The circular economy transition in Sweden: A study of institutional constraints

Abstract: The degradation of natural ecosystems, through biodiversity loss and resource depletion, has led to the emergence of circular economy (CE), a novel production model focused on circular flows of materials. Sweden, known for its progressive environmental policies, has since 2016 developed a circular economy policy in accordance with the European Union’s (EU) policies and its own initiative. However, recent findings revealed that the circular use of material in Sweden in 2021 was 6.6% compared to the EU’s average of 11.7%. The purpose of this research was to identify the institutional constraints of the Swedish government in adopting the EU’s circular economy policy between 2016 – 2022. Institutionalism was used as a theoretical framework, shaped by the works of Douglas C. North on New Institutional Economics, and Elinor Ostrom’s Institutional Framework for Policy Analysis and Design. The methods utilized were qualitative content analysis and interviews, carried with government officials working with circular economy policy at the Government Offices of Sweden. The study revealed that the institutional constraints have been the complexity of a circular economy system, the Swedish economy's reliance on primary sectors, the high consumption levels in the country, two of the circular economy’s policy programs lacking a timeline for implementation, Sweden’s infringement of the EU’s legislation on waste, and the ineffectiveness of financial instruments, such as tax and VAT (Value-added tax).