Regional and political drivers

Governments have an important role when it comes to adapting principles of CE. The con-cept has drawn attention especially in Asian countries like China and Japan, but also in Eu-rope. Japan has been enduring resource scarcity since 1990’s because of its geographical location and geological limits. Domestic resource extraction in Japan faced difficulties with too expensive extraction costs, which lead the energy sector depended on oil imports. After the 1970’s oil crisis broke out and the government had to think again their resource policy.

The disadvantage of lacking natural resources forced Japan to develop CE based economic model to keep up with the western countries. Japan’s route to develop its CE model consists of three stages. First step was to adjust the structure by reducing dependency on oil by im-proving the efficiency and increasing the amount of renewable energy in energy production.

Second phase included setting up a comprehensive legal system to support sustainability, environmental policies and waste management. Finally, the third step was to increase edu-cation and awareness about CE and through that raise societal participation. (Ji et al. 2012,

725-730.) Japan’s progress in building a legislation to support CE has been prominent espe-cially after 1990’s. Some of the laws related to CE and environmental issues in Japan are shown in the table 1.

Table 1. Laws set by the Japanese government to promote circular economy model (Ji et al. 2012, 728; Davis

& Hall 2006; Ministry of environment 2016)

Classification of law Name of the law Year

Fundamental law

The basic environmental Law 1993

Promoting the formation of a recycling society Law

2000

Comprehensive law

Waste disposal Law 1970

Law for promotion of effective utilization of re-cyclables

1991

Special laws

The law of separate collection and recycling of container and packaging

1995

Specified home appliance recycling law 1998 Construction material recycling law 2000 Polychlorinated biphenyl (PCB) special

measures law

2001

End-of-life vehicle law 2002

The successfulness of the CE program driven by the government in Japan divides opinions.

When looking at some of the numbers, the program has been a great success. Rate of recy-cling for metal increased up to 98 % and it is high for other materials too. This at the same time decreased the amount of waste going to landfill to only 5 %. Also from electronic ap-pliances 89% of the materials are now recycled and as a rule the materials recovered are used to produce similar kind of products, which creates an actual closed-loop example. (Ellen Macarthur foundation 2014, 35). On the other hand, the program has got critics for high implementation costs and some of the laws have created unintended consequences like ille-gal waste disposal (Davis & Hall 2006, 2-3).

China again has a total opposite situation compared to Japan. The country has large land area and massive resource reserves. This can also be seen from consumption levels which are reaching a crisis level. China consumed more raw materials than all 34 OECD countries together. (Mathews & Tan 2016, 440-442.) According to national statistics, CO2 emissions in China have been growing 7,5% per year from over 3000 Mt in 1997 to almost 8000 Mt in 2010 (Guan et al. 2012). One of the challenge in China is the largest population in the world which is closer to 1,4 billion (Worldometers 2016). This represents almost 19 % of the whole world’s population.

Chinese government has chosen CE as a national development strategy to improve material efficiency, energy consumption and to lower emission levels. There are three major forces accelerating the implementation of CE in China. First reason is daunting environmental chal-lenges such as land degradation, desertification, deforestation, loss of biodiversity, air pol-lutions and water depletion. Secondly there is starting to be a severe shortage on resources because of growing demand (Li et al. 2010). China holds 9 % of the farmed land on Earth, 6 % of World’s water reserves and 4 % of forests, which should meet the need of almost one fifth of the Earth’s population (Vermander 2008, 85; Worldometer 2016). The third force accelerating the change is tightened regulations regarding environmental issues in interna-tional trade markets that can cause so-called green barriers and have influence to export. (Su et al. 2013, 216.) China’s government has released many of laws related to CE similar to Japan to accelerate the implementation of CE. In 2003 the government of China released the Cleaner Production Promotion Law, then the amended Law on Pollution Prevention and Control of Solid Waste in 2005 and the Circular Economy Promotion Law was approved in 2009. (Su et al. 2013, 217-218.)

China have also committed to invest 1,2 billion US dollars in science and technology for sustainable development. One important part of the plan, where a large share of the money is directed, is to develop an industrial park network. A good example is Suzhou New District near Shanghai which is a 52 km² area designed for industrial and technological enterprises.

There is in total around 4000 manufacturing companies in the area that creates a lot of op-portunities for symbiotic relationships and material recycling cost efficiently. On a general, level China’s resource efficiency has improved almost 35 % and pollution treatment rate increased almost by 74 %. This included sewage, pollutant reduction and decontamination

of residential waste. The statistics have been created by comparing levels of 2005 to levels of 2013. (Ellen Macarthur foundation 2014, 34; Mathews & Tan 2016, 440-442.) The pilot projects have been a good support in adopting principles of CE in Chinese industry. Other practices related to CE in china are shown in the table 2. It is divided in four focus areas on a micro, meso and macro level.

