As part of the Toolkit for Policy Makers, the Foundation has identified six areas of policy which can be leveraged to accelerate the transition to a circular economy. More detailed descriptions with examples can be found in the Toolkit for Policy Makers report.
Education Information & Awareness
Since the concept of the circular economy is still not widely known among the public or in the business community, policy interventions aimed at increasing information and awareness play an important role. These policies aim to change ingrained patterns of behaviour of companies and individuals. They also seek to plug gaps in information that prevent or restrict circular economy opportunities. Since the circular economy requires business to cooperate across traditional sectoral and functional silos, an understanding of the economic potential and the practicalities is important, and often lacking. Information campaigns can also be broadcast to the general public.
When pursuing circular economy opportunities, businesses incur transaction costs finding, and interacting with, suitable collaboration partners along and across value chains. Similarly, circular economy opportunities can be held back by a lack of commercially viable technology. In both cases there is a case for policy support to facilitate partnerships either between businesses or across business and academia. Collaboration platforms can take various forms, including industrial symbiosis, public- private agreements, R&D clusters and voluntary industry initiatives.
Business Support Schemes
In seeking out circular economy opportunities, companies can face economic barriers and market failures. Policy interventions in this area can take the form of financial support, such as grants and subsidies, and capital injections and financial guarantees, but also importantly technical support, advice, training, demonstration of best practices and development of new business models. A particular focus of these support schemes will likely be SMEs, which can lack the internal capacity, capabilities and financial resources to take advantage of these new opportunities.
Public Procurement & Infrastructure
When businesses face the barrier of entrenched customs and habits or a lack of markets for a circular economy opportunity, the public sector can step in to provide purchasing power. Circular economy standards can be incorporated into procurement law or guidelines, lists of preferred suppliers or materials can be drawn up, and skill in total cost of ownership (TCO) and measures of material circularity can be built in procuring departments. If the barrier is insufficient public infrastructure – such as waste collection systems and treatment facilities – public sector budgets can provide investment that enables private sector circular economy activity.
Regulatory policy interventions are of course critical to address regulatory failures and can also address barriers including profitability and split incentives. In cases where circular economy activity is hampered by the unintended consequences of existing regulations, it can be helpful to form a taskforce on circular economy or resource efficiency. Where the barrier is that of inadequately defined legal frameworks, new or adapted regulations may be needed. These could come in the form of imposing restrictions on existing activities, lifting existing restrictions or setting a positive legal framework for circular economy activities.
The main barriers to circular economy opportunities that fiscal instruments could address are those of profitability for companies and unpriced externalities. Similar to regulations, fiscal instruments can be applied either to discourage non-circular activities on the one hand or explicitly support circular economy opportunities on the other. They can be in the form of, for example, a fiscal instrument applied to products difficult to incorporate into a circular system, such as disposable plastic carrier bags, or pricing more fully the negative externalities of waste (management) through fiscal interventions like landfill and incineration taxes.