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Circular Economy

What contribution can the government make?

In addition to drawing up specific policies, the government can also act as a market player to stimulate the development of circular economy. In addition, the internal organization and the external position of the government is important. The government can also draw up a national plan of action to identify sector-specific opportunities.

The government as a market participant

To stimulate directed circular innovations the government can act as policy (subsidy for research collaborations and education), or as market participant (demand for innovative solutions). By adapting its procurement policy  the government can influence the market. This can be done by acting as a launching customer.

In this construction, the government specifically requests circular and sustainable products. This allows the government to create enough demand for a for certain products and services and at the same time setting an example (early adapter) for other parties. This encourages private parties to purchase the product or service as well.

If the government acts as launching customer, a significant interaction between government and business can be achieved, allowing early clarity about wishes of the government as client on the one hand and the (technological and financial) possibilities of businesses on the other. This has advantages for both the government and the participating companies.

Benefits for companies

  • Government can partly bear the cost for companies to innovate;
  • The government acts as first large customer for innovative products, when the company meets predetermined requirements;
  • When the government a new service or product into use, it functions as an early adopter, thus giving a signal to other buyers, also abroad.

Benefits for governments

  • The overnment has access to a new and potentially better performing product;
  • Share risks with other governments and / or companies;
  • Better / faster achievement of social goals;
  • Provoke and / or disseminate of innovations;
  • Learning through interaction with providers.
Ministerie van Economische Zaken. 2005

The government as strong organization

Creating and seizing opportunities in a circular economy requires a strong positioning and a clear strategy for the Netherlands. Netherlands is strong in several key sectors (agri-food, chemicals, logistics and waste) and is ideally suited to be a forerunner in the circular economy. To realize this, a good functioning organization with strong internal and external communications is important. TNO has previously expressed the following recommendations:

  1. Create a clear, cross-departmental, consistent strategy for building a circular economy;
  2. Develop a coherent education and research plan for the circular economy;
  3. Make a comprehensive assessment of the existing rules and regulations regarding waste;
  4. Increase knowledge and awareness of raw materials in each value chain;
  5. Ensure that frontrunners receive a permanent and true advantage;
  6. Review the effectiveness of a broad set of fiscal and financial incentives to promote circular behaviour;
  7. Determine the impact of incineration plants on the viability of circular business cases;
  8. Develop the role of the government as an active ‘launching customer’;
  9. Use knowledge in the international playing field to help the circular economy forward.

Bastein, Roelofs, Rietveld, & Hoogendoorn. 2013, p.83-92

National actionplan

For countries in Europe that want achieve the transition to CE, the Ellen MacArthur Foundation has developed a methodology to shape this transition and accelerate the development. This method consists of 3 phases. For each phase, sub steps detailed and practical aspects are discussed, as can be found in the report “Delivering the Circular Economy: A Toolkit for Policy Makers”, in which an example is worked out for the policy in Denmark (Ellen MacArthur Foundation, 2015c, pp 39-88.). The three phases are:

  1. Identifing the starting point, the ambition and focus points: First, it is important to identify the right stakeholders and involve them early in the process. Secondly, a realistic ambition can be created, based on a common understanding of the national level of circularity and the political context. This includes defining the appropriate scope and focus on certain sectors.
  2. Evaluate sectoral circular economy opportunities: After selecting focus areas the potential of these sectors can be determined. Through parallel working groups on specific sectors in collaboration with major firms, circular economy opportunities can be identified. Opportunities with the highest priority sector-specific economic impact can be determined on the basis of specific indicators, and barriers identified for which solutions and policy options are formulated.
  3. Analyze national implications: Finally the opportunities found are merged in a national plan and the implications on the economy are analyzed. This step is best done by a core group of policymakers, policy and economics experts, and with the participation of various governmental agencies. The results of this analysis can lead to a comprehensive report in which the economic implications are presented as support and accountability of a mandate for policy innovation. This process leads to a recommendation for sector-specific policy options and policy options for the economy.