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Published March 12, 2019

These circular economy actions are also needed in Finland

In addition to the actions currently being implemented by the circular economy’s key players, many more new actions and operators are needed. Central government plays a key role in promoting the circular economy and can significantly affect the realisation of a circular economy across the whole of Finnish society by leading by example and through its steering measures.

In addition to the actions presented in the updated Finnish road map, Sitra has identified the following measures and themes of essential importance from the perspective of the administrative sector that may promote the circular economy. The actions are targeted at areas that are deemed to be in particular need of comprehensive promotion of the circular economy. Some of the measures were presented to the Ministerial working group on bioeconomy and clean solutions in January 2019.

Turning the circular economy into continuous and cross-administrative strategic activity

1. Promoting the circular economy as a key governmental project

The strategic and continuous promotion of the circular economy requires parliamentary co-operation extending over government terms, where the circular economy is promoted in collaboration with the key ministries in a phenomenon-based way. Cross-administrative co-operation should be implemented at least through the ministerial working groups of key ministries. There should be a separate key project dedicated to the circular economy in the Government Programme to politically mandate the promotion of the circular economy.

2. Giving the steering group for the circular economy an official status

Sitra set up the multidisciplinary Circular Economy Steering Group with its term running from 1 January 2017 to 31 October 2019. The steering group has been considered a good way of increasing understanding of the circular economy across different fields, spreading the message about the best Finnish and international solutions and encouraging co-operation. The Circular Economy Steering Group should be given an official status and its role developed in the direction of comprehensive promotion of the circular economy in Finland. Appointments to the multidisciplinary steering group could be made by a ministerial working group on promotion of the circular economy, in which case the steering group’s term of office would be one government term at a time.

3. Developing a set of indicators for the circular economy to measure progress

The key ministries and central government should create a set of indicators for the circular economy to help monitor and steer development. Studies and research papers on how to measure the circular economy can be found both at national and international levels. For example, the key indicators for green growth defined in the project “Key indicators for green growth and material and resource efficiency” can be applied, and countries like the Netherlands and France have created their own national circular economy indicators. Furthermore, a monitoring framework was published in 2018 as part of the European Commission’s Circular Economy Package, describing the key circular economy indicators. In relation to this, an overall review of applicable indicators should be made, and, based on this, central government should implement the introduction of the selected set of indicators.

Harnessing legislation and financial steering to promote the implementation of the circular economy

4. Launching a tax shift for sustainable development

The creation of an ambitious domestic market requires setting the price of harmful environmental impacts at the correct level. It means imposing higher taxes on emissions and the consumption of natural resources, and budget-neutral targeting of the additional tax revenues for lowering the taxes on work and entrepreneurial activities and for minimising the negative impacts on income distribution. Comprehensive studies and surveys have been made on the issue, and we are largely aware of the measures available. Next, the government should implement a comprehensive evaluation of the impacts of a tax reform and use it as a basis for creating a long-term road map on taxation, which it will set out to implement. The target should be to increase and speed up the tax shift for sustainable development by at least one billion euros per year during the government term 2019-2023.

5. Identifying and eliminating subsidies that are harmful to the environment

We identify subsidies that are harmful to the environment and transform them into innovation subsidies and subsidies for the promotion of a carbon-neutral circular economy. At the annual level, the target should be the reallocation of at least 150 million euros from subsidies that are harmful to the environment towards innovation subsidies and growth incentives for the promotion of the carbon-neutral circular economy.

6. Making sustainable development and the circular economy a part of the assessment of applications for public funding

Operation in accordance with the principles of sustainable development and the circular economy should be included as assessment criteria in public funding related to, for example, cities, investments and R&D&I activities. The Sustainable Development Goals (SDGs) are an established assessment framework, and the circular economy is also needed for achieving them. It should be examined how these goals and potential other assessment frameworks for the circular economy can be included as grounds for granting funding and/or as assessment viewpoints in funding provided by the public sector.

