A circular economy keeps the value of resources in the economy for longer, extends
the useful lifespan of products and reduces waste, thereby reducing environmental
and climatic pressures and increasing domestic competitiveness. Italy is among the
leading European actors in transitioning to a circular economy. Its adoption of the
National Strategy for the Circular Economy in 2022 reinforced the country’s ambition
to rapidly shift from linear to circular modes of production and consumption. Among
the envisioned measures, the national strategy calls for a stronger use of economic
instruments to achieve a more coherent and effective policy mix.
This report identifies opportunities for the enhanced use of economic instruments
to support the circular economy in Italy. Part I of this report takes stock of the
Italian policy landscape, compares it to international practices and recommends seven
policy reforms for further consideration. Part II contains an in-depth analysis of
three policy instruments that could reduce demand for virgin materials and promote
a shift to secondary materials. These instruments include a virgin materials tax on
construction minerals, a reduced VAT rate for products with recycled content and corporate
tax credits to promote the use of secondary materials.