Can Denmark Be the Tesla of Circular Governance?

Photo by Valentin Omikron on Unsplash

A New Kind of Crisis

In 1973, the oil crisis hit Denmark hard. The country was almost entirely dependent on imported oil, and the shock forced it to reinvent itself, investing in renewable energy, especially wind power. Today, Denmark is a global leader in wind energy. Today, the world faces a new and material crisis intertwined with climate change. According to the UN and the Circularity Gap Report, global material use is expected to double by 2050 from 2015. The circular economy has proven a valid solution to environmental and economic challenges. Yet only 7.2% of the global economy is circular, with most of the world still stuck in the “take-make-dispose” model. Denmark has been experimenting boldly with public procurement, digital product passports, and regulatory sandboxes to shift the economy toward circularity.

What Circular Governance Means

The circular economy eliminates waste and pollution by keeping materials at their highest value and regenerating nature. Consider CE as the destination; then, circular governance is the rule we have to follow, such as the traffic lights, road rules, etc., in order to reach the goal. This consists of the policies, institutions, and structural actions needed to make this happen. With developed technology, this ranges from advanced recycling systems to resource-efficient production. But ideas often stumble because of regulatory hurdles, financial pressures, and market realities. In construction, for instance, virgin materials are cheaper than recycled ones. And without trust in data collection, scaling solutions is complex. Now is the time to focus on governance to ensure technology achieves circular goals.

The Paradox of Denmark

Praised for its green initiatives and being on the global front stage for advocating climate change, this country has the EU's highest per capita material consumption, 24.5 tonnes per person in 2018, and produces massive municipal waste. That doesn’t mean Denmark isn’t acting. The country is a global wind energy leader, aims for 100% green electricity by 2030 and 100% renewable energy by 2050, and sets international standards in chemical risk assessment. Policies like the ad-valorem tax on pesticides have cut health and environmental emissions by 40%. Denmark shows that strong institutions plus political will can make a real difference.

Waste and Materials

Denmark excels in waste collection and material recovery, keeping landfills nearly empty. Yet much of the collected material ends up in incineration or energy recovery, providing heat and electricity but also destroying valuable materials. It is stated that there is a surplus of incineration plants in Denmark. This has created capital lock-in, forcing the system to feed into incineration plants for economic needs. In addition, the waste management sector accounts for 4.9% of CO2 emissions, with incineration having a significant share.

To be the Tesla of circular governance, Denmark must leverage its strengths in cross-party collaboration, high trust in government, and digital infrastructure. These assets make Denmark uniquely positioned to lead in circular governance by incorporating tools like Digital Product Passports (DPPs) and sustainable public procurement to create a road map towards meeting circular goals.

Existing Frameworks

Denmark already has an Action Plan for the Circular Economy, with 129 initiatives focusing on biomass, construction, and plastics. It also envisions a climate-neutral waste sector by 2030, requiring an 80% reduction in plastic incineration.

Public procurement is another key lever. Denmark can shift entire markets by focusing on sustainability and circularity in government purchases. Total Cost of Ownership (TCO) is considered, accounting for maintenance, energy use, and disposal. For example, the Municipality of Odense saw initial costs for greener construction 5% higher, but operational costs dropped. Denmark plans for all public procurement to be circular by 2030, forcing companies to change.

Digital Product Passports: Tracking Materials for Circularity

A DPP is a digital record mandated by EU law, detailing product identity, materials, safety, and sustainability. Denmark wants to use DPPs to attain circularity by supporting repair, reuse, and recycling. These passports track materials, lifespan, repairability, and recyclability, shifting focus to design is pivotal since 80% of a product’s environmental impact is locked in at the design phase.

Danish furniture maker Fritz Hansen already uses a DPP to track ownership, resale, and repair, improving resale value and protecting buyers and sellers. This is governance meeting innovation.

Regulatory Sandboxes: Testing Bold Ideas

Regulatory sandboxes create safe spaces to test new circular solutions, supported by technical assistance and EU funding. They help innovative ideas survive early challenges and scale. In construction, material passports for buildings could track all materials used, making dismantling and reuse easier at the end of a building’s life.

If Denmark implements these tools effectively, its circularity could rise sharply, and the lessons could be copied across Europe.

Copyable Standards for the World

Public procurement is perhaps the most globally replicable tool, as it doesn’t require complex digital infrastructure and can be adapted almost anywhere in the world. However, corruption and weak institutions can make adoption a challenge. Policies like Extended Producer Responsibility (EPR), already used in India for e-waste, show that circular governance can cross continents.

Denmark’s small size, wealth, strong institutions, and digital systems make it a prime candidate to lead. Just as in 1973, Denmark could again show the world how governance can reinvent an economy in crisis.

Towards a Circular World

If Denmark succeeds, products will carry DPPs, consumers can make environmentally informed choices, and goods will be designed for repair, reuse, and recycling. Public procurement will shift markets, and regulatory sandboxes will accelerate innovation.

This small nation in the north has what it takes to be the Tesla of circular governance: bold, innovative, and setting standards for the world. Political will, strong institutions, and collaboration could make circularity the next Danish export, leading Europe and the world toward a circular future.