The clock is ticking for the circular economy

Finnish enterprises need to share experiences and welcome incentives and common rules to convert theory and potential into profitable business activities.

The circular economy is the megatrend of the day and offers one solution to the challenges of climate change. The concept marks a dramatic departure from the union of economic growth and excess consumption. However, there is much more to it than that.

“Most of all, the circular economy is about business, not just the environment. In many Finnish forest cluster companies, the principles of circular economy are already a normal part of operations, because it makes sense financially,” says Jyrki Katainen, a European Commission Vice-President.

According to the Commissioner, who is responsible for the circular economy within the European Commission, behind all the hype is a phenomenon that will reshape the world as much as globalisation.

Katainen points out that materials account for approximately 40 per cent of the total industrial production costs. The results of a company operating in the circular economy do not fluctuate based on the price of raw material. The circular economy improves the predictability and manageability of a business and forms a solid basis for healthy growth.
“Finland’s role and potential in the circular economy is much bigger than its size would merit. This is a field which we really should invest in,” Katainen says.

Success stories to be shared

So far so good, but Finland needs to step up a gear, and fast. Especially China is rapidly catching up with Europe in the circular economy. It is, however, understandable, if Europe is slow to react. Substantial investments in the produce and dispose model of economy have been made throughout the Western countries, which is in direct competition with the circular economy. This is holding back the shift towards the circular economy in the EU Member States.

The situation is familiar to Kari Herlevi, the Senior Lead of Sitra’s Circular Economy focus area.

“Circular economy is not a growth sector, it is a way of thinking. It is an amoebic concept, difficult to grasp. Companies are in serious need of information and practical examples of viable and profitable business models, in their own as well as other fields, both from Finland and abroad.”

Herlevi stresses that too many ideas have been left to stew within the four walls of a company. Sharing experiences, burgeoning ideas and tested models would now be vital, if we are to set the wheels of circular economy in motion. According to Herlevi, Finnish resource-savvy solutions are among the best in the world. They are in global demand. Circular economy involves much more besides honing processes to perfection. The term is understood more widely in the international context, more like innovative business models.

Subsidies and legislation

Katainen says the obstacles in circular economy are exactly the same as in international trade in general. He promises, however, that assistance in overcoming these obstacles will be forthcoming. As part of Horizon 2020, the EU Framework Programme for Research and Innovation, the European Commission will be granting 650 million euros to circular economy pilots. Funding will also be available through the European Fund for Strategic Investments and the Structural Funds. In addition, the European Investment Bank is involved in the plans to establish a funding forum for the circular economy. Katainen emphasises that private funding alone will not be enough.

“There needs to be ownership on many levels. Moving to a circular economy requires the support and collaboration of the public sector.”

As a next step, the European Commission will publish a draft legislation on promoting industrial symbioses. The aim is to create a European internal market for recycled materials.

“This legislation would be highly useful for bioeconomy companies. We will amend the Waste Act so that, for example, the co-product flows from the Äänekoski bioproduct mill may in the future be sold to Portugal just as easily as a log of wood,” Katainen says.

Next year will see a number of legislative motions dealing with the reuse of waste as energy, plastics and critical raw-materials. The development work on quality standards for recycled materials is also in progress. In addition, the European Commission has launched circular economy missions in third countries. The objective is to institute European regulations and best practices in countries that are only taking their first steps in the circular economy. In Katainen’s view, EU trade agreements are also a relevant instrument in building sustainable global value chains.

With regard to the circular economy, law drafting is extremely difficult. There is not just one circular economy, one life cycle, on material flow. Herlevi points out that climate, energy and circular economy policies are all intertwined. When supporting one policy, it should not happen at the expense of the others, let alone increase the environmental load.

Text: Heli Satuli
Picture: European Commission