Case Study: investigating fees on phosphorus to usher in the circular economy

PLACE: Baltic Islands, Sweden

SITUATION: The Baltic sea is close to a tipping point, where phosphorous trapped in sediment may well start to be released. Regardless of whether emissions stop completely, there is a risk that the living eco-system will be threatened by this influx of nutrients. It may completely destroy all food chains through a massive algal blooming, for example.

SECONDARY SITUATION: Whilst we are aware that emissions to the Baltic are harmful, reports show that supplies of phosphorus from mines, essential to agriculture, may only last another 30 years, We need to find a way to make it economically viable to reuse phosphorus continuously, effectively introducing the circular economy for the element.

TERTIARY SITUATION: Economic incentives like Cap and Trade have been proposed but alternatives like the Flexible Fee mechanism proposed by the Swedish Sustainable Economy Foundation show promise of effectively stimulating the economy and curbing emissions at the same time. Flexible fees could stimulate the introduction of the circular economy. However, these have not be tried in practice yet.

FRAMING QUESTION: How can we explore the possibilities of transitioning to a circular economy, specifically using the flexible mechanism proposed by ISSS in a specific case like an Island?

SOLUTION: Stephen Hinton produced a white paper explaining specifically how the flexible fee mechanism can be applied to creating the circular economy for phosphorus. Based on the white paper, a consortium was put together with members from the Stockholm Environmental Institute and the Natural Step, along with technology partners Teknikmarknad. The consortium the sought funds to test the concepts on a Baltic Island.

Details:

The paper proposes a fee on introduction of phosphours into the local economy.

The fee is distributed to Islanders equally

The fee is adjusted regularly: raised if imports increase and reduced if imports are under target phase-out rate.

An investigation looks into the likely effects on technology choice, employment and local economy as well as levels of emissions.

RESULTS: The initial economic analyses discovered that whilst prices to buy phosphorus as fertiliser can be 20 SEK a kilo, to remove it from waste water costs 200 SEK a kilo. The cost of measures to reduce it in seawater are 6000 SEK a kilo. The analysis of available technology showed that there was no technology hinder to recycling phosphorus.

WHAT TO LEARN: Clearly the economic opportunities with the circular society are huge. At the same time the barriers, whilst not economic or technological, are huge too. These barriers lie probably somewhere in the matrix of accepted beliefs and the economic framework of taxes, fees and subsidies

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