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. Companies and consumers often lack economic incentives to make choices that are favourable to 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 for 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 included in the electricity tax category for industry at the start of 2022. Government proposal on amending the legislation on energy taxation (Finlex; in Finnish). Responsible organisation: Ministry of Finance.
  •  The Government proposes a tax on mining minerals excavated in Finland, to be introduced in the beginning of 2024 (government proposal 281/2022; in Finnish). The purpose of the tax would be to allocate a fair compensation to the society for the use of non-renewable natural resources. Responsible organisation: Ministry of Finance.
  • The waste tax on landfilled waste will be raised from EUR 70 to EUR 80 per tonne as from 2023 (government proposal to Parliament for the Act Amending the Waste Tax Act; in Finnish). The tax base will be expanded to also include a tax on gypsum waste from construction and demolition as from 2023 and on green liquor dregs as from 2027. Responsible organisations: Ministry of Finance and Ministry of the Environment.
  • Assessing the need to promote the circular economy and recycling objectives by means of a waste incineration tax. Preparation of a voluntary Green Deal agreement for reducing emissions from waste incineration and increasing 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 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 many ways. These include the KEINO Academy, regional change agents and development groups for different themes. The academy on the management of procurement operations related to the circular economy (in Finnish) will be implemented in 2022-2023. Responsible organisation: Ministry of Economic Affairs and Employment.
  • The project on distributing risks in sustainable and innovative public procurement examined ways to manage the uncertainties related to the introduction of new solutions. Final report of the project (Distributing risks in sustainable and innovative public procurement - Harnessing knowledge (; in Finnish) 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.
  • 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 (, in Finnish). The aim is to have the first criteria in use in 2023. Discussions on a possible Green Deal related to the topic and further development of the procurement criteria continued towards the end of 2022. 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.