Quo vadis, circular economy?

Blog post
Elina Huttunen-Saarivirta,
Teuvo Uusitalo
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You are probably familiar with the term circular economy? It refers to a radical improvement in resource efficiency and aims at economic development with ecological sustainability.

However, according to the recent survey conducted for Nordic consumers by SB Insight [1], the majority of respondents in Denmark, Sweden and Norway were unaware of the term, while only slightly more than 10% of the consumers knew the meaning of circular economy. In Finland, the figures were slightly more positive: one third of the respondents knew the meaning of circular economy, with only 16% admitting they were unware of the term.

The same survey revealed that respondents in all four countries: Denmark, Finland, Norway and Sweden, considered that individual citizens bear the main responsibility for a circular transition, followed in importance by companies (Finland, Denmark, Sweden) and the government and municipalities (Norway).

Despite the recognized key role of citizens in the transition, only in Finland was the attitude positive towards decreasing the overall consumption within the five coming years. Alarming, isn’t it?

POLICE project explores the ways to direct the path

Luckily, consumers and other identified stakeholders are not alone making the decisions how to advance circular economy. Policy makers at all levels, or at least at strategic levels, have already made the move towards promoting circular economy through various incentives.

We are currently carrying out a project that explores these incentives and other ways to guide us towards sustainable and circular choices. For those who are not so familiar with policy instruments and overall incentives to behavioural change, these may be broadly classified into three main categories: voluntary, market-based and regulatory. Let us provide some examples.

Voluntary, market-based and regulatory ways

Voluntary incentives cover various aspects of education, such as awareness rising, information campaigns, courses as well as both non-formal and formal education. Additionally, voluntary incentives may be agreements, sharing of best practices or bound to social acceptance that introduces change in habits. For example, awareness raising has been demonstrated to be of importance in chancing waste sorting habits [2], or altering the consumer purchase intentions as a result of corporate social responsibility [3]. Furthermore, in today’s data-centric world, various digital media have gained importance as information channels and increased the importance of the role of consumers through unpredicted visibility [4].

Market-based incentives are numerous: trade agreements, investment support, taxation, subsidies, of which taxation can also be used as a penalty. The deposits for beverage bottles and cans are an example of the first category. Taxation has been used in many ways: a 50% tax break for repairs on shoes, clothes and bicycles allows citizens to claim back from income tax half the labour cost of appliance repair [5], whereas eg, landfill tax is one way to promote valorization of the waste streams [6].

Regulatory issues are particularly widely used in EU to facilitate recycling, for example Batteries Directive [7] and WEEE directive for the waste electrical and electronic equipment [8].

Now that you know something about circular economy incentives, you may observe its many forms in your daily life. Hopefully knowledge sharing here introduces positive circular effects.

References

1.SB Insight, The Nordic market for circular economy. Attitudes, behaviours & business opportunities.

2.D. Nainggolan, A.B. Pedersen, S. Smed, K. Haile Zemo, B. Hasler, M. Termansen, Consumers in circular economy: economic analysis of household waste sorting behaviour. Ecological Economics 166, 2019, 106402.

3.N. Mohd Suki, N. Mohd Suki, N. Shihiraz Azman, Impacts of corporate social responsibility on the links between green marketing and consumer purchase intentions. Procedia Economics and Finance 37, 2016, 262-268.

4.M. Lammi, M. Pantzar, The data economy: How technological change has altered the role of the citizen-consumer. Technology in Society 59, 2019, 101157.

5.https://medium.com/@greenxeurope/getting-paid-to-fix-your-broken-things-new-swedish-tax-breaks-support-repair-ff67c016c211

6.R. Hoogmartens, J. Eyckmans, S. Van Passel, Landfill taxes and enhanced waste management: combining valuable practices with respect to future waste streams. Waste Management 55, 2016, 345-354.

7.Directive 2006/66/EC of the European Parliament and of the Council on batteries and accumulators and waste batteries and accumulators and repealing Directive 91/157/EEC.

8.Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on waste electrical and electronic equipment (WEEE).

 

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Elina Huttunen-Saarivirta

Elina Huttunen-Saarivirta

Principal Scientist
elina.huttunen-saarivirta@vtt.fi
Teuvo Uusitalo

Teuvo Uusitalo

Senior Scientist
teuvo.uusitalo@vtt.fi