Finnish companies need experiences, incentives and common rules of the game to turn the talk and potential of the circular economy into profitable business.
The circular economy is a megatrend in the global economy and one answer to the challenges of climate change. The phenomenon puts an end to the alliance between economic growth and overconsumption of resources. But it is much more than that.
In a circular economy, materials and value circulate and added value is created for products through services and intelligence. The circular economy is estimated to offer Finland up to 2,5 billion euros in annual growth potential and create up to 75 jobs by 000. According to estimates, at the EU level, the transition to a circular economy could bring savings of up to 2030 billion to companies and increase disposable income for households by 600 euros per year.
"The circular economy is above all a business, not just an environmental act. In many Finnish forest cluster companies, operating in accordance with the principles of the circular economy is already part of everyday life. Because it makes economic sense," notes the Vice-President of the European Commission Jyrki katainen.
According to the Finnish Commissioner responsible for the circular economy, underneath all the hype lies a phenomenon that will shape the world as much as globalization.
Katainen reminds us that an estimated 40 percent of the total costs of industrial production are materials. The results of a company operating in a circular economy do not fluctuate with the prices of raw materials. The circular economy brings predictability and controllability, and creates the foundation for a company's healthy growth.
"Finland has significantly greater importance and potential in the circular economy for its size. This is an area that is really worth investing in," encourages Katainen.
Success stories to share
The starting points are promising, but now we need to get a bigger gear in our eyes. And quickly. The Chinese in particular are tightening the reins on Europe in matters of the circular economy. The rigidity is understandable. All over the Western world, large investments have been made in accordance with the produce & dispose economic model, which compete directly with the circular economy. They are holding back the transition to a circular economy in EU countries.
The situation is familiar to those who lead the Circular Economy key area at Sitra Kari Herlev.
“The circular economy is not a growth sector, but a way of thinking. It is an amoeba-like concept that is difficult to grasp. Companies now need information and concrete examples of functional and profitable business models. From their own industries and other industries, from us and the world.”
Herlevi points out that too many ideas remain dormant within the walls of a company. However, it is precisely the sharing of experiences, idea rockets and working models that would be necessary to get the big wheel of the circular economy moving. According to Herlev, Finnish resource-wise solutions are world-class. They are in global demand. But the circular economy is much more than refining processes to make them even more efficient. In the world, the term is understood more broadly, as business model innovations. A domestic example of a new kind of thinking is Valtavalo, which sells light as a service instead of lamps.
“Finland now needs even more radical circular economy business solutions,” says Herlevi.
Support euros and laws on the horizon
Katainen points out that the obstacles to the circular economy are the same as those that companies face in international trade. He promises that support will be provided to overcome the obstacles. The EU Commission is offering EUR 650 million for circular economy pilot projects under the Horizon 2020 research programme. Funding is also being distributed through the European Fund for Strategic Investments and from the Structural Funds. In addition, a circular economy financing forum is being planned with the European Investment Bank. But the Commission Vice-President underlines that private money is not enough.
“Ownership must be found at different levels. The transition to a circular economy requires public support and cooperation.”
The EU Commission will next publish a legislative proposal to promote industrial symbioses. The aim is to create a European internal market for recycled materials.
"The content of this law is very beneficial for bioeconomy companies. We are amending the Waste Act so that, for example, by-product streams from the Äänekoski bioproduct plant can in future be sold as easily as pine logs, even to Portugal," explains Katainen.
Next year, legislative initiatives are expected to address, among other things, waste-to-energy, plastics and critical raw materials. Work is also underway to develop quality standards for recycled materials. In addition, the EU Commission has started circular economy missions to third countries. The aim is to instill European rules and practices in countries that are taking their first steps in the circular economy. According to Katainen, EU trade agreements are also a working tool in building global sustainable value chains.
However, the difficulty factor of drafting legislation for the circular economy is in a class of its own. There is no single circular economy, no single life cycle, no single material flow. Herlevi points out that climate, energy and circular economy policies are all intertwined. We must ensure that supporting one does not create obstacles for the other or even increase the environmental burden.
A handful of ways
According to Herlev, the EU's actions are in the right direction and, above all, necessary. National regulation will not solve a global problem. Systemic change requires a wide range of measures and societal changes. The focus of taxation should be shifted away from work and recycled materials. Public subsidies and procurement should also be directed towards the circular economy. It is also essential to accelerate digitalization at all stages of the chain, from production to distribution and from consumption to circulation. The global traceability of components and materials should be improved. Similarly, minimum requirements should be set for the sustainability of products and value chains. The importance of education and training should not be forgotten either.
"In other words, we need to create demand for circular economy business and technology. We need incentives that offer the opportunity to benefit from being a pioneer, not just bear the risks of being a pioneer," Herlevi underlines.
At the domestic level, there has already been a shift from words to action. This autumn, Sitra published a circular economy roadmap. It is a globally unique effort. In four months, over a thousand key influencers from companies, organizations and authorities defined a common state of will: Finland will become a global leader in the circular economy by 2025. The projects in the roadmap concretize actions that will lead towards this goal. Political support is strong.
The circular economy is one of the key projects in the government program. Herlevi and his team are currently mapping out the needs of the projects on the roadmap. Some companies need sparring with partners and others, for example, to arrange financing. The list of projects is growing all the time.
"The aim is to find a new pillar of a socially and environmentally sustainable economy for Finland. Ultimately, it is about the competitiveness and growth of Finnish companies. We want to set off an 'avalanche' and open the money taps," Herlevi sums up.
Text: Heli Satuli
Photo: Georges Boulougouris