7. Establishing a risk funding instrument for innovative public procurement

The government should set up a risk funding instrument in support of innovative public procurement and provide resources for it. It would encourage towns to procure and companies to scale up the kind of circular economy solutions that are not yet widely used. This would give companies home market references to accelerate their growth and exports. Public procurement agencies, on the other hand, would be offered a risk guarantee or insurance to cover some of the losses in case the solution does not work or causes damage. The annual funding or guarantee capacity of the instrument would be 35 million euros and its duration five years. This would enable initiating annual investments amounting to a total of approximately 100 million euros. Risk funding would also promote effectiveness investments made by towns.

Actions for the promotion of the circular economy are needed particularly in the following fields

8. Providing a more relaxed regulatory environment for sharing and platform economies

The existing regulatory environment does not support the development of sharing and platform economies in the best possible way when it comes to such fields as the shared use of commodities and services. Regulation related to the sharing and platform economies should prevent conflicts and secure the rights of all parties involved. Furthermore, the taxation of income gained through the sharing economy and the rules related to the issue should be clarified.

9. Promoting the realisation of a circular economy by means of urban planning and zoning taking account of circular viewpoints

The prerequisites for implementing a circular economy should be taken account of in the early stages of urban development and the planning of zoning and cities. Construction should be carried out sustainably, the production of energy should come from environmentally friendly starting points, alternatives that conserve nature should be taken into account in mobility, and the loss of different nutrients and commodities should be minimised. By yielding influence through town planning, the implementation of the circular economy can be promoted in a comprehensive manner.

10. Mainstreaming circular economy competence in teaching and education

Sitra has been making major investments in circular economy teaching and education in collaboration with more than 50 education institutions and companies. The learning materials produced in the projects are openly available, and their extensive use and development in the Finnish field of education should be promoted. Circular economy education realises the sustainable development goals included in the national core curriculum. The circular economy offers a good foundation for life-long learning and the education of new professionals. For this reason, we should also pay attention to further circular economy education in, for example, the education of new professionals. From the perspective of international effectiveness, the circular economy should be made an integral part of training export and development co-operation.

11. Outcome-based compensation for soil carbon sequestration to farmers

Outcome-based compensation for carbon sequestration and storage should be tested as part of the general agricultural policy. The Carbon Action project initiated by Sitra develops verification methods related to this that would enable validating the effectiveness of measures aimed at sequestration and storage of carbon from the atmosphere into soil. Outcome-based compensation for carbon sequestration and storage would ensure the use of methods best suited for carbon sequestration by farmers and farms. This would ensure efficient reallocation of public funding in agriculture with a view to the climate and the circular economy as well.

12. Harnessing employers as drivers of health-promoting, shared and carbon-neutral mobility

We enhance the role of employers in the promotion of carbon-neutral and health-promoting commuting, and in increasing the mobility service market based on shared use of vehicles. We develop financial steering methods and incentives supporting this goal by means such as offering mobility packages as fringe benefits, reforming the deduction of commuting expenses and providing benefits for mobility planning to employers. We are launching a “green deal” aimed at engaging as large a number of employers as possible in the achievement of common carbon-neutral mobility goals, including major growth in the volume of users in public transport, shared-use cars, commuting by bicycle and car sharing.

13. Setting ambitious goals for raw material use and developing regulation to support the sustainable use of raw materials

To ensure that the use of materials can be brought to a sustainable level, Finland should set ambitious numeric goals for the reduction of the use of virgin raw materials and the increase in the use of recycled raw materials. We specify the interpretations of the Waste Act as regards, for example, end-of-waste definitions, and make the environmental permit processes smoother so as to make them better support the use of secondary raw materials. Financial steering methods should be used in such a way that they enhance the competitiveness of recycled materials in comparison to virgin natural resources. In relation to this, a review of the taxation of virgin raw materials would be needed.

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