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Circular Economy

What contribution can the government make itself?

In addition to drawing up specific policies, governments can also use their role as buyers and launching customers to drive the circular economy. In the role of purchaser, it is important that governments take the entire process from production to disposal into account. In order to effectively fulfil the role of launching partner, it is important that governments proactively seek cooperation with companies.

Circular procurement by governments

The term purchasing power is a good reflection of how a purchasing demand can influence prices, availability and development. Local governments have an annual purchasing volume of over 40 billion euros, while central government has a purchasing volume of over 20 billion euros (Pianoo, 2016). Traditionally, purchasing is about achieving the best price/quality ratio. Nowadays, purchasing is used to change the world. For this reason, dozens of government agencies signed the Green Deal Circular Procurement 2.0 in 2018 (Green Deal, 2018).

In the context of the circular economy, it is important to use the term procurement in the broadest sense of the word. In purchasing, attention should not be limited to the moment of purchase itself (the transaction) or even to the process from demand to the moment of purchase. Purchasing starts with the first description of the need and ends when the final product is reused or given a new application after its lifetime.

Governments should therefore consider procurement as the process by which:

  1. the government body formulates a demand for the realization of a work or delivery of a product or service based on a need;
  2. the government body then purchases this in cooperation with the supplier;
  3. the supplier supplies the product, work or service during the term of a contract on the basis of agreed conditions;
  4. the product is used after its lifetime.

In circular purchasing processes, the destination is a new application of the product, possibly in a secondary chain and under agreed conditions (Copper 8, 2018).

Governments as launching partners

In line with their role as buyers, governments can also act as launching partners. In the coalition agreement it was agreed that the government would be a launching customer more often. In practice, this role is difficult to grasp. At its core, the government, as a launching customer, is a public client that actively stimulates the development and application of innovative solutions for its own social issues and contributes to further scaling up (Pianoo, 2019).

The Expertise Centre for Public Procurement (PIANOo) formulated four recommendations for governments to fulfil their role as launching costumers.

Support those who want to innovate

Invest in an organisational culture where innovation is of paramount importance. Make sure that policy and implementation together define ambitious and accountable goals and create room for customization and experimentation. Offer support to those who want to innovate and strengthen mutual communication and cooperation.

Raise the bar for suppliers

Governments should clearly indicate to the market what ambition they have. Encourage the market to get moving and contribute to these ambitions. Involve the less common suppliers, outline their earning potential and offer scope for innovation in the purchasing processes.

Participate in development

Sometimes it is necessary for the government itself to be actively involved in the development of the desired innovations. This involves supporting innovation efforts that help market parties to achieve the bar set by the government. Maintain the (idea) development together with the market, make agreements on the division of roles and revenues and organise the portfolio management of innovations.

Support upscaling

The further scaling up and roll-out of pilots is proving to be a major challenge. The focus (of pilots) is often on technical evidence and there is limited attention for learning about conditions for scaling up. The reflex to opt for proven technology is often great. In concrete terms, this means: develop scaling up plans, generate support and involve platforms that stimulate innovation.

For more information, see the PIANOo website page.