Understanding environmental politics is crucial for sustainability transitions. We study the transition politics of the shift to a circular economy in the German packaging sector, particularly the curious case of the 2019 German Packaging Act. While the policy was born out of the unanimous wish for radical regulatory change, all actors evaluate the outcome as incremental. Following the Discursive Agency Approach and drawing upon actor interviews and documents, we show that actors’ perceived fears of radical changes are critical for transition politics. This fear created a lock-in of two narratives, proposing conflicting organizational designs of packaging waste management. While the narrative lock-in was resolved by trading radical for incremental change, it left many conflicts and challenges unresolved. Our findings suggest that actors’ fears not only prevent radical regulatory change but also create incremental change that may intensify unresolved conflicts and, thus, further weaken the actors’ capacities for future transition politics.