臺北產經資訊網

Circular Economy Generates New Business Opportunities and Stimulates Investments in Industrial Innovation

The circular economy generates business models of high economic value through circular development models centered around resource, production, and recycled resources. Numerous enterprises are therefore considering how to integrate DfE (Design for the Environment), green management, social responsibility, and green innovation concepts into their manufacturing processes. The British Standards Institution (BSI) divides the circular economy model into the following six categories: Make-to-order, dematerialization, the extension of product life cycles/re-use, remanufacturing and use of recycled materials, PaaS (Product-as-a-Service)/product service system, sharing economy, and collaborative consumption. Enterprises can apply these business models to maximize the value of circular economy concepts in different product lifecycle stages based on their own competitive edge.

A report of the World Economic Forum predicts that circular economy concepts will generate 100,000 new job opportunities by 2020 and an output value of US$ 1 trillion for the global economy by 2025, which will accelerate the adoption of innovative circular economy concepts by enterprises.

The Department of Economic Development, Taipei City Government has formulated the “Taipei Municipal Self-Government Ordinance for Industrial Development” to spur innovative industrial development, promote innovative entrepreneurship and attract investments. The goal is to provide entrepreneurship, R&D, brand innovation, angel investment, and incubation subsidies as well as investment allowances for rental, salary and interest payments and occupational training. All businesses officially registered in Taipei City are eligible to apply for these subsidies and allowances. From January 2015 to March 2019, a total of 912 applications were approved. Granted subsidies amounted to NT$ 1.24699 billion. Subsidies totaling NT$ 34.89 million were granted for 27 circular economy-related applications. The number of applications and subsidy amount accounted for around 3% of the total number/amount. Program categories were diverse and encompassed recycling and environmental protection, green building materials, sustainable farming, shared lease platforms, and advanced energy systems. This clearly shows that the subsidy and incentive program fully supports inventive startup teams and strengthens innovation potential.

Further analysis reveals that among the 27 circular economy-related programs which were awarded subsidies in the context of Project of Subsidies & Incentives For Taipei Industry and encompassed product technology R&D, startup services/technological innovation, and branding, there were 7 applications for “startup subsidies” (new businesses established less than one year ago) in recent years. Circular economy concepts represent a powerful new trend in the field of entrepreneurship. The goal of entrepreneurs lies in the development of promising business models through technological or service innovations.

Promotion of Green Procurement by Government Agencies and Fostering of Green Production and Consumption

Green procurement has been implemented in EU countries for a long time. Manufacturers are encouraged to emphasize green production, supply chain management, and marketing from the source at different stages of the product life cycle through public procurement policies relying on systematic planning and design and implementation of “cyclicity.” This is conducive to the strengthening of resource recycling market mechanisms. Environmental Protection Administration (EPA) of the Executive Yuan promotes green production and consumption and “green procurement by government agencies” in Taiwan in line with international trends in the field of resource sustainability. The procurement capabilities of government agencies are utilized for the preferential purchase of eco-friendly products. Taipei City Government has compiled a “Handbook for Green Procurement by Government Agencies and Schools in Taipei City” in line with central government policies. Promotion efforts focus on Category 1 designated procurement items (Products that have been awarded eco-label licenses recognized by EPA or international eco-label licenses provided that mutual recognition agreements exist) as publicly announced by EPA. The green procurement ratio of designated items is calculated accordingly (target value of 95%). As for the procurement of Category 2 and 3 eco-friendly products, executing agencies must abide by the policy requiring agencies to give preference to eco-friendly products in order to achieve the prescribed green procurement ratio (target value of 90%).

The performance of Taipei City Government agencies in the field of green procurement in the 2015~2017 has been rated “excellent.” The green procurement ratio of designated items reached 99.94% in 2017, which exceeds the target values of 90% and 95% set by EPA and the city government, respectively. Taipei City ranks first among the islands in green procurement volume with a total of NT$ 803 million.

In addition, Taipei City Government cooperates with factories, companies, NPOs, stores, hotels, restaurants, hospitals, private schools, religious organizations, and community organizations to create green business opportunities and reduce transaction costs in line with the “Green Procurement Project for Private Enterprises and Organizations” of the Environmental Protection Administration. In 2017, Taipei City Government reported total sales of eco- and carbon-label products by green stores in excess of NT$ 2.3 billion, while green procurement by private enterprises and organizations amounted to NT$ 8.6 billion. This signals that private organizations support and approve of green consumption and procurement, which is also conducive to stimulating participation in green consumption. The goal lies in the satisfaction of existing demands of buyers and sellers and the promotion of cyclic business and product design models are promoted.

Green Financing and Banking to Foster a Green Industry Environment

As of October 2018, the Department of Economic Development, Taipei City Government cooperates with Taipei Fubon Bank, Taiwan Business Bank, Taishin International Bank, Bank SinoPac, and Cathay United Bank in the promotion of green financing projects. Financing services are available for all businesses and citizens that meet the criteria for the installation of PV (photovoltaic) equipment and the lending requirements prescribed by banks.

Since the construction of PV equipment is cost intensive, banks provide preferential loans for green energy projects to increase the willingness of enterprises and citizens to install such equipment and thereby accelerate the promotion of green energy facilities. This not only stimulates growth of the green finance market but also decreases investment risks and maximizes investment benefits through the creation of resource exchange platforms. The program aims to generate momentum for the green energy industry and promotes sustainable green development.

Since the publication of the white paper for the “Circular Taipei Implementation Plan”, all bureaus and departments of Taipei City Government have been firmly committed to strategic goal setting and formulation of action plans for 2018~2022. Subsidies totaling NT$ 41 million were granted for 38 cases in the context of the subsidy and incentive program for industrial development in Taipei. The government projects an annual green service procurement volume of NT$ 800 million. A total of 5 financial institutions currently participate in the green financing service program. The government plans to add one additional business every year.

Taipei City Government utilizes economic incentives including financing, loans, subsidies and other economic measures and methods to accelerate the transition to the circular economy age and encourage the formation of green startups and development of innovative models. In the field of public consumption, the government promotes green procurement by agencies and schools. The public understanding and awareness of eco-labels and green products is raised by tapping the capabilities of NGOs. The goal lies in the creation of economic models based on green consumption patterns. Equal emphasis is placed on economic growth and environmental protection and constant progress is made toward the goal of sustainable green development.

For more details on preferential loans for green energy projects, please contact the Department of Economic Development.

Reference data

World Economic Forum (WEF)《Circular Economy Can Generate US$ 1 Trillion Annually by 2025》https://www.weforum.org/press/2014/01/circular-economy-can-generate-us-1-trillion-annually-by-2025/