From World Cup soccer jerseys to everyday consumer goods, recycled materials are increasingly becoming a crucial raw material in global brand supply chains. Taiwan has established a solid foundation in recent years in recycled polyester fibers, recycled plastics, and circular materials. With the Resource Circulation Promotion Act clearing its third reading in the legislature in June, stakeholders are watching closely whether Taiwan can leverage this legislation to further strengthen the development of its circular economy and elevate the competitiveness of its green industries.
Chun-Hsu Lin, Director of the Center for Green Economy (CGE) at the Chung-Hua Institution for Economic Research (CIER), noted that in the textile industry, Taiwanese enterprises are already transforming recycled PET bottles and ocean plastics into functional fabrics for international sports brands and major sporting events. These efforts demonstrate that circular materials are gradually shifting from a concept of waste treatment to an industrial resource with tangible economic value.
Circular Labeling and Digital Passports Rolled Out to Help Enterprises Integrate into Global Green Supply Chains
The passage of the Resource Circulation Promotion Act signals that Taiwan’s circular economy policy will expand from its past focus on waste recycling and disposal to comprehensive life-cycle management, encompassing product design, production, consumption, and reuse. Moving forward, product design will place a stronger emphasis on durability, repairability, ease of disassembly, and recyclability. Furthermore, the introduction of digital product passports will mandate the disclosure of product compositions, the proportion of recycled materials used, and recycling information, thereby enhancing supply chain transparency.
In recent years, the Ministry of Environment has advanced the Taiwan Circular Economy Roadmap that outlines strategies aimed at improving resource productivity, reducing material consumption, and increasing circularity rates. The ultimate goal is to establish a more effective framework for governing a circular economy.
Director Lin highlighted that another crucial element of the new law is the introduction of a regulatory sandbox for resource circulation innovation. Because circular technologies and business models frequently encounter challenges related to regulatory applicability, recycling systems, and verification costs, the sandbox mechanism allows for empirical testing under controlled and supervised conditions. This will help accumulate industry development experience, serving as a vital reference for future regulatory adjustments.
For instance, coffee grounds and agricultural residual materials, which were previously difficult to commercialize due to their scattered sources and high collection costs, now have the potential to be developed into high-value products such as building materials, fertilizers, or novel materials via circular technologies and logistics integration, thus expanding the scope of circular economy applications.
In addition, the new act institutes digital product passports and a circular labeling system. In the future, products that adhere to circular design principles or utilize recycled materials will be able to leverage these labels and certifications to enhance market visibility and facilitate integration with international green supply chains. Further synergizing these efforts with recycled material certifications, green procurement, and green financial instruments will help elevate the global profile of Taiwan’s circular industries.
Effective Implementation Hinges on Market Mechanisms and Recycling Incentives
Director Lin pointed out that driving the circular economy still faces the challenge of insufficient market incentives. While carbon reduction efforts already have mechanisms such as carbon fees to reflect environmental costs, the external costs of resource waste remain difficult to quantify. As a result, corporate investments in circular transitions are largely voluntary, making it difficult to rapidly cultivate a large-scale market.
Plastics will be a critical issue for the circular economy as we advance. Virgin plastics are relatively inexpensive, which creates challenges for recycled plastics, bioplastics, and biodegradable plastics. These alternatives often struggle with higher costs and limited market acceptance, ultimately placing recycled materials at a competitive disadvantage.
By comparison, the e-waste recycling system has established a solid foundation, though there is still room to improve recovery rates. Products such as smartphones and laptops often fail to enter the recycling system because consumers hoard or leave them idle, thereby impairing resource circulation efficiency. Moving forward, a critical determinant of whether the circular economy can be effectively implemented will be how well institutional designs—such as the right to repair, extended producer responsibility, product-as-a-service models, and recycling incentives—can boost product recovery rates.
Overall, Director Lin believes the Resource Circulation Promotion Act lays the institutional groundwork for Taiwan’s circular economy development. Achieving true market scale for circular materials and products is essential for enhancing Taiwan’s competitiveness in the global green supply chain. To accomplish this, it is crucial to progressively implement sub-laws, create strong market incentives, and introduce complementary industrial measures. These steps will help facilitate the transition toward a more sustainable and circular economy.
Author: CIER Editorial Team
Date: June 17, 2026