• 
• 

Financial instruments circular economy

The use of taxes, subsidies and public procurement can accelerate the transition to a circular economy. Smart use of these financial instruments will reduce environmental damage and uncertainty about the supply of raw materials in the future, as well as creating economic opportunities through more efficient use of raw and other materials, and new business models. Moreover, reducing consumption of raw and other materials, combined with emphasising recycling and reuse, will lead in many cases to a decrease in environmental damage in the form of CO2 emissions, because less energy will be needed for the production process. 

This is the key message of the study Financial instruments for a circular economy, which the Social and Economic Council of the Netherlands (SER) published in May 2018. The report identifies the criteria for the use of financial instruments that can stimulate the circular economy and details areas of concern and research questions.

A general conclusion is that there is still too little understanding of the specific effects of financial instruments on different raw materials, chains and sectors. A clearer picture of this is necessary to ensure that society accepts the introduction of financial instruments. Thinking through which financial instruments are effective needs to be accompanied by policy that will minimise undesirable side effects for society.

---