Circular economy incentives

This is how we implement the Circular Economy Programme

The use of natural resources may cause emissions or harm ecosystems without the party causing the harm paying for any of the costs incurred. Companies and consumers often lack the financial incentives to make choices that would be beneficial for a circular economy.

The transition to a circular economy requires funding for research, development and innovation (RDI). At its best, public RDI funding directs innovation activities to new fields and encourages the private sector to finance experiments and innovations that support the circular economy.

The public sector can support low-carbon and circular economy solutions by procuring products, services and contracts with smaller negative environmental impacts than the alternatives would have. The public sector can also create new markets by procuring energy and resource efficient solutions.

What we do and where we are now:

1. We will develop economic incentives that promote the sparing use of natural resources, reduce carbon dioxide emissions, and promote the wider adoption of circular economy service models.

With respect to the development of the waste tax, the Government will outline the means to separate waste fractions by the Government's mid-term policy review session 2025, based on a study to be conducted by the Ministry of the Environment.
The recycling industry was included in the electricity tax category for industry at the start of 2022. Government proposal on amending the legislation on energy taxation (in Finnish) | Finlex. Responsible organisation: Ministry of Finance.
Parliament approved a tax on mining minerals excavated in Finland, which was introduced in the beginning of 2024. The purpose of the tax is to allocate a fair compensation to the society for the use of non-renewable natural resources. Act on Tax on Mining Minerals 314/2023 (in Finnish) | Finlex
From the beginning of 2023, the waste tax on landfilled waste was raised from EUR 70 to EUR 80 per tonne. The tax base has been expanded to also include a tax on gypsum waste from construction and demolition as from 2023 and on green liquor dregs as from 2027. Act Amending the Waste Tax Act 962 /2022 (in Finnish) | Finlex

2. We will increase low-carbon circular economy solutions e.g. in construction, energy and infrastructure projects and service procurements in the public sector.

Project on ecological objectives for public procurements (in Finnish) will formulate, in cooperation with a broad range of stakeholders, the national objectives by 2035 for the most effective procurement categories to reduce the carbon and ecological footprint and promote a circular economy by setting targets for the relevant procurements.
Green Deal agreements for public procurers contribute in a concrete way to the implementation of low-carbon circular economy procurements (emission-free work sites and sustainable procurements in early childhood education and care).
The network-based Competence Centre for Sustainable and Innovative Public Procurement in Finland KEINO has promoted low-carbon circular economy solutions through the KEINO Academy, change agents and thematic developer groups. The activities of the Competence Centre will end during 2024 but some of the measures that have been introduced will continue. News item: Activities of KEINO to be wound down (in Finnish).
The guide to low-carbon circular economy procurements (in Finnish) | KEINO helps in setting the targets and in preparing and implementing procurements.
The Criteria Bank for sustainable procurements was published in autumn 2023. Various actors in the public sector can use the Criteria Bank to find ready-made sustainability requirements for their procurements. The criteria have been developed through market dialogue with clients, suppliers and key stakeholders in the field. Responsible organisation: Ministry of Economic Affairs and Employment.
The project on distributing risks in sustainable and innovative public procurement (in Finnish) | Harnessing knowledge examined ways to manage the uncertainties related to the introduction of new solutions. The final report of the project Distributing risks in sustainable and innovative public procurement (in Finnish) | Harnessing knowledge was published in May 2022. The proposals include new models for public funding. Responsible organisations: Ministry of Economic Affairs and Employment and Prime Minister’s Office.
Motiva Oy conducted a study on the procurement criteria and the need to develop them for low-carbon infrastructure construction in support of the circular economy. The report (in Finnish) | Motiva was published in April 2022. Responsible organisations: Ministry of the Environment and Finnish Transport Infrastructure Agency.

3. We will increase funding for RDI and ecosystem activities that promote a low-carbon circular economy and for demonstration and facility investments.

We will prepare a strategic LIFE IP project to develop and implement a Circular Economy Green Deal. Responsible organisations: Ministry of the Environment and Finnish Environment Institute.
Business Finland launched the Circular Transition for Zero Waste mission in 2023. The missions guide the operations of Business Finland in the long term. The aim is to broadly create value for society and find significant future market opportunities for Finnish companies, including with respect to a systemic change of a circular economy. Business Finland’s missions | Business Finland
Finland’s Sustainable Growth Programme | Business Finland has earmarked EUR 110 million to Business Finland for the industry’s recycling and reuse investments. The projects will be implemented by 2026. Responsible organisation: Business Finland. RRF funding in 2021-2023 (in Finnish) | Business Finland
In the Innovation and Skills in Finland 2021–2027 programme under the EU’s regional and structural policy, one of the national themes is the green transition. EUR 11.5 million in funding is allocated to the theme concerning a carbon-neutral circular economy society. Responsible organisation: Ministry of the Environment.
The EU regional and structural policy programme Innovation and Skills in Finland (2021-2027) aims to promote energy efficiency and the circular economy and to reduce greenhouse gas emissions. Funding will also be allocated to measures that prepare for climate change. Responsible organisations: Ministry of Economic Affairs and Employment and Ministry of the Environment.
In June 2022 the Ministry of the Environment awarded more than one million euros in grants to municipalities for climate and circular economy projects (in Finnish). Funding was granted to 20 projects to reduce greenhouse gas emissions and promote the sustainable use of natural resources. Responsible organisation: Ministry of the Environment.