Although there are some signs that consumers in Norway are becoming more conscious about their consumption, fast fashion remains prevalent and annual utility demand across all product categories is expected to grow by 24% by 2040 compared to 2020.¹²

Product categories in scope are highly linear, with ~80% of total plastic waste currently incinerated and a small proportion landfilled.

In terms of circularity, ~17% of total waste is reused. Around half of this is exported to other countries in Europe, 34% is exported to Africa, and 17% to Asia¹³. This strategy has been important to Norway as today’s textile collection points, managed by NGOs, have built supporting infrastructure that will further improve circularity in the future. Besides reuse, a small proportion (~3%) of total textile waste is exported to be recycled outside of Norway.

Norway has set targets to significantly increase dedicated textile collection by 2025, in line with the EU Waste Framework Directive.

The Norwegian Fashion & Textile Agenda (NF&TA) is testing several pilot systems aimed at a collection rate of 80% of textile waste by 2025, compared to the ~23%¹¹ collection rate today. This is a key starting point to achieve higher levels of circularity.

However, Norway runs the risk of losing valuable, carefully collected secondary materials to other markets unless advanced local sorting, pre-processing and recycling facilities are developed.

A sector specific EPR regulation and a system for eco-modulated fees will make a significant difference.

Even though no details have yet been communicated, initial EPR policies for textiles are expected to be included in the 2023 revision of the Waste Framework Directive. These are expected to include design guidelines from 2024, and policies to prohibit the incineration of overstock, and recycling and/or repair and reuse targets, by early 2025.

EXHIBIT 13

As % of total demand for utility (with deduction of stock)

* corrected for net addition to stock
** higher uncertainty as fibre-to-fibre recycling of polyester does not exist yet at scale

Through the application of circularity strategies circularity levels could increase up to 86% by 2040 (Exhibit 13). Improving overall textile quality and reducing the complexity of fibre composition through design guidelines and regulations will be essential enablers for all circularity measures.

There are two key upstream levers:

Firstly, facilitating and encouraging sharing and reuse business models, like rental, second-hand and repair, could reduce 20% of virgin plastic demand by 2040 and extend the average lifetime of textiles by 1.7 times, based on average length of second-hand ownership¹⁴.

Globally, ~48% of GenZ ^l and Millennials and ~35% of GenX are willing to buy second-hand, with a ~1/3 intention-action gap¹⁴. In their 2030 vision, the EU strategy for sustainable and circular textiles emphasises the importance of making profitable reuse, rental and repair services widely available. Guidelines like the eco-design directive for durability, repairability and recycling, and a possible ban on the destruction of unsold textiles, will be critical enablers to turn this strategy into a reality. In Norway, sharing, resale and reuse models are starting to gain traction, with local examples including tise.com, finn.no, fjong.no, and levd.no for kids.

^l Generation Z (or Gen Z),is the demographic cohort succeeding Millennials and Gen X. Gen Z is the first social generation to have grown up with access to the Internet and portable digital technology

Another lever is the introduction of fewer and smarter seasonal collections (i.e. moving from fast to slow fashion), multi-functional garments, and reducing overproduction. This has the potential to reduce demand for virgin plastic by 10% in 2040.

Today’s fast fashion credo dictates at least four seasonal collections, with short turnover periods and frequent rotations of what is on display. The EU Strategy for Sustainable and Circular Textiles states in its 2030 vision that fast fashion needs to be out¹⁴.

Some large industry players are working towards fewer seasonal collections with less distinct colours and patterns, which is expected decrease overall demand and overproduction. Smarter seasonal collections, preceded by a test phase using e-testing or pre-ordering are expected to further reduce unnecessary production due to better design and fit. However, as not all brands will be willing to make these changes voluntarily, effective policies will be key, including to financially disincentivise overproduction. A local example of a company already applying this is Moiré.

