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Circular Economy

… in current policy and legislation?

Current policies and legislation are generally written in and for a linear economy. They may (unintentionally) hinder the transition to a circular economy. According to  research Stewart, Bey & Boks. 2016 legislation and policies can cause four types of barriers:

  1. Unclear or fuzzy messages from regulation
  2. Multiple, complex and changing regulations
  3. Low pressure from regulation and a lack of control
  4. Regulation limits room for innovation

These are also found in Dutch and European legislation and policies.

Policy barriers in the Netherlands

  • Competition policy: Policy around competition can be at odds with cooperation between companies for optimal use of waste streams;
  • Waste is not a resource: Waste regulations hinders collection and cross-border transportation of waste for circular use;
  • Fiscal policy: High taxation of labor makes labor-intensive, circular activities too expensive; social costs for resources and materials are insufficiently priced into products;
  • Legal interpretation of ownership: In a circular economy rental and lease agreements will increase in number. This may lead to disputes over ownership;
  • Financial framework: Regulations on buying and renting products stipulate depreciation without residual value, while products in the circular economy may represent economic value;
  • Limitations on trade in secondary resources: The European Regulation on Shipment of Waste impedes international trade in valuable secondary resources.

Sociaal-economische Raad (SER), 2016, p27; Raad voor de Leefomgeving en Infrastructuur. 2015, p75;

Policy barriers in the EU

Policy barriers in the European Union are:

  1. Room for discussion in definitions in EU waste legislation;
  2. Lack of clarity in the application of the waste hierarchy;
  3. Incentivising the use of biological resources (including food) as biofuels;
  4. Stimulating measures for a lower VAT, which can lead to increased consumption and decreased circularity (note: a higher VAT would stimulate a circular economy; a lower VAT is a barrier);
  5. Lack of knowledge and concerns on Food Hygiene Legislation with regard to food donations;
  6. Prohibition to feed animals with catering waste that contains animal by-products;
  7. Labelling, presentation and advertising of food products is an important cause of food waste;
  8. Directives on the sale of consumer goods set too short timeframes.

European Commission, 2014, p36-40.

Different interfaces of government

The circular economy spans a number of different interfaces of government. As a consequence it is never quite significant enough at any single interface. Therefore politically there needs to be a single champion driving it forward.

CIWM, 2014, p21-23.