Circular economy incentives

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. Both companies and consumers often lack economic incentives to make choices that would benefit the circular economy.

To make the transition to the circular economy, we must fund research, development, and innovations (RDI). At its best, public RDI funding directs innovation to new areas and spurs 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 increase the general adoption of circular economy service models.

  • The recycling industry was moved to the electricity tax category for industry at the start of 2022. Responsible organisation: Ministry of Finance.
  • A tax based on net earnings is being prepared for mines. Responsible organisation: Ministry of Finance.
  • Plans have been made to expand the waste tax base. Ramboll has examined the possibilities to expand the waste tax. Responsible organisation: Ministry of the Environment.
  • The need to promote the circular economy and recycling objectives by means of a waste incineration tax will be assessed. A voluntary Green Deal agreement will be prepared to reduce emissions from waste incineration and increase recycling. Responsible organisation: Ministry of the Environment.

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

  • The network-based Competence Centre for Sustainable and Innovative Public Procurement in Finland KEINO  promotes low-carbon circular economy solutions in numerous ways. These include the KEINO Academy, regional change agents, circular economy development groups, Green Deal agreements, and dialogue among parties to the market. Responsible organisation: Ministry of Economic Affairs and Employment.
  • The KIRI project for distributing risk in sustainable and innovative public procurement produces information and recommendations for risk distribution mechanisms and how to implement these. Set to end in spring 2022, the KIRI project is part of the Government’s analysis, assessment and research activities. Responsible organisation: Prime Minister’s Office.
  • We will prepare a digital information platform for sustainable procurement. The platform will enable the recording, co-creation and use of sustainable procurement criteria in different procurement processes. The platform pilot will begin in 2023. Responsible organisation: Ministry of Economic Affairs and Employment.
  • Motiva Oy drew up a report on the procurement criteria and the need to develop them for low-carbon infrastructure construction in support of the circular economy. The report was published in April 2022 . The aim is to have the first criteria in use in 2023. Responsible organisation: Ministry of the Environment.

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 increase funding for RDI and ecosystem activities that promote a low-carbon circular economy and for demonstration and facility investments.
  • Finland’s Sustainable Growth Programme has earmarked EUR 110 million to Business Finland for financing circular economy solutions and demonstration facilities for industry. Responsible organisation: Business Finland
  • 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 targeted to measures related to the preparation for climate change. Responsible organisations: Ministry of Economic Affairs and Employment and Ministry of the Environment.
  • The Ministry of the Environment awards EUR one million in grants to municipalities for climate and circular economy projects . The projects aim to reduce greenhouse gas emissions and to promote the sustainable use of natural resources. Responsible organisation: Ministry of the Environment.