Accurately quantifying overstock/ overproduction in Norway is difficult, due to underreporting and mishandling. As a reference, globally ~40% of garments are sold at markdown price due to overproduction. Fewer seasonal collections and investments in new technologies for demand forecasting and stock management have the potential to reduce industry wide overproduction, in combination with economic or regulatory incentives. France is currently the only European country with regulation in place to ban the destruction of unsold fashion by 2023¹⁴. This needs to be a clear objective in the EPR for textiles.

Besides these upstream levers, there are two key downstream levers.

Firstly, the scaling up of collection, sorting, and pre-processing infrastructure. Under the EU Waste Framework Directive, Norway must work toward increasing the dedicated collection of textiles by 2025 and is currently testing the best way to achieve this. However, without improved downstream measures like sorting, pre-processing, and recycling facilities, Norway runs the risk of mismanaging these carefully collected textiles.

By establishing higher collection rates, more textiles will be available for reuse and recycling domestically. This development is expected to reduce the share of collected and subsequentially exported textiles in Norway in 2040 to a quarter of the 2020 export levels.

To enable reuse and recycling, the development and implementation of automatic sorting technologies like NIRS scanning, that detect materials as well as fibre composition, fibre quality and colours in waste streams, is essential¹⁴. Sorting needs to be accompanied by pre-processing to handle the removal of zippers, buttons, etc., which can be

integrated into sorting or recycling facilities. Pre-processing remains costly and complex, but this can be tackled with regulatory incentives and should be addressed in the EPR for textiles.

Regulatory incentives, like prohibiting the export of unsorted textile waste outside of the EU, as well as increasing requirements for sorting accuracy to meet recycling rates, will drive the consolidation of the fragmented sorting landscape and increase the share of textiles available for reuse and recycling to 78% of total waste by 2040.

Fibre-to-fibre recycling of polyester (PET) does not yet exist at scale, but several technologies are currently being piloted, including in Norway and Sweden. Today, recycling is limited almost exclusively to the downcycling of polyester, and this is expected to remain the case for mechanical recycling.

As properties of polymers deteriorate during washing and drying, as well as due to wear and tear, feedstock is often inadequate for recycling. The adoption of industry wide design standards will rely heavily on regulatory and economic incentives. Although design guidelines to increase recyclability and recoverability of textiles are being broadly discussed today, their application is still in pilot stages and will need to be addressed in the EPR for textiles¹⁴.

While there is some opportunity to use recyclate from other sectors to produce recycled fibres, particularly consumable applications (e.g. rPET – plastic from bottles), this is also limited in terms of quality of the supply. Additionally, the expected increase in closed loop recycling of consumables by 2040 will limit access to recylates from this sector.

The EU Strategy for Sustainable and Circular Textiles prioritises fibre-to-fibre recycling rather than bottle-to-fibre, as the quality of recylates determines future recoverability and recycling rates. However, as mentioned above, at scale closed loop recycling technologies are not yet available. Therefore, it is important that circularity strategies and future regulations for textiles target mandatory closed loop recycling rates to limit downcycling within the sector.

Finally, chemical recycling is expected to play an increasingly significant yet complementary role to mechanical recycling. In our analysis, chemical recycling was found to be the most likely route to fibre-to-fibre recycling of polyester at scale. Chemical fibre-to-fibre recycling rates are expected to increase from virtually zero today, to ~8,000 tonnes of total waste by 2040, and then recirculate as recyclates back into the sector.

The volume of textile waste streams in Norway are big enough to justify domestic recycling, and is expected to be sufficient to

operate domestic recycling hubs, given economic viability. However, collaboration with other Nordic countries to develop competitive sorting and recycling hubs could be more economically efficient and allow for knowledge sharing.

It is important to highlight that there are ongoing discussions about what is considered waste in the textile sector. The EU currently has regulations in place to regulate exports to non-OECD countries, and there are efforts to close the gap on missing recycling capacity in Europe, e.g. through the Horizon Europe programme.