involvement of SMEs. To avoid duplication of efforts, implementation should align with Manufacturing-X, where initial DPP use cases have been and are being tested. The lighthouse projects will collaborate in a joint body, similar to the Manufacturing-X Guidance Board, to coordinate consistent and cross-industry development. Coordination with the Manufacturing-X Guidance Board should take place. 

To support the introduction of product passports, accessible offers and services should be developed as part of specific funding programmes, especially for SMEs. Information and funding opportunities for SMEs should also be strengthened at EU level.

Circular-friendly design of the DPP in cooperation with the European Commission and the European Parliament within ongoing EU regulation of product groups, ensuring effectiveness and proportionality at the sector level (in terms of costs and complexity). 

Establishment of a Coordination Office for Circular Economy Information Systems as part of the platform supporting implementation of the NCES (see Section ‎7.2 of the strategy text). This office will coordinate stakeholders to ensure consistency and compatibility of data flows and applications in the context of the future DPP, fostering transparency and transfer of experiences.  

The design and construction phase at the beginning of a product’s life cycle is particularly important for circularity, determining material selection, material reduction, repairability and recyclability (see Section ‎3.2). Digital design and construction tools facilitate assessment of various supply chain and material options, for example, when supported by AI in conjunction with easily accessible and continuously improving material data. Digital solutions enable complex, multi-criteria design tasks and optimisation problems to be solved with the goal of maximising resource efficiency. They also enable virtual engineering to incorporate downstream R-strategies from the outset by modelling them as a digital twin (for example, repair, refurbish, remanufacture and repurpose). This enables the modelling of products and processes as digital twins, facilitating a holistic, forward-looking simulation of the economic and environmental performance of circular solutions throughout their entire life cycle.

In production, Industry 4.0 digital tools offer numerous opportunities for optimised control of machinery and systems, such as minimising downtime, improving temperature management and preventing waste and rejects. Digital twins of facilities and processes also provide new possibilities for cross-cutting optimisations.

Measures

• Launch of a best practice initiative for circular economy design tools with developers and providers of design and construction tools, and development of standards with stakeholders for the effective use of digital tools for circular design (where appropriate, this could include open-source solutions for use by specific stakeholder groups, such as within the European market).
• Research funding for AI, including generative AI, to design and optimise circular products and processes (including opportunities to enhance resource efficiency through 3D printing and circular lightweight construction).
• The BMUV intends to initiate targeted research projects, including internationally oriented projects, conducted by the German Environment Agency (UBA) that will expand the environmental reference data basis (life cycle assessment data) and develop methods for the prospective use of future DPP data so that independent, quality-assured environmental data is available in the DPP.

In the target vision of a circular economy, a single, uniform and consistent data basis within a company is used for all processes related to corporate planning, management and reporting.

Measures

The BMWK will support pilot projects for a toolbox on Integrated Corporate and Production Planning for Circular Economy and its integration into business software through best practice initiatives by industry and software providers. The toolbox will be aligned with Industry 4.0 and Manufacturing X to ensure compatibility and interoperability with existing planning systems. 

Initiatives to strengthen digital circular economy competencies in vocational and higher education, as well as concrete educational modules developed in cooperation with the Länder, will be further advanced (for example, learning content on computer-aided design and engineering as well as circular value creation and corporate management).

Additionally, research and innovation funding in this area will be strengthened, for example as part of the BMUV AI lighthouse projects initiative.

Digitalisation increasingly shapes household consumption and can therefore become an important lever for climate change mitigation, environmental protection and resource conservation in daily life. In digital consumption, platforms and online trade currently use advertising (often personalised), social media influencing and purchasing process design to repeatedly create new consumption incentives, some of which have negative environmental impacts. A key approach is therefore to provide user-friendly access to information relevant to the circular economy, for example at the point of purchase, especially for online shopping (market transparency). Digital assistance systems such as apps can also help consumers search and evaluate consumption options or assist them with everyday needs, for example by providing care guidance or automatic maintenance reminders. Digital platforms can enable shared use of products in a sharing economy or their continued use as second-hand goods.

Measures

To achieve these goals, the following measures, among others, are required at national or EU level.

As part of the development of the DPP, linking products in online trade with information on circularity, particularly on repairability. This will provide the basis for corresponding comparison portals. 

Further levelling the playing field between brick-and-mortar retailers and online businesses in terms of the distributor and information obligations under the Electrical and Electronic Equipment Act (ElektroG). Creating improved information and advisory services for consumers, including through consumer advice centres, to prepare them for the introduction of the DPP and enable them to use the data. This also includes highlighting repair options, continued use and recycling as part of environmental education.

Online platforms and fulfilment service providers will play their part in ensuring that only products meeting European requirements and for which manufacturers have accepted producer responsibility are placed on the German market.

Developing a concept for digital solutions and measures to comprehensively support sustainable consumption for the circular economy. This includes purchasing decisions as well as extending product lifespan during use. Existing developments, such as AI-based voice assistants, will be included. A key focus will be advancing platforms for resource-efficient products, services such as repair and sharing, and offer of second-hand products for use across regions. Measures will also be developed to improve access to quality-assured information, for instance through certificates and environmental labels. 

At the end of the use phase, digitalisation can support commercial and private users in preventing waste. A key focus is on the interface between private households or small businesses and the waste management sector, in order to reduce the loss of valuable raw materials in residual waste fractions. In business operations, digitalisation helps to optimise logistics and route planning and to identify and classify waste. 

During the processing and recycling of collected residues, digital information facilitates the tracking and identification of material flows for the recycling industry, improves sorting technology efficiency and enhances recovery quality. Therefore, the establishment and further development of these processing systems must be promoted, alongside the advancement and establishment of digital trading platforms as key channels for marketing quality-assured, certified secondary materials and linking the recycling sector with downstream producers.

Support for pilot projects to improve digitalised waste separation, for example using AI applications through competition prizes for municipalities or as part of communication and mobilisation campaigns.

Together with the waste management sector, we aim to advance digital verification, process documentation and quality certification for recycled content. This will also serve as a foundation for digital trading systems in all major material flows (see Section ‎3.8).

The transition to a circular economy is a long-term process that must be regularly reviewed to allow adjustments to changing conditions.

To enhance market transparency, the introduction of the DPP will include enabling an anonymised cross-sectional analysis of data on the use of secondary raw materials in selected product groups, while ensuring that date and relevant property rights are protected. These data will be processed by the German Mineral Resources Agency (DERA).

DPP data should also be used to strengthen market surveillance and enforcement within Europe. 

This will be supported by new research projects to quantify data on the progress of implementation and trends in areas such as repair and refurbishment, for monitoring purposes.