Table 2. Practices of CE in China (Su et al. 2013,217)

Focus area Micro Consumption Green purchase Environmentally friendly

parks

Renting service

Waste management Product recycle sys-tem

Waste trade market and venous industrial park

Urban symbiosis

Other support Policies and laws, Information platform, Capacity-building, NGOs

Even though, there have been some great achievements in China from an environmental point of view the oversized resource consumption is still a serious problem. OECD statistics reveal that resource intensity in China fell from 4,3 kilograms (kg) of materials per unit of gross domestic product (GDP) in 1990 to 2,5 kg in 2011, which means that in China 2,5 kg of material is required to generate US$1 of GDP. For a comparison in OECD countries the average resource intensity in 2005 was closer to 0,5 kg. At the same time China’s resource consumption five folded from 5 to 25 billion tonnes. Although the direction towards a sus-tainable economic model is right, there is still a lot of work to do. (Mathews & Tan 2016, 440-442.)

It is also recognized in European Union (EU) that the linear economic model and unlimited resource consumption is not sustainable and the transition to a more circular economic model is indispensable. CE priorities are seen very much similar to EU’s priorities and therefore there is a strong willingness to support the transition. In EU, local and regional authorities, such as governments, have an important role in the development of CE and EU has been made to carry its responsibility so that the necessary regulatory framework will take place.

EU have underlined that the transition to CE strengthens international competitiveness, pro-motes economic growth, creates job opportunities and lowers greenhouse gas emissions.

European commission released an action plan for the CE development in December 2015 where ambitious goals are set further than ever before. The common EU-level target is to increase the recycling rate for municipal waste up to 65 % and for packaging materials up to 75 % by the year 2030 and at the same time decrease the amount of waste going to landfills to only 10 %. In addition, the commission proposed directives concerning waste manage-ment, packaging waste and waste electrical and electronical equipments (WEEE). (European Commission 2015, 2-3; Seppälä et al. 2016, 72.)

The ambitious plan strives to “close the loop” of product life cycles through recycling and reusing. The transition is supported by European Structural & Investment Funds (ESIF).

ESIF is committed to invest 5,5 billion euros for development of waste management infra-structure. Besides that, the EU’s funding program for research and innovation, EU Horizon 2020, will provide 650 million euros to CE related innovations at national level. (European Commission 2015, 2-3; European commission 2016.)

In EU, there are two directives that control waste management: directive on waste 98/2008 and directive on the landfill of waste 31/1999. In addition, every member country has their own regulatory policy, which must follow the guidelines set by EU. Also Finland is com-mitted to move towards circular model and support EU’s goals. The waste management law 646/2011 and council directive about wastes 179/2012 generally controls waste management in Finland. Environment protection law 527/2014 and environment protection act 713/2014 guides organizing the waste management in Finland. The waste management regulatory aims to prevent risks on health and environment, reduce the amount and noxiousness of wastes, promote sustainable use of resources and to ensure a working waste management system.

(Seppälä et al. 2016, 6; Ministry of environment 2016). Figure 10 pictures the priority order in waste management set by EU, which can be also found from Finnish waste law 646/2011.

One important act supporting CE in Finland is the council act of wastes 331/2013, which prohibits placing organic wastes to landfills. More precisely this means that wastes contain-ing organic materials 10% or more are not allowed to be located to landfills. The goal of the decree is to improve material recovery and energy recovery from wastes while reducing the environmental impacts of the landfills (Ympäristöministeriö 2013). The act was released 2^nd of June in 2013 and the landfill prohibit came into effect 1^st of January in 2016. Mixed MSW is directed now to energy recovery, after separate collection of recyclables. The act was im-portant step in the development of CE in Finland.

Also in forest and paper industry the waste management have to be organized by the Finnish legislation. Landfill prohibition for organic waste causes substantial arrangements in waste management systems in the sector. Most of the waste flows are exceeding the 10 % organic material limit and thus considered as an organic waste by the law. Most common waste fractions that have been disposed to landfill by forest industry are ash and green liquor sludge.

By the new act forestry companies need to find new innovative ways to utilize also the dif-ficult waste flows. UPM Paper ENA’s landfill in Rauma has worked also as an intermediate storage for some of the wastes such as ashes and kaolin sludge. The materials are retrieved back for utilization.

Figure 10. Priority order in waste management (Directive on waste 2008/98/EC, 4§)

Another important political driver is taxation. In Finland, new waste tax law 1126/2010 came into effect from the beginning of 2011. Waste tax must be paid from fractions disposed to landfill that are technically possible to utilize in some other way. The taxation concerns pub-lic and private landfills such as UPM Paper ENA’s landfill in Rauma. The new updated waste tax law aims to increase the recycling and utilization rate. In pulp and paper industry all waste produced in the process is taxable by the new law except the green liquor sludge, which is at the moment exempted from taxation due to its difficult utilization (1126/2010).

Also, storing wastes to landfill for less than three years is tax free. (Ympäristö 2016.)

Taxation and new laws concerning waste management have been trying to steer forest and paper industry to reduce the amount of wastes and increase utilization rates, even so a lot of improvements were done already before economic controlling measures such as waste tax.

There has been some complaining that the taxation hasn’t been the best way to force forest industry to improve the waste management. One of the biggest reasons is that landfill costs basically defines the cost of the utilization when it is outsourced, which means that also the cost of the utilization is now higher for the forestry companies. It is seen that waste tax weakens the position of Finnish forest industry in the international markets by increasing the overall waste management costs, when for example in Sweden waste produced by forest industry is still tax free. (Metsäteollisuus 2015b.)